Michigan’s cannabis industry sold $3 billion in both recreational and medical marijuana in 2023, making the state the second biggest cannabis market in the U.S. behind only California.
Prices remained relatively low for consumers and sales show no sign of slowing down in 2024.
But cannabis companies struggled last year. One prominent company, Green Peak Industries (which operates under the brand name Skymint), entered receivership in March. Several other companies also found themselves under the control of a court-appointed receiver, in part because the price of marijuana flower rapidly declined, causing margins to narrow.
This year, as Michigan enters its fifth year of legal recreational marijuana sales, expect more of the same, cannabis industry insiders say.
“I really think that’s the leading edge of what’s going to be a much bigger trend of business failures, followed by business disputes, litigation between investors and companies,” Lance Boldrey, a cannabis attorney at the law firm Dykema in Michigan, said in an interview in December. “We’re seeing more and more of that now. I think that’s only going to continue” in 2024.
Here are six predictions for the Michigan cannabis industry in 2024.
An oversupply of cannabis will continue to cause problems
Some of those business failures stem from an oversupply of cannabis in Michigan’s market, which leads to lower prices and slimmer margins for retailers. The average retail price for an ounce of recreational marijuana flower was $95.08 in December 2023, a 73% decline from the average price of $350.88 in December 2020, when the recreational cannabis industry was still in its early days, according to data from Michigan’s Cannabis Regulatory Agency.
Michigan has been one of the most oversupplied markets in the U.S. over the past year, Ben Burstein, a data analyst at LeafLink, a cannabis wholesale market that works with thousands of cannabis brands and retailers, said in an email. Retail licensing acceleration should help improve wholesale pricing, upstream profitability and consumer accessibility to cannabis, Burstein said.
More retail stores will help … but are they coming?
Retail growth, a key component in reducing oversupply issues, has been stagnant over the past year. There were about 1,000 active medical and recreational marijuana provisioning center licenses in both December 2023 and December 2022 (one store could hold two licenses), according to CRA data.
Overall, fewer than 10% of municipalities in Michigan allow recreational marijuana businesses.
In November, voters in four upscale metro Detroit communities — Grosse Pointe Park, Keego Harbor, Rochester and Birmingham — said no to allowing recreational marijuana sales in their communities.
But there were some bright spots. Detroit, Michigan’s largest city by population, began sales of recreational marijuana at the very beginning of last year. Sales of recreational marijuana began in Berkley and Southfield, two communities in Oakland County, in mid-2023.
More on Michigan’s cannabis industry:Michigan’s cannabis industry has gone through some growing pains: What to expect in 2023
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