Cannabis prices in Michigan reach lowest level ever
Cannabis prices in Michigan in January reached their lowest level ever in January. That’s positive news if you’re a cannabis retailer or a customer, but it’s a problem if you’re growing cannabis for a living. Prices are lower than they’ve been in decades. A gram of cannabis can now be purchased for roughly $5 in Michigan.
“The buzzword right now about the market is growth, but I think we’re entering a stage where the prices and supply are meeting demand and it’s stabilizing,” Andrew Brisbo, executive director of the Michigan Marijuana Regulatory Agency, told Bridge Michigan.
Rick Thompson, executive director of Michigan NORML, told Cannabis News Box that these prices changes are having large effects in the industry.
“The race to the bottom in cannabis pricing has altered the cannabis industry by forcing mergers, by giving easy entry into the Michigan market
to multi-state operators via acquisitions, it has frozen funds designated for charitable causes, and ended the American dream for some cannabis entrepreneurs,” Thompson said. “And- the price per pound hasn’t hit the bottom yet. The next six months will be hard for some Michigan businesses.”
Thompson said the main problem for cannabis businesses that are being hurt by these low prices is that the licensing system in Michigan allows businesses to essentially get licensed to grow an unlimited amount of cannabis, which means too much cannabis gets produced. He said one business “stacked” 40 licenses for one location so they could grow an incredible amount of cannabis.
“No matter how predictable this price drop was, it has happened faster than most had anticipated,” Thompson said. “Many companies are still trying to pay down their start-up costs. Companies all across the state are adjusting their business plans, trying to find a path to profitability with this new, lower cannabis pricing reality. We have begun to see Michigan cannabis cultivators going out of business.”
Consumers love when their cannabis is really affordable, Thompson said, but they don’t love when they see their favorite cannabis companies go out of business because they can’t afford to stay in business anymore. A price drop is only so great if your dispensary ceases to exist and you have to go to a place you don’t like so much or drive farther to get cannabis.
“They do not like seeing their favorite stores struggle, have to lay off people, and go out of business. They do not like to see their favorite brands disappear. They also do very little to help prevent that from happening,” Thompson said.