GRAND RAPIDS, Mich. (WOOD) — Michigan’s marijuana industry is facing growing pains as prices fall and supply increases.
In January 2022, the average cost for an ounce of flower in Michigan was $152. In January 2023, the average fell to $80, creating what some call a consumers’ market.
“When you go in you are now able to buy more for your dollars than you were before,” said Benham Wrigley Jr.
Wrigley is an attorney with CannaLex law in Grand Rapids, which works within the marijuana industry. He said part of the reason prices have dropped so steeply is due to “oversupply.”
“You might go to the state of Illinois and only find 12 growers, here you can have as many growers as municipalities will allow,” Wright said.
One of the companies feeling the impact is SKYMINT, which has 24 dispensaries in Michigan. The business recently had to enter a receivership due to financial challenges.
“SKYMINT made the difficult but necessary decision to enter a receivership to address our debt obligations and financial position, which were driven by the challenges facing many in Michigan’s cannabis industry, including excess supply, decreasing prices, limited access to capital and the increasing cost of capital,” the company said in a statement.
According to a report from Crain’s Detroit Business, there are also four other cannabis companies that have been placed under receivership.
“I think what you end up seeing is some folks overleveraged themselves. Some folks believed that the industry was going to grow at a pace that it didn’t,” said Chris Jackson, vice chair of the board for the National Cannabis Industry Association.
Despite the current challenges, Jackson said the marijuana industry still has a bright future.
“It’s not that consumers are less interested in options, because they are interested in options. They’re interested in safe options,” Jackson said. “We have a very infant industry overall and so this industry, like every other industry, needs the ability to correct itself.”
He said the businesses that will thrive are the ones that are small, locally owned and unique.
“They’re going to become staples in their community, just like any industry over time,” Jackson said. “I think there’s a lesson in not getting too big too quickly, understanding what you do best, being as conservative as possible.”
Wrigley told News 8 he expects marijuana prices to level out when cannabis growers produce less and after some stores inevitably go out of business.
According to the Michigan Department of Treasury, more than $1.8 billion in adult-use marijuana sales were reported during the 2022 fiscal year.