Politically conservative Oklahoma has structured its cannabis regulations to be unusually inclusive and to encourage robust and dynamic market activity. Understandably, this has resulted in a stronger level of competition than literally any other legal medical marijuana jurisdiction in the United States.
Oklahoma is currently home to thousands of cannabis brands, many of which feature the quality and sophistication of some of the best from leading states in the space like California, Massachusetts, and Oregon.
Image courtesy The Toklahoman
According to KGOU, a National Public Radio station serving Oklahoma City, the state's medical cannabis industry generated 6,000 new jobs in 2020, bringing the number to almost 17,000. "To put that in perspective, there are now more medical marijuana employees than construction workers in the state," reported the station in March 2021.
Oklahoma is currently home to thousands of cannabis brands, many of which feature the quality and sophistication of some of the best from leading states in the space like California, Massachusetts, and Oregon.
"The growth in the medical marijuana industry has surpassed pretty much anyone's expectations," said Dr. Kelly Williams, Deputy Director of the Oklahoma Medical Marijuana Authority, the group responsible for the administration of the state's program (including licenses for both patients and businesses).
Deep Dive: Oklahoma Cannabis
Nearly anyone who labels themself a cannabis industry professional is by now aware of the phenomenon of American small business that is Oklahoma, the 30th U.S. state to legalize production and consumption of marijuana that is intended for patients who are using the herb medicinally.
With a regulatory framework that features a low barrier to entry for both patients and the businesses serving them, the state's pot law is one of the most progressive and egalitarian in the nation. In fact, Oklahoma is arguably the most accessible cannabis market in the world.
According to Politico in a November 2020 article: "What is happening in Oklahoma is almost unprecedented among the 35 states that have legalized marijuana in some form since California voters backed medical marijuana in 1996."
While most states debate the value of adding more ailments to their respective lists of qualifying medical conditions, Oklahoma has paved the way to the future and decided to do away with such a requirement entirely. Medical doctors can recommend patients for the program for any condition they consider valid (which must be documented for the state's regulatory board, the OMMA [Oklahoma Medical Marijuana Authority]).
As of October 2022 and according to the OMMA, the state's program is now 393,000 patients strong. However, the medical marijuana program in Oklahoma is about more than raw numbers. To the shock of many in established legal markets, Oklahoma is now home to an increasingly thriving pot culture that borders on recreational in nature and expression.
Regardless of the perceptions of the outside world, "Oklahoma Kush" and a host of new state- and region-centric themes and brands are quickly gaining traction (and the profits necessary to maintain their positions).
Regardless of the perceptions of the outside world, "Oklahoma Kush" and a host of new state- and region-centric themes and brands are quickly gaining traction (and the profits necessary to maintain their positions).
Intelligent entrepreneurs in the Sooner State are hunkering down. Not for short-term profits, but rather to establish the type of infrastructure and sustainable market share that is necessary to survive the coming wave of federal legalization. Regardless of its precise legal underpinnings, the advent of interstate commerce for currently isolated legal cannabis states will change the playing field in ways almost unimaginable. Most operators will find themselves out priced, bankrupted, purchased on the cheap, or otherwise defeated by larger, more experienced, and better capitalized competitors (typically from out-of-state).
Oklahoma City and Tulsa are now home to entertainment and cannabis community events on the level of what has been occurring in leading adult-use states such as Michigan and Nevada. Like the new adult-use laws in Connecticut and New York, Oklahoma allows registered patients to smoke or vape cannabis anywhere that tobacco consumption is permitted, including public streets and bars.
In a state of only four million residents, this means that one in every 10 Oklahomans is a card carrying member of its medical marijuana program.
According to Andrew Livingston, Director of Economics and Research at the Vicente Sederberg law firm in Denver, Oklahoma has "taken the glass ceiling of how high a medical cannabis program can go and...broken it. Oklahoma has the most open medical cannabis system in the country."
Oklahoma by the Numbers
Passed in 2018, the Oklahoma Medical Marijuana and Patient Protection Act (a ballot initiative that attracted support from 57 percent of voters) has implemented a program that now features nearly half a million patients—all of whom paid between $20 and $100 for a two-year license to purchase, possess, consume, and grow limited quantities of cannabis. Oklahoma also supports a popular caregiver system that now accommodates about 1,725 licensees (a decrease of about 900 from 2020).
In a state of only four million residents, this means that one in every 10 Oklahomans is a card carrying member of its medical marijuana program.
The significance of this becomes apparent when the enrollment rates of other medical states are considered. New Mexico, Arizona, Florida, and Colorado feature 5.4 percent, 4.2 percent, three percent, and 1.5 percent enrollment of their respective populations in their medical cannabis programs.
The fact that Oklahoma's enrollment rate, at 10 percent, is more than triple that of Florida and nearly seven times greater than Colorado exceeds mere statistical theatrics. These metrics provide further evidence that Oklahoma is, in some respects, leading the nation for medical cannabis with affordable, open access for all patients and businesses.
Image courtesy The Toklahoman
Entrepreneurs in the state who desire to be cultivators, processors, transporters, waste disposers, or operators of retail dispensaries can snag a license for an annual fee of only $2,500. For $100 per year, an individual may obtain a transporter license, allowing them to legally move product between the facilities of license holders such as cultivators and processors.
Interestingly, business license applicants must be at least 25 years old, a change from the standard 21 of most states. 75 percent of the ownership of the applicant company must be Oklahoma residents. Separate physical locations require their own license. There is no stated limit to the number of licenses that a single company can hold.
Some jurisdictions in the United States charge as much as $200,000 for an initial license that includes recurring administrative fees in the tens of thousands of dollars per year.
Some jurisdictions in the United States charge as much as $200,000 for an initial license that includes recurring administrative fees in the tens of thousands of dollars per year. Such medical programs make Oklahoma's almost surrealistically low fees seem like a program from 30 or more years ago. Calling the state's approach "democratic" or "libertarian" does not quite match the significance of what is quickly becoming one of the largest fully regulated and tax-collecting industries in the state.
Patients are permitted to hold up to three ounces of cannabis loose-leaf flower on their person and can store as much as eight ounces at their residence. Patient status also affords participants the legal right to grow six mature (flower stage) and six immature (vegetative stage) cannabis plants. Hydroponics companies are obviously leveraging this opportunity to promote home cultivation, selling equipment and installation services.
Business Opportunity
In June 2021, MJBiz Daily described Oklahoma as "the most unfettered medical cannabis market in the country." MJBizFactbook projects retail dispensary sales in the state will reach between $900 million and $1.1 billion in 2021 (an increase of 25 percent from 2020).
Compare Oklahoma's $2,500 business license fee to that of New York, which features an application fee of $10,000 and a registration fee of $200,000. Or perhaps Arkansas's medical program and $100,000 license fee, including a half million dollar performance bond requirement.
Low license fees have little positive impact in states that place severe caps on the number of licensees allowed. This is another area where Oklahoma earns its title as the "most unfettered" medical program in America: It has chosen to place no cap on the number of licenses it assigns.
This has resulted in more than 13,000 licensed medical cannabis businesses in the state. This includes:*
7,400 cultivators
2,477 retail dispensaries
1,555 processors
134 transporters
26 testing laboratories
Nine waste disposers
One for research
*As of October 5, 2022 according to the Oklahoma Medical Marijuana Authority.
In addition—and unlike many states and the entire nation of Canada—Oklahoma allows its licensees to do things like advertise using roadside billboards.
According to the Denver Post, "Small [Oklahoma] towns from the panhandle to the Missouri border boast more pot shops than grocery stores. Meanwhile, Oklahoma County, which is home to Oklahoma City, now sports 530 dispensaries—three times as many as Denver."
Image courtesy The Toklahoman
Oklahoma is also outperforming considerably more populous siblings such as Ohio. The Buckeye State, which legalized medical pot in 2016 and features a population of about 12 million, will generate sales this year of $350-425 million. This is less than half of Oklahoma's billion dollar market, a state with a population of less than one-third that of Ohio. If the mantra in neighboring Texas is "Go big or go home," perhaps Oklahoma should promote itself with "We do more with less."
Push for Profit
However, the lack of a limit on the number of licenses—including no limit for individual companies—is no panacea. While patients reap the reward of Oklahoma's hyper-competitive market in the form of lower prices, the situation is different for vendors. Many cannabis companies in Oklahoma are straining to produce a reasonable profit.
"Competition is brutal in the dispensary business in Oklahoma."
Once the numbers are considered, it is no wonder. According to Politico, "competition is brutal in the dispensary business in Oklahoma." One example is Ardmore, a town of 25,000 in southern Oklahoma halfway between Oklahoma City and Dallas, that features 47 licensed retail dispensaries (that's one dispensary for every 530 people). Another is Ada, a town about 1.5 hours southeast of Oklahoma City with 18 dispensaries and only 17,000 residents. The statewide average is even more dramatic: There is one dispensary for every 150 citizens in the state of Oklahoma.
The result? Thin, unsustainable profits. "Margins are too slim to make any real money," said Bill Moore, the owner of the NatureMeds dispensary in Ardmore.
Two-year Moratorium on Licences
On August 26, 2002, Oklahoma imposed a two-year ban on cultivation, processing, and dispensary licenses in the state. MJBizDaily reported on August 2 that Oklahoma's regulators "have struggled with curbing illicit marijuana activity and getting businesses to comply with industry regulations, including more stringent rules."
The moratorium expires on August 1, 2024. The moratorium could end earlier if the Executive Director of the OMMA determines that all pending license reviews, inspections, and investigations are complete.
Ban on Bans
The biggest difference between Oklahoma's implementation of legal cannabis and that of other states—including progressive pioneers such as Colorado and Washington (the first two states to legalize adult-use cannabis, back in 2012)—is the fact that Oklahoma's law allows no jurisdictional banning.
In other words: Municipalities, counties, and townships in Oklahoma cannot prevent cannabis businesses from operating within their borders. With reports of new adult-use legal states like New Jersey having already experienced cannabis business bans in upward of 70 percent of its jurisdictions, Oklahoma's ban on bans is probably its greatest differentiator among medical and adult-use states.
Ferreting the Fraudsters
The wild west environment in Oklahoma has attracted both good and bad players. With such a large number of cultivators and retail dispensaries, even a small percentage of fraudulent companies and individuals has produced a significant number of illegal, unlicensed operations.
On February 22, 2022, Oklahoma's Republican governor, Kevin Stitt, addressed the media:
"I told Oklahomans that bad actors have no place in Oklahoma. I said we will find them, we will hunt them down, we will bring them to justice. That's exactly what we're doing today. This is setting a standard."
His statements were part of the Oklahoma's official announcement of a year-long multi-agency investigation involving 200 "state, federal, and local officers" that seized about 100,000 cannabis plants and 200,000 pounds of marijuana.
"These criminals try to blend into our state's medical marijuana program while trafficking marijuana onto the illicit market around the United States, laundering money and moving millions of dollars in illicit drug proceeds overseas," said OBN spokesperson Mark Woodward.
"For over a year, [the Oklahoma Bureau of Narcotics] (OBN) has been targeting numerous individuals and organizations that have moved to Oklahoma from out-of-state and used fraudulent business structures and 'ghost owners' to obtain their Oklahoma Medical Marijuana licenses.
"These criminals try to blend into our state's medical marijuana program while trafficking marijuana onto the illicit market around the United States, laundering money and moving millions of dollars in illicit drug proceeds overseas," said OBN spokesperson Mark Woodward.
The OBN reported that additional large-scale enforcement operations are planned and that the state is actively investigating hundreds of potentially illegal cultivation facilities within the state.
"We are sending a clear and powerful message today that Oklahoma is not a safe haven for criminals who think they can hide behind a Medical Marijuana license," said OBN Director Donnie Anderson. "My agency is committed to aggressively targeting and dismantling these marijuana trafficking organizations that threaten the safety and well-being of our citizens and the law-abiding marijuana businesses in our state," he told the press.
The Future
Will Oklahoma embrace adult-use cannabis in the near future? Will state or federal authorities clamp down on the freewheeling open market that Oklahoma fosters, similar to how marijuana businesses in states like California and Colorado have suffered raids in the past?
In summary, the three factors that make Oklahoma's medical pot program truly exceptional in North America include:
No cap on the number of cannabis business licenses granted (with recognition to the two-year moratorium currently in effect).
No qualifying conditions for patient participants.
No county or municipal bans on cannabis businesses permitted.
Any of these policy positions, alone, would give the Oklahoma medical cannabis market a boost over the average state. Combined, these factors create a unique and powerful opportunity for entrepreneurs while simultaneously maintaining a hyper-competitive marketplace that, in theory, benefits patients.
While there is obviously ample opportunity for entrepreneurs in Oklahoma, operating in the state also carries greater risk due to a significantly elevated level of competition. This situation is exacerbated by a lack of legal channels to export overproduction to out-of-state customers.
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