That uncertainty comes at a time when the state is adding more and more recreational business licenses in the state to accommodate a growing desire for legal weed in the state. Since Dec. 1 when recreational marijuana sales began, $31.9 million in marijuana products have been sold. That amount has generated $5.3 million in tax revenue from the state’s 10% excise tax and 6% sales tax.
Michigan’s marijuana market just got a little bit tighter at a time when the legal weed supply is already struggling to keep up with demand.
From June 1 to Sept. 30, licensed marijuana growers and processors will be limited in the amount of flower they can get from caregivers. And by Sept. 30, no caregiver products — flower, oils or infused products will be allowed in the licensed marijuana marketplace.
“Most of the wholesalers are vertically integrated, and they’re only going to supply their own shops. So there is definitely a big concern about product availability,” said Rush Hasan, head of operations at The Reef. “And once the Marijuana Regulatory Agency shuts down the caregiver market entirely, then we’re at the mercy of any of the suppliers out there.”
The wholesale price for marijuana in Michigan is running $4,000 to $4,500 a pound, one of the highest prices in the nation. Those prices are then getting passed on to customers. And many of those customers are reverting back to the much lower black market prices.
“We’re seeing less of our loyal customers coming in,” Hasan said. “We’re assuming that they’re going to places closer to them or the illicit black market.”
At Arbors Wellness in Ann Arbor, which sells both medical and recreational marijuana and is vertically integrated with a grow operation, processing plant and retail shop, supply has been steady, but phasing out caregiver flower and infused products will make business challenging.
“It will kick licensed producers into high gear, which is a good thing,” said James Daly, president of Arbors. “And I think the state is looking for more aggressive action and production from licensees.
In an effort to ensure that all marijuana produced and sold in Michigan comes from licensed growers, processors and retailers, the Marijuana Regulatory Agency began Sunday to phase out products grown and processed by caregivers, who have been cultivating weed since Michigan voters approved marijuana for medical use in 2008.
In an effort to ensure that only licensed marijuana businesses are operating in Michigan, the state sets new rules to phase out caregiver products
Beginning March 1, medically licensed growers and processors were barred from purchasing any non-flower marijuana products from caregivers, including THC vaping cartridges, edibles and concentrates. Caregiver sales were limited to marijuana flower only to medically licensed growers and processors.
Marijuana customers may experience even higher prices at stores across the state due to the changes.
The new purchase limit for a grower between June 1 and Sept. 30 will be equal to the weight of marijuana the grower harvested between March 1 and May 31, in addition to the projected harvest weight of any plants that are flowering as of May 31.
“Anytime there are regulatory changes we can expect market fluctuations including pricing,” Michigan Cannabis Industry Association Director Robin Schneider said. “In this case they are giving us seven months notice to prepare for the change and we are grateful for that. There are many new licensed grows that just came online or are almost ready so we are hopeful with this advance notice we will be better positioned to meet demand in time for the deadline.”
While the Marijuana Regulatory Agency has increased testing requirements — everything purchased from a caregiver has been required to undergo the same testing as licensed product since April 2019 — it does not track the identity of the caregiver who sold it.
The caregiver, in theory, would grow up to 12 plants each for up to five designated patients, and themselves — if they were also registered patient. This meant a fully loaded caregiver could grow up to 72 marijuana plants.
This isn’t due to a lack of ability. Each caregiver is assigned a state registration number that links to the person’s identity, and that number is entered into the state tracking system along with the product they sell into the licensed marijuana market, but the Marijuana Regulatory Agency said it’s legally barred from tracking caregiver activity based on rules created in the 2008 medical marijuana law.
“The laws that govern our licensing program, both medical and recreational, require that cannabis sold in the regulated market be grown and tracked from seed to sale,” she said. “We very intentionally included the 100 plant grow licenses in our recreational ballot initiative in hopes that more caregivers and independent entrepreneurs will have an opportunity to participate in the licensed and regulated market.”
Between June 1 and Sept. 30, processors will be limited to caregiver marijuana purchases no more than 50% of the marijuana they purchased from caregivers between March 1 and May 31.
Dominant source being cut from Michigan marijuana markets, possibly spurring higher prices Marijuana buds at Elite Wellness on Monday, Dec. 9, 2019 in Thetford Township. (Jake May |