Bruce Linton was right. Michigan cannabis is going to be big, real big.
Michigan is one of the states that only recently legalized the use of cannabis and its performance since December 2019, when this happened, has far exceeded expectations. By becoming number five on the list of highest-grossing states in terms of cannabis sales, it is an understatement to say Michigan has taken a huge leap forward.
Based on economic projections, the state is expected to generate about $1 billion in cannabis sales. It should be noted that these aren’t just baseless projections; they are backed by extensive economic studies. Andrew Brisbo, the Marijuana Regulatory Agency’s Executive director at the Cannabis Capital Conference held virtually sometime this year also gave a statement backing this. Michigan is on track to become one of the best states for cannabis sales in the nearest future.
A detailed analysis
The recreational cannabis market saw exponential growth from $9.8 million as of January to record a whopping $65.5 million by August. A lot of favorable economic factors have led to a very keen interest by investors from all over who see Michigan’s high potential. It should be kept in mind that this sum total does not even include that of medical cannabis.
The medical cannabis industry in Michigan is far older than the recreational cannabis industry as the sales of medical cannabis has been legalized in Michigan since 2008. Michigan is even considered as having the second-largest market for medical cannabis in the US, just behind California.
With both markets raking in about a total of $109 million in July, the success in Michigan is obvious for all to see. It should be noted that the total revenue is expected to grow as high as $3 billion by the end of the year. The fact that Michigan is harnessing the cannabis industry to serve both medical and recreational users means that the state will reach its highest potential quickly in terms of market value.
A lot of factors have contributed to this cannabis market surge in Michigan. A couple of these factors are
An Existing Market to Leverage On
The fact that the medical cannabis market had been in operation in Michigan since 2008 means that the cannabis scene down there had developed to a point. This made it a lot easier for the recreational market to get a good start because it didn’t have to start from rock bottom, just build on what the medical cannabis market has accomplished. This leverage really helped the market as it did not only guarantee interest in the products, it also helped lay down an effective structure for sales and distribution.
According to statistical data, the purchasing power of an average Michigan consumer is said to be at least $84.58 which is relatively higher than that of California which is currently at $64.13. This means that the consumers in Michigan can spend a lot on cannabis which puts them at the top of the cannabis consumption table in terms of general spending patterns.
Economic reports like this play a significant role in attracting cannabis companies and investors who sell products at premium prices because the consumers show a preference for higher quality brands not minding the fact that they have to spend more purchasing them. Having adults over the age of 21 accounting for 7.3 of its total 9.9 million population is also a huge positive that attracts investors.
With the Outbreak of Covid-19 all over the world, there was a widespread lockdown in several countries’ activities and movement of people became restricted with only a few essential businesses opening. Due to being a legalized industry, some cannabis businesses were part of those considered ‘essential’ and allowed to open subject to their compliance with a myriad of safety regulations.
The lockdown and restriction on movement had also already made many consumers anxious and in need of a form of relief that cannabis provides. Thus, there was a surge in the number of cannabis purchases. The adoption of the delivery and curbside pick-up system also made it easier for people to get their orders thus contributing to increase total revenue generated. According to Meredith Mahoney, the president of Lantern, a cannabis delivery platform, the technology she created stepped in and filled the demand the pandemic created.
Out of State Consumers
The geographical location of Michigan is also very advantageous as it allows for the influx of other consumers from states nearby where cannabis use isn’t legal. These states include Indiana, New York, and Ohio. Reports show that a lot of consumers come from these states to purchase cannabis in Michigan. This situation also played a significant role in bringing more cannabis businesses to Michigan because cannabis companies expand to areas where their services are in huge demand.
Factors that can impede Michigan’s growth
Below are a couple of factors that can hinder the growth of the cannabis market in Michigan.
Funding – Funding is an integral part of a business. The importance of adequate funding to growth cannot be overemphasized which makes the lack of it a potential impediment for the growth of the cannabis market in Michigan. Since the pandemic hit the economy of the world hasn’t remained the same, and unless significant turn arounds are recorded soon it is difficult to picture a scenario where it doesn’t affect Michigan’s growth.
Complex verification process – It is no news that the entire process involved in getting a cannabis product tested is exceedingly long and tiresome. A lot of these bureaucratic processes needed before cannabis products can be sold via proper channels might discourage a lot of potential investors
Inequality– The inequality in the socio-economic status of communities must be addressed. A closer gap will enable growth of the purchasing power of the state. However, if nothing is done to address this crucial issue, eventually, it’ll have a negative impact on the industry’s growth.
The road to success is never easy, it’s filled with stumbling blocks. For an industry to be truly successful, it has to be strong and resilient to overcome whatever obstacle comes up. And this is what the Michigan cannabis industry needs to sustain success and Increase growth.
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