It’s not getting better. It’s getting worse. The state hasn’t figured out yet how to license growers. There are still plenty of retail operations (provisioning centers) in the state, but there’s little flower to be had. Someone in Michigan government thinks they’re doing a good job. They aren’t.
It’s no longer just the medical cannabis market that has draconian fees and regulations. Now regulations for the recreational market are coming. And the fees are cutting out the little guy…again. Michigan’s actions and proposed regulatory rules for applying for a grow or dispensary license will ensure the black market remains larger than the legal cannabis market. Big moneyed players are the only ones who can get in the rec game. And when there’s no product in the legal recreational marketplace (dispensaries), there will be plenty of money flowing into the black market. Michigan is going to lose 100s of millions of dollars to the same market where it has always lost potential tax revenue. It’s the illegal market.
The Michigan Cannabis Market is in Deep Trouble
The Michigan cannabis market is at a dangerous crossroads and it’s the fault of the new governor, plain and simple. Governor Whitmer (D) was elected last November on a campaign promise to normalize the Michigan medical cannabis market and develop the best adult use market in the U.S. In the face of current evidence, the promises are hot air.
New Michigan Cannabis Licensing Agency
Governor Whitmer dissolved the old bureaucracy licensing retail and grow operations. She then initiated a new regulatory department called Marijuana Regulatory Agency (MRA). The MRA is supposed to be efficiently granting licenses. They’re not. It’s run by the same person who previously held up licenses, Andrew Brisbo. The people at the regulatory agency are breaking their arms patting themselves on their collective back for the good work they’re doing. The MRA is not doing good work, or enough of it to help the state markets now. If they were doing a good job, the dispensary shelves would not be bare.
Street Reality for Michigan Cannabis
The reality is quite different on the street. Medical cannabis patients are hurting. Effective medicinal products are not available, including Rick Simpson Oil (RSO). RSO is reputed to have an analgesic effect on cancer. There is at least one lawsuit because of the lack of product some cancer patients need. It’s not going to get better soon unless the courts step in once again and tell the regulators in Michigan to get their act together.
So, What Happened in Michigan?
A quick recapitulation of the facts; Gov. Whitmer dissolved the department of the Licensing and Regulatory Affairs (LARA) in charge of licensing both growers and retail operators. She replaced it with a new department called the Marijuana Regulatory Agency (MRA). This simply substitutes one bureaucracy for another. Both the old LARA and the new MRA are run by the same person, Andrew Brisbo. Brisbo gives the impression he does not care about the medical cannabis market or its patients.
The MRA has granted only twelve grow licenses to date. Twelve grow licenses for well over 100 licensed stores in Michigan? There’s just not enough cannabis to go around. Currently, dispensaries have very little cannabis flower product on the shelves.
Michigan’s Cannabis Market
Michigan growers have little interest in growing flower, as concentrates are much more profitable.
Michigan caregivers (the original growers of cannabis) gave way to an unregulated hodgepodge of stores. This was the original failure of the state; A failure to regulate the burgeoning medical cannabis retail market. The adult use market is supposed to start later this year. If it happens, the shelves will be bare.
Currently, there are about 300,000 registered medical cannabis patients in Michigan. If they only smoked two grams per week, per person, about 13,000 pounds of weed per week would be needed to keep patients supplied with cannabis.
13,000 pounds/week works out to more than 50,000 pounds a month. That’s a lot of weed. It takes at least 20 weeks to go from planted seed or clone to cured harvest. Twelve growers, no matter how big, can’t handle that. 100 big growers, maybe. How does Michigan expect to grow the market when adult use comes online? The simple answer is, they can’t. Dispensaries only have 12 growers from which to buy. Past caregivers can either dump what they have or divert it to the black market. Guess what is going to happen? The black market will thrive!
What Michigan Needs to Do to Fix the Problem
Here are 5 things Michigan needs to do right now. Not three or six months from now. Now!
- Recognize cannabis is business. The state gets tax revenue from these businesses. In order to operate and thrive, businesses needs inventory. Cannabis flower inventory in the market right now is scant, and has been for over a year.
- Allow caregivers (and let’s call them small growers, since that’s what they are) to sell their product to the dispensaries.
- Open up the licensing system for smaller growers with smaller fees.Now everyone has to show at least $150,000 in assets, with $37,500 in liquid assets. That’s a non-starter for many people who might like to become a grower. The current Michigan cannabis licensing fee scale is pretty steep. This takes smaller growers out of the cannabis business.Convert “caregivers” to “growers” and make them ’boutique’ growers for a new, craft category. Treat them like the state treats wineries or distillers. Allow the ’boutique’ growers to grow 50 to 100 plants. Create a lower fee for smaller grow operations. This allows smaller, disadvantaged communities access into the marketplace. What a win-win!
- Regulate the Michigan cannabis model after the alcoholic beverage market. Both are controlled substances. Both need regulation at some level, especially because both are revenue streams for the state.
- Let growers and dispensaries have a say in how they’re regulated. The best interests for both groups will regulate the free flow of legal cannabis products in Michigan. Make sensible regulations and implement them slowly enough to not disrupt the market.
The Current Reality
Excess cannabis grown by past ‘caregivers’ is currently not allowed in dispensaries. Until earlier this year it was. Now it is going to the illegal market. Where does the state think it’s going? Do they think growers going to destroy their harvests? What should the small cannabis farmers do? They need to make a living. The cannabis is going to the black market, that’s what is happening. Since January 2019, 3 times Michigan failed to implement a reasonable and thoughtful approach to medical cannabis.
Get your head out of your nether regions, Michigan. You have patients, and soon adult consumers, wanting to pay tax dollars to the state.
This mess in Michigan is the fault of the last governor, not the current one. Who wrote this hit piece? Nobody in Michigan likes the 3-tier alcohol distribution monopoly system either.
Not a ‘hit piece’ at all. It’s facts. While our current governor cannot be compared to the last debacle, she has essentially swept the issues under the rug. The abolition of LARA as the ‘licensing’ entity in Michigan and the forming of the new board hasn’t done a thing. The same people are running the organization. Take a look now in any dispensary. There are very few strains of cannabis from a handful of companies. The ‘licensed growers’ are taking the easy way. Caregivers have been forced out of the market to make way for what appears to be big money.
As for the 3 tier ‘monopoly’, for alcohol, it only exists for spirits. Wine and beer are handled by wholesalers and there are no price controls over beer and wine as there are for spirits in Michigan. The 3 tier system which evolved after the end of prohibition, is a productive market. The ‘monopoly’ is held by the wholesalers who have carved up coverage of beer (think Miller/Bud) so there are no overlapping territories. While this part isn’t good, it’s efficient. And there’s lots of competition … between brands. For cannabis, what I’m suggesting is that the individual small ’boutique growers’ sell directly to dispensaries.. This is exactly the same as Michigan wineries and craft breweries selling directly to stores. However, they mostly sell their wines through wholesalers because it’s more efficient for a winery or craft brewery on Michigan’s west coast to sell to southeast Michigan retailers through a wholesaler.
I’m just looking for the best cannabis market to exist in Michigan with large growers and small ’boutique’ growers existing in the same market. Exactly the same as small wineries and breweries.
Let’s keep the dialogue moving.