Is This a Meltdown For Michigan Cannabis Market?

LANSING – Michigan’s legal Cannabis industry, once a hot spot for progress since recreational legalization in 2018, is now struggling with some serious financial pressures that could threaten its stability.

According to a recent report from Crain’s Detroit Business, 37 Cannabis companies have failed to renew their state-issued licenses this year, signaling a deepening crisis driven by high taxes, steep licensing fees, and a sharp decline in Cannabis prices.

The Michigan Cannabis Regulatory Agency (CRA), responding to a Freedom of Information Act request, revealed that the non-renewals stem from multiple factors. Fifteen companies, including high-profile operators like Primitiv Cannabis, owned by former Detroit Lions star Calvin Johnson, lost licenses due to delinquent state or federal taxes unpaid for at least a year. Others faced renewal fees of up to $24,000 per license, a cost that many operators, already strained by market conditions, could not sustain. Disciplinary issues, like purchasing illegal THC concentrate, also contributed to the closures, with Pure Roots’ processing facility in Lansing facing potential further penalties after a CRA investigation.

The price of Cannabis has plummeted, with the average cost of an ounce of recreational flower dropping to $62.91 in June 2025, down more than 65% [!] since March 2023, making Michigan one of the cheapest markets in the U.S. This price collapse, fueled by an oversupply of product, has eroded profit margins for both growers and retailers. The state’s 1,016 active recreational grow licenses, coupled with 69 new licenses issued in June alone, have flooded the market, leaving businesses like Pure Roots, which shuttered stores in Battle Creek, Lansing, and Center Line, struggling to remain viable.

Alvarez Cultivation and Consume Cannabis are among other operators hit hard. Alvarez lost licenses for facilities in Jackson and Edwardsburg, while Consume Cannabis’ Quincy location also failed to renew due to tax delinquencies. Larger players, like Bliss Farms in Turner, surrendered 15 medical grow licenses, potentially scaling back operations to cope with financial pressures. Meanwhile, multistate operator TerrAscend announced plans to exit Michigan entirely by September, closing 20 dispensaries and 4 cultivation sites, citing the state’s challenging market conditions.

The CRA has faced criticism for its regulatory approach, with industry voices arguing that excessive fines and complex rules exacerbate the financial strain. At a recent Senate Regulatory Affairs Committee hearing, CRA Executive Director Brian Hanna highlighted additional challenges, including competition from unregulated hemp-derived THC products and illicit market activity, which undermine licensed businesses. Industry advocates, such as Robin Schneider of the Michigan Cannabis Industry Association, have called for a moratorium on new grow licenses and stricter enforcement against black-market products to stabilize the market.

Despite generating $3.27 billion in recreational sales in 2024, a 9.9% increase from the previous year, Michigan’s Cannabis market is showing signs of distress. Sales have declined for five consecutive months compared to the prior year, with June 2025 reporting $261.1 million, a 4.2% drop from May. The oversupply, compounded by competition from neighboring states like Ohio, which recently legalized recreational Cannabis, has reduced demand for Michigan’s product, particularly in border regions.

The industry’s challenges have broader implications. With nearly 40,000 jobs and over $300 million in annual tax revenue at stake, the potential for consolidation looms large. Small businesses, including social equity licensees, face the greatest risk, as larger operators may dominate a contracting market. Proposed reforms like limiting new licenses or regulating hemp-derived products could offer relief, but their implementation remains uncertain.