Hawaiʻi’s Medical Cannabis Sector: State of the Market and Economic Impacts
In Hawaii, medical cannabis is regulated by the Department of Health and produced by self-cultivation, caregiver-cultivation, or by one of eight vertically-integrated dispensary licensees. In fall 2019, to prepare for the upcoming legislative session, the Hawaii Cannabis Industry Association (HICIA) engaged Aperture Research to study dynamics of the regulated market and estimate the economic impacts of the licensed medical cannabis sector.
A common obstacle with estimating the economic impact of legal cannabis markets is the Federal prohibition on data collection relating to cannabis activities, plus the idiosyncratic nature of business structures and spending patterns across different licensed cannabis regimes. In response, Dr. Davenport directly surveyed Hawaii’s medical licensees to develop a new custom economic input-output and spending pattern model fit to Hawaii’s vertically-integrated medical cannabis sector.
The final report represented the first comprehensive review of Hawaii’s medical cannabis program from its start in 2002, through the establishment of dispensaries in 2015, and through present day — pulling on all available data regarding cannabis use, production, sale, and regulation in Hawaii, in addition to new data collected from Hawaii’s licensees.
Market analysis estimated supply and demand trends over time, spanning the distinct cannabis sub-markets: fully illicit cannabis, patient-supply, caregiver-supply, and dispensary-supply. Overall, Hawai’i was estimated to have 126,804 past-month cannabis users, consuming 63,700 pounds of cannabis valued between $210 and $300 million. Roughly one-in-five past-month cannabis users were estimated to have registered as patients, such that medical cannabis demand was estimated at 13,500 pounds (valued at $45M - $63M).
The report identified that excess production from the state’s caregiver system limited the viability of licensed dispensaries. A major finding was that estimated demand for medical cannabis was dwarfed by potential supply by licensed caregivers, under the state’s ten-plant cultivation limit. Under current caregiver registration numbers, it was estimated that that sector could at its legal limit produce as much as 271,500 pounds of cannabis; massively treated than the 8,500 pounds sold annually from dispensaries, or the only 5,000 pounds of residual unmet medical cannabis demand after considering dispensary supply.