The current cost of living crisis has impacted individuals and businesses alike, and it appears that the medical cannabis industry is not exempt from the injurious effects of inflation, soaring energy prices, and the current economic climate.
The medical cannabis industry is one of energy-intensive production in terms of growing and distribution, but demand for cannabis based medicines is naturally inelastic given how essential it is people access these products.
Recently, Grow Pharma, one of the UK’s biggest cannabis companies, have had to increase the cost of their flower-based products by 50p a gram due to the rise in the price of energy; transportation costs and the poor exchange rate.
In an interview with Cannabis Health News regarding the price increase, Grow Pharma’s CEO, Pierre van Werperen, said:
“We are truly sorry about having to do this. As you can imagine, growing cannabis indoors requires significant amounts of energy and our energy bills have gone through the roof. On top of that, transportation costs have escalated, and the exchange rate versus the euro adds another five per cent to the increase.”
“We’re getting to a point now where we’ve got families who are choosing between eating and heating, but then you have families who are choosing between eating and heating and then keeping their child alive.”
Patients felt that the price increase came at an interesting time, considering there has been talks of such a move within the industry for a while now. Therefore, patients on the Grow Open Access Initiative have been left questioning the extent to which the price rise is attributable to the effects of the cost of living crisis. When asked about how patients feel towards this move, Zach added:
“They’re angry, they’re upset because now they’re sat there wondering ‘How am I going to afford not only the rest of my bills, but also my medication?”
Competing with the illicit market
Not only does the medical cannabis industry face a battle with the cost of living, but it must also compete with the illicit market – the freest and most adaptable marketplace in the world.
Doing things ‘above board’ presents the medical cannabis industry with a number of hurdles to jump over which are ultimately designed to provide patients with a better experience. However, this complexity is not shared by the illicit market. Therefore, the price increases in medical cannabis may not be mirrored in the illegal recreational market, making it difficult for the industry to compete, and potentially turning patients to illicit dealers, or consumers.
In attempting to make their products more visible to patients, medical cannabis companies have also experienced difficulties. At the end of September 2022, the Australian Government fined 3 companies almost $1m for alleged ‘unlawful advertising’ on their social media platforms and websites. The companies allegedly promoted prescription-only medical cannabis products that are currently not entered on the Australian Register of Therapeutic Goods, and made unapproved references to the treatment of serious conditions.
Companies attempting to be transparent with their patients about the cost of living price increases are also being met with regulatory barriers. The CEO of Grow Pharma commented on the lack of communication to patients, stating that the company could risk breaching MHRA guidelines concerning the promotion of unlicensed medicines if they were to inform affected patients of the price increase. Pierre van Werperen added:
“Communicating price changes to patients is a compliance nightmare,”
“We cannot send out messages announcing anything since it would be seen as a promotion of medicines to the public, which has severe penalties for us.”
And yet the heavy regulation experienced by the medical cannabis industry is juxtaposed by the ease with which dealers are able to freely advertise their products. For example, in September 2022, illegal cannabis business Dispenseroo put up 2,500 adverts on London Underground trains, mimicking the branding of food delivery service Deliveroo. The adverts stated: “Do you love 🍃? Use code ‘tube’ for £5 off,” above #dispenseroo.
What’s the Deal With Those ‘Dispenseroo’ Weed Adverts Across London? https://t.co/AfCpUllupu
— VICE UK (@VICEUK) September 15, 2022
Following the unauthorised advertising campaign, the founder of Dispenseroo stated that business was effectively booming, making around £50,000 a week in the sale of illicit cannabis products. What’s more, by setting up its servers and website in a territory outside of the UK where cannabis is legal, the business has so far been able to evade contact from the police.
Not only does this show how futile the government’s attempts at prohibition are given the clear demand for cannabis in the UK, but it also highlights the disparities between the legal medical market and the illicit recreational market.
There is a clear need to raise awareness of the legality of medical cannabis, given that more than 80% of UK residents are still unaware that they can access the drug on prescription or through private clinics. However, the medical cannabis industry will continue to struggle in the battle with the illicit market, due to the aforementioned regulatory barriers which make advertising expensive and risky, and the continuing lack of any chance of widespread medical cannabis prescription on the NHS.
What does this mean for patients using medical cannabis?
By increasing the cost of medical cannabis for people who are already experiencing price rises in almost all other aspects of life, the bottom line is that many patients simply will not be able to afford their prescriptions. This will lead to a reduction in the already low number of patients that are currently accessing medical cannabis. Zach adds:
“The reality is your patients can’t afford this. So if the industry is already struggling to hold onto patients and to attract new patients, increase your price, but then you’re going to end up with less patients because less patients are going to be able to afford your products.”
It is likely that patients who are feeling the pinch will be pushed out of the private medical cannabis space due to the price increase, instead having to turn towards the illicit market to access the medicine that they need to improve their quality of life. Zach highlighted that this would not only put patients at risk, but is also counterproductive for the industry:
“When you look at increasing the pricing you’re just pushing patients back into the illicit market, you’re placing them at increased risk of harm. So it seems very backwards that actually they’re wanting to attract new patients and maintain them on prescriptions and stand on their soap boxes about anyone who’s using cannabis without a prescription and demonise them, and yet they’re forcing patients into that market.”
What are the next steps?
In responding to the feelings of patients and the effects of the cost of living crisis, it is clear that the industry has a degree of responsibility to take stock of what they can to help their patients.
Zach highlighted that those affected by the price increase saw this move as symptomatic of a disconnect between companies and their patients. To address this, there is a real need for the industry to open up a dialogue with their customers regarding the products they need and what they can afford:
“I don’t think the industry really is doing enough. There needs to be a compassionate access, and either you give the product away for free or you give the product at cost. So if the products are at cost they’re not losing any money, they’re not making money either, but they’re not losing money.”
“They need to be speaking to the patient organisations, going out into the groups, reaching out into the community or do their own surveys, work out how much these people can actually afford because it doesn’t make sense to me.”
Moreover, from an industry perspective there is a clear need to address the barriers that medical cannabis companies experience compared to the illicit market. By opening up the space and making it more accessible, communication to patients should be improved and awareness of medical cannabis should increase.
This piece was written by Volteface Intern Megan Townsend. Megan is a current MA Criminology student at Birmingham City University. Tweets @megant2799.