Michigan’s cannabis industry experienced another tumultuous year in 2024. While consumers enjoyed cheaper weed than ever and the state solidified its position as a sales powerhouse, the industry faced significant challenges stemming from oversupply, intense competition and an ever-evolving regulatory landscape.
A double-edged sword: record sales and shrinking profits
This year saw a surge in retail cannabis sales, driven by increased consumer demand and expanding market accessibility. Border stores propelled much of the success, according to industry insiders, who believe dispensaries along the southern border and in the western Upper Peninsula may account for up to half of all retail cannabis sales in the state. But growing sales numbers don’t tell the whole story.
A glut of supply, coupled with aggressive pricing strategies, led to a sharp decline in profit margins, and many producers found themselves struggling to maintain profitability in the highly competitive market.
Conversion oil controversy
One of the most pressing issues in 2024 was the rise of CBD conversion oil, which is created by isolating THC, the primary psychoactive compound in cannabis, from hemp. The lack of oversight due to hemp’s federal legality means hemp-derived THC products don’t have to be tested at a state-licensed facility for potency or contaminants like fungus, heavy metals and pesticides. The process of isolating THC from hemp is also complex, and there’s a lack of research on the potential long-term health effects for consumers if unpredicted chemical reactions take place.
The finding through third-party testing that numerous vape cartridges and edibles pulled off dispensary shelves contained conversion oil and banned pesticides raised concerns from industry members, advocates and even the state Cannabis Regulatory Agency about product safety and quality. The CRA has proposed rule changes that would “prohibit the conversion of a cannabinoid into a different cannabinoid using a chemical reaction” and would ban Michigan licensees from selling products containing conversion oil. The proposed rules would take effect immediately if approved, rather than the typical 90-day period.
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