A Look at Michigan marijuana in 2022

It’s been a great year for Michigan marijuana customers, who are paying less than ever for increasingly potent cannabis.

As of November, the average retail cost for an ounce of marijuana had dropped to a record low of $95 with some strains dipping to near $60 an ounce in retail stores.

It’s also been a healthy year for the industry as a whole. Retail Michigan marijuana sales are currently on track to surpass $2 billion in annual revenue by year end.

But the year has presented struggles for others, including businesses facing shrinking profit margins as prices plummet and state regulators engaged in a seemingly insurmountable battle with the long-entrenched black market.

Here’s a look back at highlights from the year in Michigan marijuana with a glimpse forward to 2023.

New leadership

More than half way through the year, Gov. Gretchen Whitmer made a significant leadership change in August, replacing departing former Cannabis Regulatory Agency Director Andrew Brisbo, who helped launch the recreational marijuana in December 2019, with Director Brian Hanna.

Hanna, who has a law enforcement and investigations background, was named the “acting director” in September and elevated to the full-fledged agency director on Dec. 2. He made it well known that he wanted to step up enforcement of illicit marijuana making its way into the regulated market.

“We’re hearing about this illicit product in the market, that’s in the regulated market — we want to find that,” Hanna told media on Oct. 25. “We want to expose that. We want to make it known.”

Hanna and the CRA have taken noticeable action.

The CRA disciplined eight businesses with fines or suspensions in September, a dozen in October and five in November, including the indefinite license suspension of Green Culture, a retail store in Flint accused of selling suspected unlicensed products.

Black market

The Michigan CRA temporarily suspended both the medical and recreational licenses for Green Culture after an investigation revealed the company had been selling improperly labeled hemp products that contained THC over the legal threshold. The investigation also revealed products had been improperly delivered and labeled, according to the agency.

The CRA on Oct. 10 suspended business for 30 days at and fined the House of Marry Jane, a medical marijuana retailer in Detroit, $75,000 after a surprise inspection in May 2021 revealed duffel bags of untagged and potentially black-market marijuana seemingly intended for sale.

Michigan requires all licensed marijuana products to pass safety testing and be logged into a statewide tracking system before sale.

Related: Michigan shutters Flint pot shop

Later in October, Hanna indicated there is plenty of other suspected unscrupulous activity going on within the industry.

There are “rumors of trucks driving around with (THC) oil, going licensee to licensee, offering illicit oil at a cheaper price,” Hanna said. “That’s the kind of stuff we’re looking for.

“I think this is the first time I’ve heard of a truck driving around from another state with oil … That’s pretty eye opening.”

Michigan has a theoretically tight tracking system but there are ways to subvert it.

For instance, a marijuana processor could obtain THC oil, which is commonly used to produce vaping cartridges, from an unlicensed, black-market source and combine it with existing, licensed oil. If the business then reports the inflated combined quantity of oil to the CRA tracking system, the illicit oil would get legal tags and become nearly undetectable.

Based on simple math, that’s what some in the industry believe is happening. THC oil, or distillate, is extracted from cannabis, often the less desirable parts of the plant known as trim.

“I have to imagine there are some loopholes in the system where you are able to slip it in somehow,” said Harry Barash, who founded the 8,200-member Michigan Cannabiz Professionals Facebook group and operates Meet. Connect. Puff, a Hazel Park-based cannabis event planning business. “When you look at the amount of trim that the CRA reports, and how much distillate is being produced from that, the numbers are out of whack,”

Prices plummet

For consumers, the story of the year was pricing. Marijuana customers are getting more for less as the market saturates with an increasing number of growers and retailers.

The average retail price for flower has seen a monumental decline. In two years, between November 2020 and November 2022, the average retail price for an ounce of flower plummeted from about $376 to $95, a 75% decline. There’s been a nearly 50% dip in just the last year.

“The consumer is definitely the winner, right now,” Barash said. Barash. “I just don’t know how long this model is going to be sustainable for the licensees.

“Either there’s going to be failures and less product being produced, which will drive up prices, or everyone is going to have to learn how to live on lower margins,” Barash said.

As companies are forced to achieve those lower margins, there are fears that product quality may suffer. This is the equivalent of craft beer versus mass-produced Budweiser.

“As the market becomes more price friendly, it does become less quality conscious,” said Rick Thompson, who leads the Michigan chapter of the National Organization for the Reform of Marijuana Laws (NORML) and sits on a consumer advisory committee for the CRA. “If the market price is so low that you can only produce lower quality in order to remain competitive, then that’s what industry growth will do.”

The state added more than 100 retail businesses this year, increasing the total to 591, as of November, according to the CRA.

While there’s a cannabis store for nearly every 17,000 Michigan residents, the locations are clumped disproportionately in communities that have not banned recreational commercial sales. Almost 1,400 of the Michigan’s 1,700-plus cities, townships and villages have opted not to allow recreational sales.

But the price crunch isn’t coming from the retail end. On Nov. 30, there were 1,673 various grow licenses issued among medically and recreationally licensed businesses in the state.

“There’s been more product grown than what the consumers can reasonably consume or that the retailers are able to sell,” said Robin Schneider, director of the Michigan Cannabis Industry Association with more than 430 business members. She insists marijuana quality in the state has yet to suffer and remains among the best in the nation.

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