Although demand for adult-use cannabis soared throughout 2021 in Michigan, falling retail prices have left some business executives uncertain of their future in an increasingly competitive market.
From flower, vapes, edibles and a host of other products, Michigan dispensaries sold $124.6 million of adult-use cannabis in January 2022, representing an 84.8% increase from the $67.4 million sold in January 2021.
But during that same one-year timeframe, the average retail flower price dipped from $323.68 to $152.74 per ounce at adult-use dispensaries, a 52.8% price decrease, according to Michigan’s Marijuana Regulatory Agency (MRA).
The percent decrease for medical flower was nearly the same. The average retail price per ounce for medical flower dipped from $252.04 in January 2021 to $119.64 in January 2022, representing a 52.5% decrease.
Michigan was the eighth state to launch adult-use cannabis sales in the U.S. when licensed dispensaries began opening their doors to customers in December 2019. During that inaugural month of adult-use sales, the average retail price of flower was $516.21 per ounce, according to information from Metrc, the state’s seed-to-sale tracking provider.
Cannabis business executives from Buchanan and Niles—cities in the southwestern part of the state—remain skeptical of those falling prices making any kind of meaningful rebound in the near future, the South Bend Tribune reported.
“Prices have been dropping since day one and they continue to drop,” said Rick Paniagua, founder and CEO of Cannavista Wellness in Buchanan. “Major manufacturers are coming into the market and bringing a production scale that supports lower prices.”
George Lynch, CEO of Green Stem Provisioning Center in Niles, told the Tribune, “When we opened about two years ago, there were probably 100 or 120 growers in Michigan. Today, we’re approaching 1,000 growers.”
As of Feb. 28, 2022, Michigan had 616 active grower licenses and 460 active retailer licenses for adult-use cannabis, as well as 638 active grower licenses for medical cannabis, according to MRA.
And Michigan’s cannabis market only appears to be getting more competitive.
The first phase of a planned 350,000-square-foot growing and processing facility by 305 Farms is getting ready to start cultivating cannabis as soon as this week in Lawrence, a small town about 25 miles west of Kalamazoo in the southwestern part of the state.
While the first phase includes 44,000 square feet, once the entire project is completed by 2025, the facility will house up to 80,000 cannabis plants at a time, MLive.com reported.
Mitchell Maltz, the vice president of business development at 305 Farms, told the news outlet the company will own the largest single-stack facility in the state once the project is completed.
“We decided when we came to Michigan that we wanted to make sure that we were able to get a grow site where we can have unlimited amounts of growing, and that’s very difficult to have in the state,” he said. “A lot of municipalities that issue licenses, they issue one or two Class C licenses.”
Class C licenses allow for up to 2,000 plants to be grown at a time in Michigan.
“So, we were able to say, if we’re going to do this, we’d like to get one site where we can say, ‘Hey how about giving us 40 licenses. What if we want to grow 80,000 plants?’” Maltz said. “Lawrence was so nice to us. They said, ‘Hey, if you guys want to build this kind of facility, and you’re going to create the jobs that you’re going to create, we’re all for it.’”
The company is promising to create 200 jobs for the community of roughly 1,000 residents, with a minimum pay of $20 for entry-level positions at the facility, MLive.com reported.
As of Feb. 28, 2022, there were 38,369 employees working under licensed adult-use and medical cannabis businesses in the state.