Michigan Recreational Cannabis Prices Rise as Fewer Plants Being Grown and Enforcement Steps Up
MICHIGAN– The price of recreational cannabis in Michigan has increased for the first time since dispensaries began selling in December 2019. According to the Michigan Cannabis Regulatory Agency, the cost of an ounce of flower rose to $86 in February, up from $80.12 in January.
Industry insiders believe that the drop in plant inventory is driving the price increase. Many producers are finding it more expensive to grow their own cannabis than to buy surplus from competitors, which has resulted in a slowdown of new plants in grow houses. This decline in plant inventory is reducing supply, which is helping to support prices, even as demand remains high.
The number of plants being grown for recreational consumption in Michigan has dropped by 20.5% to just over 1.2 million since September. Although this decline is typical in the months following the October harvest of outdoor grows, the numbers usually recover by the start of the new year. The recent increase in enforcement may also be contributing to the drop in plants being grown.
Some smaller, independent growers are benefiting from the larger operations reducing their grows due to rising cost pressures. Andrew Sereno, CEO of Manchester-based Glacial Farms, said that maintaining quality is hard, and it is just easier to outsource.
The Michigan cannabis industry has been plagued by steep price declines since the recreational industry’s inception. Margins were all but eliminated due to declining prices brought on by an oversupply of product. However, some believe that the industry is breathing slightly easier now that prices are rising. Doug Mains, principal and co-leader of the cannabis practice for Detroit law firm Honigman LLP, said, “Everyone is struggling to pay bills and negotiating lending extensions.”
The industry’s struggles have led to at least five Michigan cannabis companies being under the authority of a court-ordered receiver. Lansing-based Skymint, which primarily operates under the parent company of Green Peak Innovations Inc., owes more than $127 million to Canadian investment firm Tropics LP, according to a lawsuit filed in the Ingham County court on March 3.
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