Michigan’s Marijuana Industry Faces Oversupply and Strain
The marijuana industry in Michigan is facing a crisis, with oversupply and falling prices causing many businesses to struggle to stay afloat. According to the Cannabis Regulatory Agency, sales of both medical and adult-use recreational marijuana declined in June, with combined cannabis sales totaling $261.1 million, down $11.5 million from the previous month.
The oversupply of marijuana is attributed to the rapid growth of the industry, with many new operators entering the market. This has led to a glut of product, causing prices to plummet. Jerry Millen, owner of Greenhouse, a dispensary in Walled Lake, said that the industry is “oversaturated” and that too many stores are selling products at a loss.
The decline in sales has also led to a shift in consumer behavior, with many opting for cheaper alternatives, such as home cultivation or buying from friends and family. This has resulted in a decrease in demand for traditional retail products.
The situation is particularly challenging for smaller businesses, which are struggling to compete with larger operators. Millen said that revenue at his store has fallen by about 50% over the past two years, with profits down by about 70%.
Some larger operators, such as Canadian cannabis giant TerrAscend, have already announced their exit from the Michigan market. The company plans to sell or divest its assets in the state, which include four growing facilities and 20 dispensaries. TerrAscend’s decision to leave the market is a blow to Michigan’s cannabis industry, which has struggled to establish itself as a major player in the national market.
The decline of the Michigan cannabis industry is also attributed to the lack of federal legalization, which has made it difficult for businesses to access capital and navigate the complex regulatory environment. Kevin Sabet, director of the advocacy organization Smart Approaches to Marijuana, said that the industry is “very difficult” due to the lack of federal regulation and the competition from illegal markets.
To address the crisis, some industry experts are calling for a halt to new licenses and a focus on supporting local, knowledgeable businesses. Millen said that he would like to see federal legalization, which would result in tax savings for marijuana businesses. He also called for lawmakers to work with industry entrepreneurs to create fair, realistic regulations.
In the meantime, many cannabis businesses are struggling to stay afloat, and some are forced to reduce prices or sell inferior products. The situation is a reminder of the challenges facing the cannabis industry, which is still in its early stages of development.
