Big market, small margins: How MI’s cannabis industry is evolving

MICHIGAN
Big market, small margins: How Michigan’s cannabis industry is evolving

Driving the news: Michigan had a banner year for cannabis sales in 2024. Michiganders purchased over $3 billion in cannabis for 2024, the largest sales year ever for the Wolverine State.

Hold up: But a big overall number hides some serious market challenges in Michigan, including price compression. Michigan’s Cannabis Regulatory Agency year-end report shows that the average price of an ounce is under $70. 

Last year, in the same annual report, the price of an ounce was $95. 

Why it matters: Michiganders love their cannabis. That’s for sure. 

And as an industry, we’ve seen Michigan grow to be one of the largest cannabis markets in the US. But every market goes through a maturation phase — and just like teenage years — the maturation phase of a cannabis market can be awkward and full of zits. 

Michigan is no different.

Other markets: We’ve seen declines in overall sales in the most mature markets, including Colorado and California. California’s cannabis industry in particular has seen its fair share of challenges, from burdensome taxation and regulation to hyper-competition and cash-flow issues throughout the supply chain. 

We’ve also seen New York and New Jersey surpass the billion dollar mark in terms of market size in the past year. So while the industry is growing overall, overall sales numbers certainly are not indicative of overall industry health.

What’s next? Perhaps these are the cycles we will continue to see in the cannabis industry. A ramp up to full saturation of both market players and market size, followed by price compression, leveling off of sales, and finally a market that is predictable and stable – albeit not growing by huge percentages every year. 

-JR

Jay caught up with Ben Kaplan, the author of "Catch a Fire: The Blaze and Bust of the Canadian Cannabis Industry" at yesterday morning. You can watch the full conversation here:

Pro-cannabis groups put a positive spin on delayed rescheduling hearings 👀

Pro-rescheduling witnesses and cannabis companies put a positive spin on the now-delayed rescheduling hearings, which were set to begin on January 21. Village Farms International, a Canadian cannabis firm and selected witness at the hearing, said in a press release: “We commend the ALJ for harsh criticism of the DEA’s defiance of this process and misconduct, which underscores our view that these proceedings are severely flawed due to the DEA’s conflicted role.” 

And Curaleaf CEO Boris Jordan said on X the judge’s decision to delay the hearing is “absolutely” the correct decision. Shane Pennington, the attorney who sought to delay the hearing on behalf of his clients, also explained on X the legal strategy behind the delay — and that his side is creating a record of the DEA’s intransigence on rescheduling and will ultimately result in a more “defensible,” result. 

Read yesterday’s newsletter for more background on the delayed rescheduling hearings. 

Judge rules that New York must halt raids of licensed hemp stores 🛑

A New York judge sided with hemp sellers, ruling that state cannabis regulators and the New York City Sheriff’s Office warrantless raids on licensed hemp shops violate the Fourth Amendment, The New York Law Journal reports. The decision includes a temporary restraining order on the state’s Office of Cannabis Management. Read more.

Democrats urge Biden to grant more cannabis clemencies 🌿

Democratic Reps. Ayanna Pressley and Mary Gay Scanlon on Tuesday urged President Joe Biden to issue more clemencies for nonviolent cannabis-related offenses and other nonviolent drug crimes before he leaves office, reports Politico’s Natalie Fertig. 

Former High Times CEO to plead guilty 👨‍⚖️

Adam Levin, the former CEO of cannabis magazine turned financial instrument, will plead guilty for paying stock promoters to tout the company’s initial public offering to unwitting investors. 

De-banking + cannabis banking? 💰

The Senate Banking Committee is organizing an early year hearing to examine "debanking" in the US financial system, reports Punchbowl’s Brendan Pedersen. It’s possible that the lack of banking access for cannabis companies is a topic.

Acreage Holdings settles with the SEC 🥊

Cannabis firm Acreage Holdings paid a $225,000 settlement with the Securities and Exchange Commission over a $4.2 million “round-trip” transaction designed to inflate the company’s cash balance on December 31. Read our friend Marc Hauser’s Cannabis Musings for more. 

And press releases:

• Wurk announced a strategic partnership with Green Check Verified.

• HYTN Innovations expands its international cannabis export permits.

• Ascend Wellness issues $15 million of debt. 

• California cannabis company Kanha expands its line of Solventless Rosin Belts to Illinois, Massachusetts, and Nevada. 

1933 CEO steps down 🪜

Paul Rosen, of 1933 Industries, will resign from his job on February 1. He’ll be replaced on an interim basis by Brian Farrell, the company’s CFO.

New Minnesota cannabis consultancy launches 📈

Minnesota cannabis lawyer Jen Randolph Reise said on LinkedIn she’s launching North Star Cannabis Consulting, “a consultancy dedicated to empowering cannabis entrepreneurs and businesses.” Minnesota dispensaries are set to open later this year. 

We know that many members of our cannabis community have been hard hit by the fires raging in Los Angeles. We’re thinking of all of you. 

Embarc Dispensary is rounding up the California cannabis community to assist with the wildfires. They’ve set up a GoFundMe to help victims — all proceeds go to the World Central Kitchen. 

Donate here. 

Nation’s oldest marijuana retailer facing multiple lawsuits related to unpaid bills | MJBizDaily

Misogyny, racism, nepotism: Curaleaf leadership sets toxic tone throughout company | Green Market Report