The Michigan Marijuana Market in 2022
Michigan cannabis could serve as a case study in how to roll out recreational cannabis. More than three dozen states could have legal cannabis sales by the end of 2022, and most could learn a thing or two from the Michigan marijuana market.
Exceptional Growth in Cannabis to End 2021
Few states can claim as successful a start to their cannabis industry as the Mitten state. With a growing network of cannabis suppliers and retailers, the market has certainly bloomed. Total cannabis sales in 2021 increased more than 50%. December of 2021 saw a record $168 million in sales, with $135 million of that total stemming from recreational sales. That wasn’t the high mark, either. 2021’s top month was July, reaching $171 million.The market does face what some experts are calling a “period of consolidation”, in which large grow operations or those with greater distribution capability swallow up smaller operations. While volatile, this could ultimately lead to a healthier market in the long run and improve QA/QC and testing. The industry also faces residual competition from illegal, unlicensed growers looking to avoid red tape, quality controls, and taxes.
Michigan Marijuana Market Headwinds
The 10% excise tax, one of the key selling points of legalization in many states and particularly in Michigan, is helping to refill Michigan’s coffers. In 2021, the Michigan legislature also introduced Senate Bill 461, which requires all cannabis operations to hold an additional layer of insurance worth $100,000 in liability.Michigan cannabis companies also face new competition pouring in from other states. Several larger operations have set up shop in the state, including participation from Body and Mind, Inc. The scale of these operations has contributed to the fear of takeovers and the gradual squeezing-out of Michigan grown supply. While certainly possible, Michigan’s high quality and ample supply should make that transition profitable for small operations and allow for flexibility in retaining branding, identity, and quality control efforts.At the state level, Michigan is a welcoming market for marijuana, but local governments have been universal in acceptance. Communities like Traverse City, Grand Haven, and others, have prohibited recreational sales and kicked the proverbial can when it comes to explaining or establishing their position. Producers and retails have lodged lawsuits in several of these communities, but the legal battles are ongoing.
Keeping Cannabis Growers Competitive
The Michigan marijuana market is enjoying tailwinds at the moment, but increased competition, new taxes, and insurance obligations, and the potential for long-running legal pursuits for fair market access could impact how profitable operations are in the years to come. We’re working to help cannabis growers in Michigan produce the highest quality product with energy-efficient systems and streamlined systems to maintain margins and stay ahead of the curve. Contact us today to get started.