Following End of Caregiver Sourcing to Michigan Cannabis Businesses, Redbud Roots Works to Address Supply Issues

For some people in the Midwest, the close of September signaled not only the changing of the leaves and an increase in pumpkin-flavored and -scented product availability, but the end of an era for cannabis. Michigan’s caregivers are no longer sourcing dispensaries with product.

“There is a massive shortage on distillate in the state of Michigan, particularly in light of the phaseout of caregivers,” said Alex Leonowicz, COO and general counsel of Redbud Roots, a vertically integrated cannabis company based in Buchanan, Mich. “There have been rumors of distillate pricing reaching as high as [$25,000 to $30,000] for a liter. Likewise, vape cartridge demand has skyrocketed.”

During the March through September phase-out of caregiver sourcing for medical dispensaries, Leonowicz said, dispensaries and customers had already been feeling the effects. (In April, the Michigan Marijuana Regulatory Agency cut off caregiver sourcing for adult-use dispensaries.)

Past experiences foreshadowed growing pains that would come with phasing the model out. Redbud, established in 2017, was one of the first several commercial growers and manufacturers to supply cannabis product into the retail market alongside caregivers, Leonowicz said.

“We couldn't even come close to supplying all the stores,” he said, explaining that the state had previously warned of a phaseout. “So, guys rise up, and they're like, ‘Wait, I can't buy it from my caregiver; you [the state] are shutting those guys down. Yet, your new model isn't ramped up enough. So, you're leaving people that utilize the plant for truly medicinal purposes without medicine.’ That's what allowed them to continue to supply into the commercial model for so long.”

Now, in a caregiver-less climate, Redbud is working to help fill the supply void.

“Being forward-thinking, we’ve ramped up both our production capacity and the cultivation,” Leonowicz said. “We added a new grow facility. We also automated all of our cartridges, edibles and prerolls.

“For us, we looked at it like, ‘Hey, there’s obviously a huge wave of shortage coming here. How can you meet that?’ Automation seems to be a huge answer to that because you can only make so many prerolls [by hand]. You're sitting there pouring it in and then packing it in, versus a machine that can do 5,000 of them in two days.”

This automation is taking place in a new 15,000-square-foot processing and packaging facility that Redbud opened in Buchanan in late September. Located “a few parcels down” from the company’s three cultivation facilities in Buchanan, Leonowicz said the facility will increase the company’s output by five times and serve as a distribution hub.

Serving the Michigan Market in Other Ways

Leonowicz recently shared some other business developments with Cannabis Business Times and Cannabis Dispensary.

Photo courtesy of Redbud Roots

On the cultivation side, Redbud has grown its SFV #4 cultivar to produce more than 32% THC. (It is not an original cut from the plant.) First grown under LED lights, the company launched its SFV #4 in its own retail locations and have since begun to wholesale it to dispensaries. Redbud is now growing the cultivar under HID lights and expects that product to have a strong THC percentage and yield.

To accommodate retail needs, Redbud opened a medical and adult-use dispensary in Muskegon, Mich., more than 100 miles north of Buchanan, in July. A 12-foot-tall red astronaut sculpture welcomes patrons and passersby; the company had it specially made by Innovative Sculpture Design to garner some attention.

That’s just the start of Muskegon customers’ retail experiences. The company hired employees from around Muskegon to provide customers and patients with a sense of familiarity.

Photo courtesy of Redbud Roots

“A lot of shops set [locations] up, and they all look and feel the same. It’s kind of like a Walgreens or CVS—you know where to go, you know how to navigate it,” Leonowicz said. “And that's fine. We’re, I guess, trying to cater to the feel and the soul of each little city.”

The Redbud Roots Muskegon Provisioning Center sees about 85% adult-use customers and 15% medical patients, Leonowicz said. In a typical week, to both markets, he said it sells 12 to 13 pounds of flower, 900 to 1,100 cartridges and 800 to 1,000 prerolls.

The storefront is one of three competing dispensaries that have opened in Muskegon so far. The city created a “marijuana overlay district” to dictate where plant-touching businesses can operate, according to ABC affiliate WZZM.

Leonowicz applauds the city’s decision to welcome new businesses to an area that has historically had vacant buildings and low traffic flow.

“You build awareness of this whole area of the city who lives over here,” he said. “I thought it was pretty smart to bunch them together. Obviously, it stinks from a competition standpoint because you’ve got a guy right down the street from you. But that’s why we brought the astronaut in.”