From Opioids to Cannabis: The Impact of Cannabis Rescheduling on Pharmacy Revenue Streams

A year ago, the management of Novus Cannabis MedPlan, a health insurance carrier that includes cannabis in health plans, made a bold statement about the impact of the opioid settlement on the pharmacy industry and the rise of cannabis as a new revenue stream. Their argument was based on the notion that pharmacies could transition from generating revenue from opioids to earning more money from cannabis, capitalizing on the growing legalization and broader acceptance of cannabis in the US. This is also in response to the Health and Human Services (HHS) review, which suggested that there will be an increase in oversight fees and additional staffing for pharmacies.¹

It’s time to assess what the current landscape looks like for pharmacies exploring cannabis as a potential revenue source. Image Credit: © mast3r - stock.adobe.com

More recently, the DEA published proposed rules in the US Federal Register to reschedule marijuana from Schedule I to Schedule III, which initiated a 62-day public comment period. The DEA explained that they would be accepting public comments until July 22, 2024. If marijuana is rescheduled, US cannabis dispensaries would need to register with the DEA in a fashion similar to regular pharmacies, while fulfilling strict reporting and recordkeeping requirements. This may place existing pharmacies that are able to manage these requirements in a particularly advantageous position.

With this news, it’s time to assess what the current landscape looks like for pharmacies exploring cannabis as a potential revenue source.

The Opioid Settlement: A Catalyst for Change

The opioid crisis has been a significant public health issue, leading to widespread addiction and overdose deaths. In response, numerous lawsuits were filed against pharmaceutical companies, leading to a historic settlement where major opioid manufacturers and distributors agreed to pay billions in compensation.² This settlement was not just about financial reparations but also about reshaping the future of pain management and pharmaceutical sales. Novus suggested that this could be a turning point for pharmacies, as they would need to find new revenue streams to replace those lost from declining opioid prescriptions.

The impact of the opioid settlement on pharmacies is becoming more evident as time goes by. Independent pharmacies, in particular, have been struggling due to stricter regulations and the decrease in opioid prescriptions, leading to reduced revenue. However, the financial impact of these issues does vary depending on the size of the pharmacy and its reliance on opioid sales. While larger chains have been able to offset the loss of these sales through diverse revenue streams and adjustments in their business models, smaller independent pharmacies have faced more significant challenges and have had to adapt quickly to survive.³

The cannabis market is expected to grow at a compound annual growth rate of 53.3% from 2024 to 2030, driven by the increasing number of clinical trials for cannabis-based pharmaceuticals, the growing legalization of medical cannabis, and rising awareness of its medical benefits. This growth presents a significant opportunity for pharmacies, potentially filling the gap left by opioids and allowing them to offer these products safely and responsibly.

Legal Landscape and Regulatory Environment

Although the cannabis market has seen robust growth, the integration of cannabis sales into traditional pharmacy models has been slower than anticipated. Federal regulations still classify cannabis as a Schedule I substance, and until the DEA takes action on its proposed rule, legal and regulatory barriers for pharmacies remain. Many pharmacies will be waiting for more precise federal guidance before fully committing to cannabis sales.

Pharmacies must stay informed about changing regulations and be prepared to adapt quickly. This may involve working with legal experts to navigate complex compliance requirements and advocating for clearer federal regulations that would allow pharmacies to participate fully in the cannabis market.

Pharmacy Adoption and Strategies

Despite the challenges, some pharmacies have started to look into cannabis-related products, mainly focusing on CBD (cannabidiol) products derived from hemp, which are legal under federal law. These products are being promoted for their potential therapeutic benefits, such as pain relief and anxiety reduction, without the psychoactive effects of THC (tetrahydrocannabinol).

Pharmacies have also been exploring partnerships with cannabis companies and Novus Cannabis MedPlan insurance plans, allowing them to offer various products while navigating regulatory complexities and ensuring more than adequate reimbursement. These partnerships can give pharmacies access to expertise in the cannabis market, helping them understand product quality, customer preferences, and legal compliance.⁵

Consumer Demand and Trust

One critical factor for the success of cannabis as a pharmacy revenue stream is consumer demand. There is growing interest in cannabis products for health and wellness, driven by increasing awareness of their potential benefits. Pharmacies, with their established reputation for safety and trust, are well-positioned to capitalize on this demand.⁶

However, building consumer trust requires pharmacies to provide high-quality, consistent products and to educate customers about safe and effective use. This involves training pharmacy staff, developing clear guidelines for product selection, and establishing solid relationships with reputable cannabis suppliers.

Strategic Partnerships and Innovation

To succeed in the cannabis market, pharmacies must innovate and form strategic partnerships. This could involve collaborations with cannabis producers, technology companies, and health care providers to create integrated solutions that meet customer needs. These partnerships can provide pharmacies with access to expertise in the cannabis market, helping them understand product quality, customer preferences, and legal compliance.

For example, Novus Cannabis MedPlan has received numerous inquiries from pharmacies that want to partner with us to create personalized cannabis wellness plans. These plans would combine cannabis products with other health and wellness services. Additionally, pharmacies could utilize technology to track customer preferences and outcomes, which would help refine product offerings and improve customer satisfaction.

Conclusion

A year later, the pharmacy industry is seeing the effects of the opioid settlement, with a clear need to diversify revenue streams.⁷ Cannabis presents a promising opportunity, and with the right strategies and partnerships, pharmacies can successfully pivot to cannabis as a new revenue source, redefining their role in health care. As the legal landscape changes and consumer demand for cannabis products grows, pharmacies can offer safe and effective cannabis products alongside traditional pharmaceutical services.

The DEA will have a hearing on December 2, 2024, regarding the potential reclassification of cannabis to Schedule III. This reclassification could significantly impact the regulatory environment for pharmacies and their involvement in the cannabis market. Pharmacies must seize the first-mover advantage at this point: Cannabis can be an essential part of the pharmacy business model.

REFERENCES

1. State Opioid Response Grants: Substance Abuse and Mental Health Services Administration. HHS. 2024. Accessed September 9, 2024. https://www.samhsa.gov/sites/default/files/grants/pdf/fy-2024-sor-nofo.pdf

2. Executive Summary of National Opioid Settlements. National Opioid Settlement. May 6, 2024. Accessed September 9, 2024.https://nationalopioidsettlement.com/executive-summary/

3. Hill KP. Medical Use of Cannabis in 2019. JAMA. 2019 Sep 10;322(10):974-975. doi:10.1001/jama.2019.11868

4. Cannabis Pharmaceuticals Market Size, Share & Trends Analysis Report. Grand View Research. Accessed September 9, 2024.https://www.grandviewresearch.com/industry-analysis/cannabis-pharmaceuticals-market

5. Shulman H, Sewpersaud V, Thirlwell C. Evolving Global Perspectives of Pharmacists: Dispensing Medical Cannabis. Cannabis Cannabinoid Res. 2022 Apr;7(2):126-134. doi:10.1089/can.2020.0144 2024

6. Marijuana Industry Statistics & Data. Flowhub. 2024. Accessed September 9, 2024.https://flowhub.com/cannabis-industry-statistics

7. Labrozzi F. Opioid Settlement May Spur Cannabis as Potential New Pharmacy Revenue Stream. August 30, 2023. Accessed September 9, 2024.https://www.pharmacytimes.com/view/opioid-settlement-may-spur-cannabis-as-potential-new-pharmacy-revenue-stream