A grow room for Michigan's Redbud Roots. (Submitted)

Wednesday afternoon the Michigan Marijuana Regulatory Agency (MRA) announced that beginning March 1, 2021, the agency will no longer require recreational cannabis licenses to already hold a medical license. The long anticipated decision comes quick on the heels of a decision to ban patient caregiver cannabis sales to medical cultivators as of September 30. Together, the two decisions substantially alter the state’s cannabis market, where some independent dispensaries have been hard up to obtain supply.

“From the perspective of a member of the drafting committee [for the proposition campaign] the intent was always a guaranteed one year,” for medical license holders to have exclusive access to recreational licenses, said Robin Schneider, executive director of the Michigan Cannabis Industry Association. “The MRA has determined the state meets that criteria, I would say we agree they are in the legal right to do that.”

As part of the MRA bulletin issued Wednesday, regulators argued that an increase of marijuana-related crime demonstrated an increase in the illegal market, one of the possible criterias MRA could use to speed up full public access to recreational licenses. Michigan’s 2018 recreational cannabis law stipulates that limits to recreational licenses can’t be limited for more than two years after cannabis sales began on November 1, 2019.

“I think that it was a compromise between what the MRA wanted to do and what the current license holders wanted to do,” said Dave Murray, CEO of vertically-integrated Redbud Roots. “The MRA had a lot of pressure to get something done immediately because of the pinch on the supply chain. They wanted to get it done September or October, versus the six months it’s going to happen. That was really only six months earlier than what would have happened anyway.”

“We would have preferred that [MRA] maintain the two years, since many of the large investors that invested in state of the art grow and process facilities, and high tech provisioning centers, built models around a two-year runway,” said Steve Linder, executive director of the Michigan Cannabis Manufacturers Association, a trade group of larger, vertically-integrated cannabis companies. “It was a shock to move from two years to a year and a half.”

Independent dispensary owners, those who do not own their own cultivation facility and helped prop up a small medical cannabis market for years, are concerned about the one-two punch of eliminating caregiver supply, and then a shifting emphasis to recreational cannabis.

“They are prioritizing recreational growers without ensuring a consistent supply in the medical market. The operators who have invested, propped up the market, have already put the money into it, they are going to be the ones who are taking the brunt of this because there’s not going to be the same supply for medical dispensaries,” says Evan Pilot, director of operations for The Reef Dispensary in Detroit, which is medical only.

Pilot reports that he’s paying between $3,000 to 4,000 a pound for wholesale medical cannabis flower, while recreational is going for as much as $5,000 a pound. Two other Michigan cannabis dispensary owners reported similar prices as of Wednesday to Grown In.

“That’s because there’s fewer recreational providers and higher demand in the recreational market. Everybody’s open to it. You’ve got people willing to pay that much. The recreational volume should be four times the medical market volume,” says Pilot. “You have a dichotomy between the two markets, nothing differentiates the two except a piece of paper.”

Patient advocates, such as Annette Crocker of Michigan Holistic Health in Kalamazoo, are concerned that rising prices will impact medical patients with limited incomes.

“What I don’t want to see is if it’s recreational, will the prices bump up? Right now recreational is much more expensive than in a medical provisioning center,” said Crocker. “I like that more people have access, however i just don’t want to see it turn into competitive pricing for patients who already struggle to get medicine.”

Murray from Redbud Roots agrees with Pilot’s market assessment, and thinks it’s just a matter of time before prices get back in order.

“You’re starting to see the shift. When recreational came on, medical was an eight-to-one player [in terms of demand]. Now you’re starting to see the shift go back, and the medical side is getting hard to see on a supply side, now that you’ve got the October 1 ruling that caregivers are off the grid,” said Murray. “Medical should be a higher price per pound. The market is inverted. I think prices will go up in the next 18 months.”

Still, other independent dispensary owners are not so dispassionate.

“I can’t understand, it’s corporate greed,” said Jerry Millan, owner of The Greenhouse dispensary in Walled Lake, which is both medical and recreational. “Why were caregivers able to stay on the medical side, but not the recreational side? If it is tested and clean, why was it not able to go to the rec side? It doesn’t make sense, and nobody can tell me why, so it must be all about money.”

“The shortage is real,” says Millan, who suggests that smaller, independent dispensaries are the ones who are experiencing shortages more acutely. Stores like his, which are larger and higher profile, have an easier time buying product. “We can buy the whole shipment, so it’s easier for [growers].”

“There’s not a shortage of product,” says Linder. “We’ve looked at the Metrc data, since most of our members generate most of the data, there is an equilibrium that has been reached. We can’t control how many people apply for licenses and how many dispensaries are set up. There’s only a supply shortage if there’s too many provisioning center licenses that have all of a sudden come on line, and the cycle of processing and distribution needs to keep up.”


Editor Mike is a co-founder and the editor of Grown In, a U.S. national cannabis industry newsletter and training company. His career has taken him from Capitol Hill to Chicago City Hall, from...