Michigan’s Cannabis Industry Hits $3.2 Billion; Illicit Market Still Booming

Michigan’s Cannabis Industry Hits $3.2 Billion; Illicit Market Still Booming

A recent study found that about 70% of cannabis sales in 2020 happened outside retail stores.

July 1, 2021

Across approximately 400 licensed medical provisioning centers and 300 adult-use cannabis stores, in addition to cultivation operations, Michigan's cannabis industry is worth $3.2 billion. Still, a recent study shows that illegal sales account for more than half of the revenue. 

In 2020, medical and adult-use dispensaries combined to haul in a whopping $984.7 million in state-legal sales, including more than 800,000 pounds of cannabis products, according to Michigan’s Marijuana Regulatory Agency.  

According to FOX 2 Detroit, the Michigan Cannabis Manufacturers Association (MCMA) hired the Anderson Economic Group, a consulting firm specializing in public policy, business evaluation and industry analysis, to conduct a study to assess the economic impact of legal cannabis in Michigan. 

The study found that approximately 2 million of the state’s roughly 10 million residents used cannabis last year. Many speculate that the COVID-19 pandemic and stay-at-home order likely correlated with an increase in cannabis users, as dispensaries were considered an essential business throughout the pandemic, the news outlet reported

Data from Headset released earlier this year shows an increase in adult-use cannabis sales in Michigan throughout the pandemic. Sales rose by 482% between January and December 2020, topping $500 million for the year, Cannabis Business Times previously reported

The recent study also found that 70% of cannabis sales happened outside retail stores, making "off-the-book" sales the No. 1 way for Michigan citizens to get cannabis, the news outlet reported. 

Illegal transactions have presented concerns about public safety and untaxed sales. From the state-legal sales reported, the industry generated about $169 million in tax and fee revenues last year, the news outlet reported. 

And according to Brian Peterson, director of public policy for the Anderson Economic Group, the firms' research shows that a vast amount of cannabis comes from sources not regulated by state safety testing requirements. "Transactions from these sources typically do not produce tax revenue," he said. 

Stephen Linder, MCMA executive director, said the Anderson Economic Group study shows that Michigan can and should be a leader in cannabis safety, innovation and entrepreneurship. "With this information in hand, we now have a full picture of Michigan's cannabis market and a clear understanding of the challenges that lie ahead," he said.