Examination of Market Segmentation among Medical Marijuana Dispensaries

As medical marijuana legislation becomes more common, concerns arise about the overconcentration of dispensaries, raising questions about the number of medicinal marijuana dispensaries (MMD) needed to serve medicinal users.

This paper applies niche-marketing theory-which suggests dispensaries market to specific types of people-to examine if MMDs might be targeting recreational users. Observed differences between dispensary populations and between dispensary clients and local residents may indicate that dispensaries are drawing in patients based on factors other than medical need.

Data were collected via exit surveys with patients at four dispensaries in Long Beach, CA. A total of 132 patients were surveyed regarding demographic data, purchase information, medical condition, and nearest cross street for their home address. Census tract information was collected for every dispensary.

Chi-squared tests show significant associations between dispensary visited and race (χ² = 31.219, p < 0.001) and significant associations between medical condition and dispensary visited (χ² = 22.123, p < 0.05). Lastly, we found that all four of the dispensaries had patients who were different from community residents in some characteristics.

There were significant differences relating to race, medical condition, and distance traveled across dispensaries. Results suggest dispensary users do not necessarily reside in the same area in which dispensaries are located and do not necessarily reflect the local population. Taken together these results provide some support for market segmentation.