Michigan Marijuana Industry Impacted By Price Drops

Michigan has already had some of the cheapest recreational marijuana products since legislation passed in 2018. Many users saw the industry enter the Mitten state with a big boom and hundreds of dispensaries opened up all over the state. Just like anything else in the commercial world, pricing is based upon supply and demand.

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Originally the prices were very similar to what street prices were when use was illegal unless medically prescribed. Then within just a couple of years, the prices began to dramatically drop as more competition arose. This has continued to bode well for consumers who are able to get their favorite products for affordable prices, but what about the businesses?

As expected, the cheap prices have both dispensaries and growers struggling to make quality profits. The average price for an ounce of recreational marijuana flower has fallen to $65.21 which is a sharp 30% decline from the year before. This has been a consistent trend since 2019 that doesn't look to be slowing anytime soon.

Unfortunately, due to the number of products that's available and the prices that it's being sold for, growers are having trouble selling products for as much as it costs to grow them. This means we may see more cannabis businesses closing up shop this year as they fall into a hole.

Even as the number of products sold continues to rise, the amount of revenue made from those products continue to fall not only year to year but also month to month. Although many shops and growing facilities have already closed, there are more retailers and processors than last year.

Michigan is the nation’s largest market by units sold and is expanding rapidly, driven by growth in metro Detroit and Southwest Michigan. Michigan has the highest sales per resident compared with all other states where recreational cannabis is legal at $327 per resident, fueled by strong retail access and competitive pricing.

Even through all of the price woes, Michigan surpassed huge milestone earlier this year as the state reach $10 billion in total sales since it became recreationally legal.