Michigan Cannabis Business Reporting Shortages in Some Areas of the State, While Others Are Doing Fine
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Michigan Cannabis Business Reporting Shortages in Some Areas of the State, While Others Are Doing Fine

A few months after a series of lawsuits over cannabis supply, the state’s medical cannabis market is still settling.

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August 20, 2019

Before Michigan begins accepting adult-use cannabis business applications in November, the state has plenty of work cut out for itself in its medical cannabis market. Much like California’s legal developments, Michigan brought an existing “gray-market” medical cannabis framework into a tightly regulated program over the past few years. The initial rollout has been a long, uneasy process of approving business licenses and finding ways of working with home-grow caregivers who’d been providing cannabis to patients since 2008.

The supply-and-demand curve hasn’t quite settled into place.

At the start of this year, Michigan regulators were continuing to allow caregivers to sell their cannabis products to licensed dispensaries. Patients would need to sign a waiver acknowledging that the product had not been tested in a licensed lab. Then, in the spring, the state put an end to that practice. After some legal wrangling, regulators landed on a compromise: Caregivers could sell their product to licensed growers and processors, who would then test that product as part of the Metrc seed-to-sale tracking system and (as long as it passed testing) sell it to retailers.

Scott Schroeder, owner of Meds Café in Rogers City, says he’s been struggling to find state-licensed cannabis products and watching his remaining supply from the caregiver market dwindle. He’s almost out, he says. 

“We got [into the legal market] under the caregiver rule, where we were able to have some product entered in that wasn’t state-tested,” he says, recalling the early days of his business this past spring. “We had three days to do it, and we were able to get ‘X’ amount entered. We’ve only had maybe five or six pounds of state-licensed flower in the shop because it’s so unavailable and so flippin’ expensive.”

He says his last shipment was July 3, and, since then, he and his manager have been scrambling to put in an order with Michigan suppliers. No dice. “Everybody says, ‘Two weeks,’” he tells Cannabis Dispensary. “Two weeks lapses, and still—nothing. Literally, we’re still in the same position. We’re down to two strains. I’m maybe at 10 lbs. of caregiver [cannabis] left that we’ll probably go through by the weekend. And then what?” (On Aug. 20, a search through Meds Café’s online ordering system showed an assortment of concentrates and cartridges—but no flower products available.)

Schroeder, whose dispensary is located on the far northern edge of the state’s Lower Peninsula, says the ongoing shortage could drive patients—and caregivers, who may be unable to sell their products to licensed producers—back to the illicit market. “Either it’s failing in testing or the caregivers don’t want to sell to the processors,” Schroeder says. (Michigan does allow adults to grow as many as 12 cannabis plants at home.)

Meanwhile, as a licensed business owner, he’s eyeing a $66,000 regulatory assessment fee later this year. “Which is fine. If we’ve got the product to sell, I’ve got no problem paying what I owe,” he says. “But we’re getting the point where we’re going to be out of product.”

A Detroit Metro Times article reported that BotaniQ (in Corktown) and Greenhouse (in Walled Lake) were experiencing shortages this month. "We probably have about two weeks' worth of flower left," Greenhouse owner Jerry Millen told the paper, echoing Schroeder’s comments. "Then [we'll] be totally out. There is no flower to be had anywhere." 

Penny Milkey, owner of Northern Specialty Health in Houghton, says her dispensary hasn’t faced any shortages this year. What’s more—Northern Specialty Health is the lone medical cannabis dispensary in the Upper Peninsula, nearly a five-hour drive to the bridge that separates the UP from the rest of Michigan. 

“We did not experience a shortage, although the number of flower options has diminished,” Milkey says. “We started to prepare for this change, as soon as we received our license.  Overall, we have a larger variety of edibles, concentrates, cartridges, capsules [and] tablets … that we didn't have previous to licensing.”

Her dispensary began the transition away from caregiver-sourced cannabis in December 2018—a few months before the final deadline for the switch. Milkey says the goal was to be fully prepared for where the market was taking its licensed businesses. Even though state regulators have continued to allow caregivers to sell into the market, in some form, Milkey’s business had adjusted to new ways of doing business in the more tightly regulated space.

“Since we had already switched to licensed products, and informed our patients of the changes, we kept moving forward,” she says. “We worked hard to build relationships with the growers and processors that had product at that time, and graciously thanked the caregivers that supplied us before licensing. It was a challenge for the patients, as change is always hard for some. Our staff is resilient and is accustomed to changes in this industry.”

Beyond the state’s regulatory churn in 2019, Northern Specialty Health has had to surmount the simple burden of geography. Milkey’s store is located 266 miles from the Mackinac Bridge—and 494 miles from the capital in Lansing.

“The transportation costs definitely impact our buying decisions,” she says. “We need to carefully plan our orders to minimize the secure transport costs. We would like to average one delivery every 4-6 weeks, but this depends on when products are available and/or if the supplier is willing to hold any until our delivery date. Overall, the costs to operate have increased since licensing occurred, due to the cost of licensed products, transportation costs, licensing fees and more.”