In its quarterly public meeting last week, Michigan’s Cannabis Regulatory Agency (CRA) trumpeted stats showing sales are up by as much as 25% compared to the state’s last fiscal year ending in June. With a slight decline in cannabis sales in May compared to April however, some believe the state’s worst problems could catch up to it.
CRA Director Andrew Brisbo reported medical sales have fallen 48% from a year ago to $23.3 million per month in May and adult-use sales have increased by 56% to $163.2 million per month in May, down 2.8% from last month.
Unlike many other states, Michigan also reports the number of plants in production. Last month the overall plant count also skyrocketed for adult use, jumping from 403,471 adult-use plants in production in May 2021 to 1,126,881 adult use plants in May 2022.
While an increase of year-to-year sales is an unambiguous success, the value of harvested plants has plummeted. Flower sold on a per-pound basis was roughly $2,090 last May, down from roughly $10,525 in January 2020. Observers attributed the drop to an increasingly disproportionate ratio of growers to consumers in the state.
Between the lack of consumers to sell it to, the oversaturation of growers, and controversies related to testing, some in Michigan believe danger is around the corner.
Rick Thompson, executive director of Michigan NORML, believes his state’s market has become a “Wild West”, due to a lack of regulation on licenses as well as problems with testing regulation, which could bring a reckoning to the state’s industry, especially on smaller operations.
“The amount of plants far exceeds what we can buy,” Thompson says. “We need to enact some sort of license control because there is no way most people can stay around.”
Thompson believes testing issues, despite areas of improvements, are a significant issue which has shaken faith in the regulated market as well. He cites a new report on testing company Viridis regarding THC testing potency. The actions of Viridis could lead to more recalls costing the state’s industry millions of dollars, posits Thompson.
George Birkho, executive director of the Michigan Caregivers Association, warns such an unregulated market threatens the survival of smaller growers and dispensaries at the expense of larger, corporate entities.
“We tried to educate these folks and tell them what would happen. Now people are practically throwing it out onto the street,” Birkho says. “The growing is out of control and the little guys keep getting caught in the crossfire.”
While both men believe the CRA is doing a good job of handling the market, they think stricter enforcement is needed to regulate the industry and create parity within to prevent large, widespread monopolies. This includes tighter regulations on grow licenses, particularly capping the number of them in the state.
Detroit’s late (or never) entry to the market has also affected sales. Currently, Michigan’s largest city has lagged behind other communities as adult use dispensaries have been banned from operations for the past two years as the result of a series of lawsuits. Currently, the city is being sued by two entities who claim that the city’s newest adult use ordinance – which was intended to give longtime Detroiters an equitable opportunity to get into the industry – is discriminatory and threatens to push medical providers out of business.
