Michigan’s Cannabis Industry Soars, Surpassing the GDP of 51 Nations in 2023

LOS ANGELES— Michigan’s cannabis industry closed 2023 on a high, establishing itself as a national leader in cannabis sales. The state’s robust cannabis market sold nearly $3.06 billion worth of medical and adult-use cannabis last year, averaging about $305 for every resident, based on data from the Michigan Cannabis Regulatory Agency.

This staggering figure for cannabis sales in Michigan has surpassed the gross domestic product of 51 countries, nearly equaling Burundi’s GDP. A record-breaking December, with cannabis sales reaching $279.9 million, contributed significantly to this annual total.

Michigan’s per capita cannabis spending in 2023 outpaced rival states. Californians, for example, spent an estimated $5.9 billion, approximately $150 per capita, while Colorado’s per capita spending was close to Michigan’s at around $290.

Colorado’s cannabis market, once booming, appears to have peaked, with a decline in sales from $2.23 billion in 2021 to $1.77 billion in 2022, and projections indicating a further dip in 2023. In contrast, California’s market experienced a rise in sales in 2023 but continues to grapple with a well-established illegal market predating its 2018 legalization.

Interestingly, Michigan’s cannabis market shows no signs of peaking yet. Despite a brief stabilization in August, the market surged to new heights by year’s end, averaging monthly sales of $254.8 million. This surge is a notable jump from January’s $207.3 million sales.

Michigan’s market is projected to reach or possibly exceed $3.1 to $3.2 billion, with 2024 expected to be a pivotal year in determining the market’s trajectory. A significant factor in Michigan’s success is its regulatory, tax, and business framework established post the 2018 legalization of adult-use recreational cannabis.

Michigan’s approach includes unlimited licensure, allowing for swift approval of grow operations, processing plants, and retail stores. While local licensing challenges persist, these are gradually diminishing.

The state’s tax structure further bolsters its cannabis market. Michigan’s 10% excise tax on recreational cannabis sales is among the lowest in the U.S., compared to higher rates in states like Colorado, California, Washington, and Oregon.

The fiscal impact of cannabis sales is profound, with the state likely surpassing $1 billion in tax revenue since its first recreational dispensary opened in December 2019. In fact, cannabis has proven more lucrative for Michigan than alcohol. The 2023 fiscal year saw cannabis excise taxes outstripping those from beer, wine, and liquor combined.

This shift reflects not only Michigan’s dynamic cannabis consumer market but also differences in tax collection methods for cannabis and alcohol. Cannabis faces a 10% excise tax at both wholesale and consumer levels, while alcohol taxes are considerably lower.

As Michigan’s cannabis market continues to flourish, it highlights the growing economic and societal impact of the cannabis industry, positioning the state as a major player in this evolving sector.