The overall growth in the United States legal marijuana industry is substantial and will be fueled by the implementation of additional legalized markets across the country as momentum continues in favor of changes to existing federal laws. However, based upon our analysis, we believe that investors may call attention to the inherent evolution of consumer spending preferences in a dual marketplace, as the easing of recreational use restrictions has disrupted the growth rate of the presently constituted medical marijuana market. That said, we believe that the medicinal use market will recalibrate when the pipeline of new, more targeted medications become available and as the medical profession gains more comfort in pushing a marijuana treatment rather than a patient having to pull a recommendation from a doctor.
Until that time, the success of a state regulated marijuana program will be largely dependent upon the active participation of the medical community and there is a ways to go, even in those markets that do not coexist with recreational use. Why are doctors so resistant to recommend marijuana? For one reason, there has been no real incentive to participate in a state regulated marijuana program and secondly, the standard protocols for prescribing FDA approved medications have not been proven ineffective (which would lead to an alternative treatment). Also, most doctors are not comfortable recommending a schedule 1 substance (illegal at the federal level) for treatment. Some states have been more proactive than others in establishing educational programs but as we note there is a long way to go in getting more active participation.
In the 23 legal marijuana markets and DC there are about 453,000 licensed physicians. If we look at just those states where a doctor registration is required, the percentage to total state licensed physicians is a mere 2%, clearly a very low percentage relative to the full population of licensed practitioners. As more adult use markets are implemented, we would expect these numbers to decrease even further.