Are Pharmacies the New Dispensary Model? Utah Thinks So
Georgia has captured national attention by allowing medical cannabis to be sold through independent pharmacies. Utah has spent the past six years developing another version of the pharmacy model, one designed specifically for cannabis.
Utah’s medical cannabis pharmacies do not dispense conventional prescription drugs. They sell cannabis products exclusively, but each location must have a licensed pharmacist available to consult with patients about dosage, delivery methods, medications, and possible drug interactions.
With medical marijuana’s move to Schedule III and adult-use reform hopefully not far behind, the outlines of a national medical model are beginning to take shape. Cannabis businesses preparing to participate in a federally regulated medical market may need more clinical oversight, stronger manufacturing standards and tighter inventory controls than most dispensaries currently provide.
Narith Panh, chief growth officer at Dragonfly Wellness, believes Utah offers an early look at how such a system could operate.
“Utah is the blueprint for what a future Schedule III medical cannabis future looks like,” he said.
A Pharmacy Instead of a Dispensary
Utah opened its medical cannabis market in 2020 with physician involvement, patient cards and a limited number of licensed pharmacies. State lawmakers have shown little interest in legalizing adult-use cannabis, leaving the medical program as the only regulated path to marijuana in the state.
Dragonfly operates two of Utah’s 15 medical cannabis pharmacies. Patients are required to consult with a pharmacist when they enter the program, regardless of their previous cannabis experience.
The pharmacist reviews why the patient is seeking cannabis, what medications the patient takes and whether there are potential contraindications. The consultation can also cover dosage, product format and how the patient has responded to cannabis in the past.
Panh points to the difference between walking into a retail dispensary and asking a budtender what to buy.
“We have people who have real conditions that are seeking cannabis as an alternative treatment,” he said.
Many are using cannabis for the first time. Some want symptom relief without feeling high. Others are older patients or people managing serious conditions while taking several prescription medications.
Panh said cannabis should not be presented as completely risk-free merely because it is considered safer than many other controlled substances. Consumers should be aware of possible drug interactions and how delivery method and dosage can affect the experience.
“If you really want to consider cannabis as medicine, it’s important to understand your medical history,” he said.
A first-time patient would not be directed toward a concentrate or another high-potency product without understanding the possible effects. The pharmacist can recommend a lower dose or a delivery method more appropriate for the patient’s needs.
Medical and Adult Use May Follow Different Paths
While medical marijuana has moved to Schedule III and adult-use cannabis remains federally illegal, Panh believes the two markets could eventually operate under different federal systems. Medical cannabis would move through physicians, pharmacists, and licensed healthcare facilities. Adult-use cannabis could eventually be regulated more like alcohol.
Businesses would then have to decide which market they intend to serve.
Panh does not expect adult-use dispensaries to disappear. He sees a continued place for products sold to consumers 21 and older without physician involvement. Participation in a medical market would carry different responsibilities and costs.
A company could continue selling to adult consumers, enter a medical system or create separate operations for each. Businesses choosing the medical path may need pharmacists, DEA registration, pharmaceutical quality systems, and more extensive documentation than state cannabis laws currently require.
The elimination of the Section 280E tax burden has been one of the most anticipated financial effects of Schedule III. Panh said the industry should also account for the cost of meeting medical standards. Hiring licensed pharmacists adds a considerable payroll expense. Pharmaceutical quality management systems can be costly to implement and operate, while facilities may need additional security, inventory controls, manufacturing procedures, and employees trained to maintain federal records.
“If you want to talk about this big 280E relief that you’re going to get, you’re giving all that right back to all of these extra costs,” Panh said.
Small independent dispensaries could have the hardest time absorbing those expenses.
Manufacturing Standards Will Carry More Weight
Dragonfly manufactures cannabis products under good manufacturing practice standards, according to Panh. The company collects safety and sourcing information from suppliers and uses internal systems to document materials and production.
Panh said Utah’s requirements have already pushed Dragonfly toward the standards expected of conventional controlled-substance manufacturers.
He expressed concerns over the need for product consistency when cannabis is used by patients with cancer, autoimmune diseases and other serious conditions. Manufacturers must be able to document what is in a product, where its ingredients came from, and whether one batch is consistent with the next.
Finished-product testing provides only part of the record. A certificate of analysis can report cannabinoid potency and screen for designated contaminants, but it does not document every supplier, material or production step.
“How are you going to prove to anybody what is actually in your product?” Panh said. “How are you going to prove that your product was derived safely?”
Quality management systems used in pharmaceutical production track each stage of manufacturing. They also document deviations, investigations, and corrective actions when a batch does not meet specifications.
Panh expects medical buyers to look closely at testing, residual solvents, pesticides, ingredient sourcing and manufacturing records before purchasing cannabis products. A pharmacist or medical facility unfamiliar with cannabis is likely to favor suppliers whose standards resemble those already used for other medicines.
Dragonfly has invested heavily in these systems, he said. The added controls increase production costs and may prevent the company from offering the least expensive products in the market.
Dragonfly Is Preparing for Interstate Commerce
Utah’s limited-license system restricts how much Dragonfly can expand inside its home state, limiting its growth opportunities.
State law prevents a single operator from controlling more than 25 percent of Utah’s pharmacy licenses. Dragonfly currently has two locations, while Curaleaf holds four.
Utah plans to open a 16th medical cannabis pharmacy in Moab. A 17th license is expected to follow, although existing Utah operators will not be eligible to receive it, according to Panh.
“We don’t have an opportunity to grow if there is no opportunity to go interstate commerce,” he said.
Dragonfly is pursuing DEA registration partly to be ready if federally authorized interstate sales become possible.
Panh envisions a system in which a DEA-registered manufacturer supplies another registered medical facility. A conservative state without a cannabis program could provide patients with access without first licensing in-state cultivation and manufacturing.
Idaho is a like prospect since it shares a border with Utah but has not established a medical cannabis program. A future federal system could allow an Idaho pharmacy to obtain products manufactured by a registered Utah company, depending on the rules adopted by federal and state regulators.
Panh believes transactions between DEA-registered facilities could eventually offer the ability to do business across state lines.
“If you are a traditional pharmacy in another state and you want products that are GMP manufactured, that are registered with the DEA, who are you going to buy those from?” he said.
Schedule III does not currently establish unrestricted interstate commerce for products made under state cannabis programs. DEA registration, FDA requirements, and state licensing laws will determine which businesses may manufacture, transport, and dispense them.
Dragonfly does not intend to become the immediate test case through an unauthorized shipment, Panh said. Its registration and manufacturing investments are intended to put the company in a position to act once regulators establish a workable route.
We Still Need FDA Approval
The FDA has remained conspicuously absent while state cannabis markets developed without a federal framework for their products. Schedule III could finally bring the agency into a more active role.
Companies seeking approval for products intended to treat a specific condition must provide evidence of safety, efficacy, and manufacturing consistency. GMP compliance supports an application but does not replace clinical research.
Panh believes whole-plant products may have a future under the FDA’s botanical drug pathway, which accommodates complex plant-derived mixtures rather than a single isolated compound. Manufacturers must prove consistency across raw materials, production processes and finished products, a challenge when cannabis varies by cultivar, growing conditions, harvest and extraction method.
Panh pointed to German pharmaceutical company Vertanical and its whole-plant cannabis drug candidate for chronic lower back pain. Its progress could help establish how regulators evaluate medicines containing several cannabis compounds.
Few cannabis businesses have the capital to conduct late-stage clinical trials or complete a new drug application. Pharmaceutical companies have much larger research budgets and extensive experience with FDA approval.
Utah’s Need for Medical Cannabis
Dragonfly entered the Utah market partly in response to the state’s opioid epidemic and mental health needs. Panh said Utah’s conservative culture and religious attitudes toward alcohol and other substances have contributed to a greater reliance on medications prescribed by doctors.
Utah has consistently reported a higher rate of lifetime depression than the country overall, while its suicide death rate also exceeds the national rate.
Medical providers remain reluctant to recommend cannabis, however. Panh estimated that about 1,100 of Utah’s more than 30,000 providers participate in the program.
“I don’t fault them,” he said. “You want me to just start prescribing cannabis, and I don’t even know about it?”
Utah may also face a shortage of cannabis-trained pharmacists. Panh estimated that roughly 100 pharmacists have completed the education required to work in the state program. Demand for cannabinoid training could rise quickly if pharmacists become part of a national medical cannabis model.
Bringing Cannabis Into the Healthcare System
Utah still operates cannabis separately from conventional medicine.
Patients need a qualifying condition and state authorization, purchase products from cannabis-only pharmacies, and pay out of pocket.
Panh believes Schedule III could eventually move medical cannabis into the existing healthcare system. A doctor could prescribe it as a controlled substance, a pharmacy could dispense it and insurance could help cover the cost. Patients would no longer need to enter a separate state program.
Cost will be critical. Panh contrasted a $10 insurance copay for an opioid prescription with approximately $40 for an eighth of cannabis.
“It’s actually not a real choice that people have,” he said. “They’re going to take the opiates all day long because it’s all that they can afford.”
FDA approval, insurance reimbursement policies, and new federal regulations would be required before medical cannabis could operate this way. Utah’s use of pharmacists and medical providers offers an early version of the care model, even though it remains outside the conventional prescription and insurance system.
What Happens to the Dispensary?
Utah adopted a pharmacist-led system while much of the cannabis industry was moving toward adult use. Federal policy is now favoring a model centered on medical marijuana.
Dispensaries may have to look more like healthcare facilities as cannabis enters the medical system. Some states may require pharmacists in cannabis-only stores, as Utah does. Others may allow traditional pharmacies to dispense cannabis, following Georgia’s lead.
“Customers are transactional,” Panh said. “Patients, you’re building a relationship for a lifetime with them. Real patient care. It’s a very different model.”
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