This story was republished with permission from Crain’s Detroit.
Despite increased regulator crackdowns and a new competing market in Ohio, Michigan’s marijuana market continues to reach new heights.
The regulated market set another new sales record in August with the industry selling more than $295.4 million worth of marijuana, up nearly $7 million from the previous monthly sales record in March.
The state’s legal industry is now on track to sell more than $3.3 billion in weed in 2024, up from last year’s record of $3.06 billion.
California, with nearly 30 million more residents than Michigan, is the only state with larger sales figures, averaging about $347 million in marijuana sales monthly.
For context, California’s market sold about $8.90 on marijuana on a per capita basis in August, where Michigan’s sold $29.50 on a per capita basis. Assuming the estimated 26.86% of Michigan adults that use marijuana shop in the legal market, that would mean each consumer bought about $109.65 worth of marijuana in August. Where in California, roughly 9.35 million adult weed consumers spent on average $37.11 each during August.
Michigan’s sales output also shows the strength of its market, as legal recreational sales began on Aug. 6 in neighboring Ohio.
Ohio sold $44 million in marijuana in August after its recreational market went live the first week of the month, albeit with far fewer dispensaries than Michigan. Ohio has just 15% of the Michigan total of legal recreational marijuana retailers.
Insulating the Michigan legal market are all-time low prices.
The average price for an ounce of marijuana flower in August was $80.14, up from the lowest price on record $79.70 in July, according to data from the Michigan Cannabis Regulatory Agency.
Prices have fallen since legalization in 2019. The average price for an ounce of flower was $116.84 in August 2022 and more than $400 in August 2020.
The price decline this year could be caused by a variety of reasons, including product oversupply, pricing compression from “Croptober” preparations and a continued supply of illicit market products in the state’s regulated market.
Outdoor growers are also preparing for “Croptober” – the annual harvest in October of plants grown in outdoor farms. That product, which typically is used in vapes, gummies and edibles, floods the market by late October through the end of the year, though some of the outdoor product is sold as flower.
However, the state has ramped up enforcement efforts, targeting legal market players importing products from out-of-state in recent months.
In August, the CRA issued a formal complaint against West Michigan grower HiCloud LLC after its owner was arrested on I-96 near Lansing by the Michigan State Police with 43.5 pounds of marijuana in a rented truck. That product was not tagged in the state’s tracking system, potentially meaning it was grown illegally. Investigators also found large batches of marijuana at its facility not cataloged in the system.
Also in August, the state cited Chesaning-based processor One Love Labs for allegedly importing more than 110 pounds of concentrated THC from Oregon.
It is against federal law to ship hemp products containing more than 0.3% THC across state lines and against Michigan regulations to process or sell products containing more than 0.3% THC that are derived from another state. The product tested for having 86.49% THC.
A month earlier, the CRA alleged Mount Morris processor Sky Labs purchased 130,000 grams – nearly 287 pounds – of THCA isolate, which is a heavily concentrated powder derived from hemp that when heated can be converted into a form of THC comparable to the psychoactive ingredient found in marijuana, from out of state.
But the state’s targeting hasn’t restricted supply enough to raise prices, and sales continue to rise.
[[{“value”:”Low prices have insulated many Michigan operators from the effect of Ohio’s adult-use market launch in August.
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