As the marijuana market diminishes, Canadian entities are focusing on selling medical marijuana to patients whose employers provide MMJ health benefits. Alberta’s Aurora Cannabis and other market players have taken up a benefits-focused clinical strategy even as prices fall in the country’s broken-down, aggressive adult-use marijuana market.
But the uptake of medical cannabis benefit coverage is low. Prior to adult-use legalization, analysts expected the coverage would be a great area for self-insured benefits plans. That didn’t manifest as expected because few have adopted the coverage. This coverage has two types — the self-insured and the fully insured — says Mike Sullivan, an employee of Cubic Health, an employee consultancy firm.
The benefit-focused strategy seeks an avenue for higher-margin growth in this maturing market. However, cannabis entities say serving benefit-covered patients comes with high costs for education, research and customer relations.
Aurora Cannabis, which commands a 24% stake in the market, has channeled its business toward medical marijuana citing reliance on insured customers whose benefits cover MMJ. This has accounted for 80% of the company’s $17.2 million revenue in its first quarter. Those in an insured program buy more often and stay on similar medication for longer as opposed to the noninsured customers. Additionally, medical marijuana generates twice the profit of recreational marijuana in sales.
Aqualitas, a Nova Scotia cannabis producer. also said about 75% of its sales is from insured clientele. Ontario’s Entourage Health also records 90% of its revenue from insured clients bringing in $2.3 million in the recent financial quarter. Entourage absorbs the cost of consumer education, call centers and physicians, which in the process affects its margins.
Entourage Health CEO George Scorsis says the company’s margins on medical marijuana are not higher than for adult use. The profit is affected by the daily running of the business in terms of clinical work, product development, etc.
The Canadian medical cannabis market stood at $68.5 million by the third quarter of 2022 denoting that it runs into $274 million yearly. Veterans from the military are the largest beneficiaries of the benefit-covered medical marijuana project, spending $143.7 million of cannabis reimbursements in the 2022–2023 financial year.
Ned Pojskic, vice president of Green Shield Canada, the fourth-largest benefits company in the country, says prior interest in benefits coverage of medical marijuana failed to capture broad interest. Human resource leaders have been focusing on drug costs and the COVID-19 pandemic in relation to sales, among other things. Benefits expert Sullivan said after the legalization of adult-use cannabis in 2018, Canadian companies lost focus on medical marijuana. Aurora’s Martin agrees with Pojskic that extensive research could increase the benefits acceptance of medical cannabis.
As more players such as India Globalization Capital Inc. (NYSE American: IGC) go a step further and develop approved cannabis-based pharmaceuticals, the medical insurance industry is likely to move faster along the path of covering medical marijuana for policyholders.
NOTE TO INVESTORS: The latest news and updates relating to India Globalization Capital Inc. (NYSE American: IGC) are available in the company’s newsroom at https://cnw.fm/IGC
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