Special Report: Marijuana industry on pace to reach about $1 billion in sales
MICHIGAN (WPBN/WGTU) — Many businesses have taken a hit during the pandemic, but one of the industries thriving during this time is the marijuana industry.
In fact, close to $60 million a month in recreational marijuana has been generated in Michigan.
The money only made because Michigan voters passed legalizing adult-use marijuana back in November 2018.
A year later, the state issued its first recreational license to a dispensary in Ann Arbor, and the industry has been booming ever since.
“We’ve seen tremendous growth in retail sales even through the pandemic,” said Andrew Brisbo, Executive Director of the Michigan Marijuana Regulatory Agency.
The MRA looks over both the medical and recreational marijuana programs in Michigan.
“We saw total retail sales double between November of last year and March of this year, and then double again between March and July,” Brisbo said.
In March 2020, the MRA commissioned an economic analysis through Michigan State University which estimates the total mature marijuana market in Michigan will generate about $3 billion a year.
“When we look at total sales between medical and the adult use market, we are on pace this year to reach about a billion dollars in sales,” said the MRA Executive Director.
Most of that money coming from the six percent sales tax and the 10 percent excise tax imposed on adult-use marijuana.
“In terms of that excise tax, again that’s only on the adult-use side, but we are seeing close to $60 million a month in sales in the adult-use program already.”
So how is the money being dispersed throughout our state?
Brisbo said, “It’s first use is to offset the cost of the agency, operating the program, [then] we are going to have two sessions of $20 million grants provided for approved clinical research trials, and then after that has been funded – in the future, 15 percent of that revenue goes to municipalities, 15 percent to counties, 35 percent to roads and 35 percent to schools.”
As of November 4, 2020, there are 321 active licenses for medical marijuana provisioning centers and 43 licenses for adult-use marijuana retailers.
Lake and Leaf Cannabis in Benzie County has both licenses.
“Each cost a minimum of $30,000 each,” said Jennifer Donovan, Chief Operating Officer of Lake & Leaf Cannabis.
Despite opening during a pandemic, Donovan said sales are about twice as high than she expected.
In addition to edibles, including everything from cookies, gummies, chocolate and honey, marijuana dispensaries sell blower in bulk, which Donovan said is the most popular sale.
“We have grams, eighths and quarters,” said Donovan.
Depending on the THC level, and the type of product, a gram could cost anywhere from $13 to more than $60, but what’s really driving the cost is supply and demand.
“We just paid $4,800 a pound for a premium cannabis,” said Donovan. “My guess is that the marijuana prices can go down to as much as $800 a pound in the next couple of years as the market starts to get saturated.”
To help keep the cost down many dispensaries are transitioning to vertical integration.
“We are a vertical, so we grow, process, and dispense at Pincanna,” said Rob Nusbaum, founding partner of Pincanna. “We have an approximately 135,000 square-foot grow and processing facility – absolute state of the art.”
Pincanna recently held its grand opening in Pinconning, Michigan and has been able to harvest enough grow for its first dispensary in Kalkaska.
“CBD and THC products they are known for stress relief and anxiety relief,” said Nusbaum.
Which is just one theory for booming business during a pandemic.
“In this particular industry, as well as the alcohol industry, both have seen a spike because you know there’s so much additional stress and there’s so much anxiety,” Nusbaum said.
But even when the pandemic is over and the extra stressors are gone, Brisbo believes the adult-use marijuana industry is here to stay.
In addition to billions of dollars, the marijuana industry is also estimated to create around 13,000 jobs over time.
Michigan is one of 11 states, plus the District of Columbia, to have legalized recreational marijuana.
However, on Tuesday four more states approved ballot measures to legalize recreational marijuana as well.