Michigan will seek to weave tribal cannabis operations with state regulatory systems this year, says Marijuana Regulatory Agency Director Andrew Brisbo in a quarterly check in with Grown In. He also thinks the market won’t grow as fast as it did in the last year, and is just now settling into patterns.
[Interview edited for grammar and clarity.]
Grown In: In your Senate committee testimony at the end of last month you predicted a $1.4 billion market for cannabis by the end of the year. That seems like a come down in terms of growth compared to what it was last year. Can you explain that prediction a bit?
Andrew Brisbo: That’s just doing math based on the sales so far this fiscal year. I think that might have been a fiscal year prediction. So, if there is substantial growth beyond what we’ve seen in the first four months but when I have the February data it could exceed that. But that was just looking at the monthly averages so far this fiscal year. And we did see a bit of a dip in the fall last year, which I think might be indicative that that’s kind of how the market will function in the future. But sales went up in January, so we had $108 million in sales in January versus, you know, $91 million in November. So if that continues, then then we could still exceed that.
Grown In: And the fiscal year ends June 30th?
No, September 30th.
Grown In: September 30th. Okay,
Brisbo: If we look at the monthly aggregate total at the end of last year, the volume of products being sold actually went up. The retail price started to come down as well.
Grown In: The unit totals were consistent, but because the cost of the unit overall sales.
The economics of this market in Michigan because it’s still relatively new and supply is growing. Municipalities are coming on. Demand is, you know, fairly static, though maybe more accessible as more stores open. It’s hard to really develop patterns from it.
Grown In: Can you provide an update on the social equity recommendations? Which ones should we expect to see put to work soonest?
Brisbo: I think there are some that our group, our social equity team at the MRA is already implementing. Additionally, this month we’ll have our first meeting of the standing Diversity, Equity, and Inclusion workgroup. And through that group we’re gonna continue to pursue some of those other ideas as well. Obviously those that would take statutory or rule changes are predicated on those processes as well.
Grown In: So, Director, what’s the status of efforts to merge the adult-use and medical license types? You didn’t mention it as a priority in your Senate committee testimony. Is it still a goal for this year?
Brisbo: It’s still one of the legislative priorities. There were some other issues that I’m working on as a greater priority in this early legislative session.
Merging the markets and consolidating the statues is a huge lift. It’s a complete overhaul of the statutory structure. So, that’s something that takes a little more time and energy to devote to and with a lot of new members in the Legislature now, we want to educate them on the priorities of the agency, when it comes to legislative changes. So, taking some smaller bites, if you will, I think there’s still an interest in thinking ahead to how the policy that surrounds this industry should shift as the landscape of the industry itself shifts.
Grown In: One of your legislative goals and your testimony was to obtain negotiation powers with tribes. Can you explain what topics you’d like to negotiate on?
Brisbo: It’s not really negotiation. It’s entering into compacts and agreements for intergovernmental commerce if you will. The situations we’re seeking would allow the MRA to enter into those agreements with interested tribes so that there could be commercial involvement both for tribal operated and regulated markets doing business with the state regulated market. So, in those agreements, we would want to look at standardization of processes and testing and tax equalization. Things of that nature.
Grown In: As part of those discussions, would you consider allowing products that are produced entirely on tribal lands to be sold in the state of Michigan?
Grown In: The number of medical patients is down, and so is the number of medical-only dispensaries this year. Is this a concern for you as a regulator?
Brisbo: Actually, the number of patients has gone up this year. We reached the low point last year of 241,000. Now it’s back up to 245,000.
You know, the ability for individuals to obtain a patient registry card has actually streamlined and made that process easier. So that is still open, so the number doesn’t concern me. Still open to individuals that are interested in pursuing a registry card. I think it’s expected that the number of medical-only licensed facilities will decline with adult use legalization and the proliferation of that market. We want to make sure that the patient access is maintained. But we still have a relatively high number of licensed provisioning centers. That hasn’t diminished quite as quickly as we thought it might. So, I still think there’s a reasonable amount of access for patients in the current market.
Grown In: Why are there so few micro business licensees?
Brisbo: I think that there’s a couple of factors there. The first is that’s one of the few license types that was available from the beginning to individuals who weren’t already licensed on the medical side. So, the vast majority of licenses we’ve issued in the adult use market where the businesses that were already operating in the medical space, so they had, you know, an established business and location that they just needed to expand the scope of operation into the adult use market.
And the second is just being a new license type in the adult-use market, municipalities played a role in determining how to address those, and I think it’s a challenging model for municipalities to zone because it is an operation that’s growing, processing, and selling product. So, the location of those different types of operations, where they’re separate are typically zoned in different places. And I’m not sure every municipality has made decisions on where those should be located.
And then I think the third kind of that same point, from a business operator’s perspective is it’s one of the most complex business types. Because you are doing all of those operations under one roof. It’s got a firm cap on the number of plants that you can grow. So, I think it’s relatively new. It’s it’s, uh, it’s sort of a novel concept. Even nationally, there aren’t a lot of states that have a similar business type, so there’s been a lot of interest in a lot of questions, so I think we’ll see more of those over time. So I think those are the primary factors.
Grown In: As you keep mentioning, there’s still a relatively low number of small number of municipalities that allow marijuana licenses. As a result, larger cannabis companies, as we reported last week, are buying or taking options on available land in these limited municipalities before they even apply, blocking out smaller, independent competitors. Is this a concern for you? Do you have any ideas on how it might be solved?
Brisbo: So, the law clearly gives municipalities an opportunity to decide how and if they want to approach commercialization and the availability of commercial businesses in their municipalities. So, that’s really up to local officials to decide what’s best for them. I don’t foresee that changing. I still think there’s room in this market across the state for businesses of various sizes. And while we still have vastly more municipalities that don’t allow for commercial operations versus those that do, we see steady progress and the number of municipalities opting in. So, I think over time that will start to shift. I think sometimes it gets forgotten that the commercial market in Michigan – the entire market and if we go back to the beginning of the medical commercial market – is about three years old.
So, it’s still relatively new and obviously, the adult-use market is only about a year old, so there’s still a lot of learning and growth to be done. And I think we’ll continue to see that evolve over time.
Grown In: In that vein, would you ever consider reporting the average wholesale price of flower like they do, say, in Oregon?
Brisbo: The issue we have with wholesale prices is tracking that in the statewide monitoring system is based on the data that’s input by the businesses themselves. And because we have so many who are vertically-integrated, I don’t think the wholesale price that they input is reflective of market value. So, I think that number is a little misleading. I think it’s interesting from a relative measure perspective, but not an absolute measure. I don’t think that will report on that publicly.