Retail adult use cannabis prices in Michigan are half of what they were a year ago and newly reported data from state regulators suggest they have even further to drop this year. The Michigan Cannabis Regulatory Commission reports that last month, cultivators in the state have three times as much flowering cannabis than they did in August 2021, which precipitated a major price collapse over the winter. Despite tremendous consumer demand, adult use prices have not recovered to previous levels.
Here are five charts that put Michigan’s adult use cannabis price crash in perspective.
Despite 3 million fewer people than Illinois, Michigan’s total cannabis sales have mostly surpassed the Land of Lincoln in 2022. Illinois, which hasn’t added a new operating dispensary or cultivator since April 2021, has mostly stayed flat by dollar sales since then, while Michigan, furiously adding cannabis facilities of all kinds, has continued sales growth.
But as adult use sales have grown in Michigan, it’s medical sales have collapsed – a particular problem for existing dispensaries located in Detroit, which are mostly still only allowed to sell medical cannabis. Illinois’ medical program, meanwhile has largely stayed flat, while Ohio and Missouri, which only have medical programs, have seen their medical grow between 50 and 80% over the last 12 months.
A closer look at Michigan’s adult use flower sales shows a sales increase of 67% since this time last year, which would seem like an incredible boon to cultivators and dispensaries alike.
But a look at retail adult use prices show an almost total collapse during the same period. And while we don’t have an accurate measure of margins dispensaries and cultivators are making on their sales, the numbers suggest dispensaries and cultivators have to sell much more product to make the same amount of money they made a year ago. For some dispensaries and cultivators, who counted on bigger margins to keep them in the black, dropping prices may mean going out of business.
But the amount of reported flower under cultivation suggests prices aren’t going to be going up in Michigan for some time, since cultivators have unprecedentedly big grows coming up fo harvest this fall. Last year’s croptober brought a 50% price decrease. After this year’s croptober, how much further will prices drop in 2023?