New data from the Cannabis Regulatory Agency (CRA) in Michigan revealed that the state collected more than $3.6 billion in adult-use sales last year. Compared to the $2.3 billion in sales collected in Michigan in 2022, the most recent sales data shows 30% growth.
According to Crain’s Detroit, that amount equates to $305 in cannabis products per person, compared to the $150 per capita in California (with a projected $5.9 billion in cannabis products sold in 2023), and approximately $290 in per capita spending in Colorado.
The CRA also showed an increase in retailers as well, with a total of 750 dispensaries as of December 2023. “As we head into 2024, the CRA continues to focus on transparency and communication, working with stakeholders as the industry continues to grow,” CRA Director Brian Hanna said. “We’re committed to supporting Michigan’s cannabis licensees who currently employ over 35,000 employees, a 23% increase from December 2022.”
Hanna took the position of director after former director Andrew Brisbo departed in September 2022. With a background in law enforcement, Hanna has implemented strict rule enforcement, such as fines for cannabis businesses that didn’t pay their annual fees but also for those who were not tracking and/or handling cannabis products properly. According to MLive.com, this helped curb black market sales and other related activity.
MiCannaPros founder Harry Barash told MLive.com about the methods and results of the CRA. “They’re certainly making a lot of examples, and if you’re doing things that you shouldn’t be doing it’s only a matter of time before the CRA figures it out,” said Barash. “It certainly seems like they have more bodies and more enforcement now. The CRA has sent a strong message.”
The news outlet sought out comment from an industry veteran, Eric Jacovetti, who has previously worked in cultivation and for a cannabis-related staffing company, but currently runs cannabis-related equipment rental. Jacovetti added that the CRA has only reached the tip of the iceberg, so to speak, in terms of uncovering black market operations. “Just the way the current system is set up, you’d have to go to facilities and be auditing sticker by sticker, batch by batch, and I just don’t see that happening,” said Jacovetti. “I don’t even know how they could do it, en masse. A lot of this is still self-policing and thankfully there’s not a lot of folks that don’t want to break the rules.”
Despite the growth in sales, some believe that Michigan is reaching a cap soon. Prices in December 2019 when sales first began included $323 for one ounce of flower, but by December 2023, prices had dipped to $95 an ounce. Just in 2023 though, per ounce prices were lowest in January 2023 with $80.15 an ounce, and highest in July 2023 with $98.65 per ounce. After July, prices remained stable.
NORML board member and Meds Café operations manager, Jamie Lowell, predicts that the more drastic price decreases in 2022 pushed away investors, leading to a decrease in supply in the near future. “We could be looking at a scenario in the future where there’s not as much inventory in the pipeline,” said Lowell. “A lot of people just backed off because of market saturation.”
Michigan currently uses private labs for product testing, which is funded by cannabis producers, but some allegations claim that labs can potentially be changing product results to benefit business owners and not consumers. To counter this, the CRA is working on building a state-run testing lab that will verify test results and perform audits on those labs. The new lab will be built using $2.8 million from Gov. Gretchen Whitmer’s 2024 budget, and is expected to open sometime this year.
“I think it could definitely have an impact on the safety compliance portion of the business, which definitely needs some correction,” Barash commented about the state lab. “If that gets corrected, it could definitely impact pricing. Because if these results are artificial and we now see the true colors of these results, it will probably have a negative impact on prices, because it’s all based on THC.”
Proof of corruption has been found in other parts of the industry as well. Last September, former legislator and head of the Michigan Marijuana Licensing Board and Marihuana Advisory Board, Rick Johnson, plead guilty to accepting $110,000 in cannabis-related bribes while in office between 2017-2019. “I am a corrupt politician,” he said in court, which followed with a sentence of 4.5 years in prison. U.S. Attorney Mark Totten told AP News that Johnson exploited the system. “Rick Johnson’s brazen corruption tainted an emerging industry, squandered the public’s trust and scorned a democracy that depends on the rule of law,” Totten said.
However, other legislators continue to push to change the industry for the better, in some cases. In May 2023, legislators proposed a rule change to stop drug testing potential government employees for cannabis, which took place later in October. Michigan Civil Service Commissioner Nick Ciaramitaro said that it’s well past time that the rule was implemented. “Whether or not we agree with it or not is kind of beyond the point,” Ciaramitaro said. “Use of marijuana on the job is different than having used it months before you take the test … It doesn’t make sense to limit our ability to hire qualified people because they took a gummy two weeks ago.”
