Last year was nothing short of a rollercoaster for Michigan’s 5-year-old legal cannabis industry, but 2025 is shaping up to be even more turbulent. Industry insiders are bracing for volatility that could wipe out 20 to 30% of growers.
The state’s legal market brought in more than $3 billion in sales in 2024, with the average price of an ounce dipping just below $70 by year’s end. But as we move into 2025, the pressure is mounting, and the turmoil is far from over.
Cannabis producers and retailers are already feeling the heat, scrambling to stay afloat in a market that’s been in a constant state of upheaval. The race to the bottom on pricing has reached crisis levels, forcing operators to slash costs wherever they can.
See also: Michigan Eclipses $10 Billion In Adult-Use Cannabis Sales Since Went Legal In 2019
We’ve seen a wave of layoffs in the past month, with cannabis companies across the state cutting their sales and marketing teams or shutting down entirely. Smaller operators are being hit especially hard, wearing multiple hats as they try to outlast the storm. It’s a fight for survival as businesses pivot, cut corners and do whatever they can to stay competitive.
The winter months typically bring a lull in cannabis sales, and this year is no exception. Post-holiday blues and cold Michigan winters tend to keep people inside, slowing foot traffic to dispensaries. But the challenges in Michigan are even more pronounced for operators who are managing businesses in other states.
In fact, we’ve already seen some out-of-state players like LivWell and Curaleaf decide to exit the Michigan market, choosing instead to focus on states with less competition and greater market potential.
Michigan’s generous licensing system has allowed a large number of businesses to enter the market. However, many industry insiders believe this open-door approach has contributed to oversupply, with too many producers fighting for market share.
In some cases, producers have exploited loopholes, moving their operations between different licenses in ways that skirt state regulations. It’s a bit like the use of burner phones in “The Wire” and has only added to the chaos in Michigan’s already struggling cannabis industry.
That said, there’s still hope for the future. Some are optimistic that 2025 could finally bring the federal cannabis reform that the industry has been waiting for. If the Trump administration can make good on promises of reform — especially around tax issues like Section 280E of the Internal Revenue Code, which prohibits companies from deducting or receiving tax credits for otherwise typical business expenses related to the “trafficking” of Schedule I or II substances — there’s potential for a significant shift.
A change in tax policy could free up much-needed capital for retailers, increasing their bottom lines and boosting the wholesale price of cannabis. This could help to stabilize the market in the long run.
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