News Summary

Michigan’s marijuana market is experiencing a downturn, with sales dropping by 4.2% statewide in June, following a period of growth since legalization. The average retail price for cannabis flower has plummeted by 70% from 2021 levels, contributing to intensified competition among over 850 businesses. Despite 76 new business applications, major companies like TerrAscend are exiting the market. In contrast, farmers are increasing production, driven by an oversupply. Regulators are considering new measures to stabilize prices while the industry continues to generate significant tax revenue for the state.

Detroit, Michigan — Michigan’s marijuana market is experiencing a significant slowdown, with sales declining by 4.2% statewide in June. This downturn follows years of steady growth in the cannabis industry since legalization began in December 2019. The state has witnessed a drastic drop in the average retail price for cannabis flower, which fell from over $200 an ounce in June 2021 to around $63 an ounce as of last month, representing a staggering 70% decrease.

The decline in sales is compounded by a wave of competition among the state’s cannabis businesses. Currently, Michigan boasts more than 850 cannabis businesses, with 75 of the state’s 83 counties having at least one marijuana operation. Particularly in border counties, such as Iron, Gogebic, Menominee, Branch, and St. Joseph, there are more than three dispensaries for every 10,000 residents, contributing to an increasingly saturated market. Despite the challenge, 76 new applications to open marijuana businesses were submitted last month, signaling persistent interest in the industry.

Major players in the market have begun to withdraw due to the difficult conditions. TerrAscend, a Toronto-based cannabis company, recently announced its exit from Michigan, closing 20 retail stores and four cultivation facilities. The company cited the “extremely difficult market” as a primary reason for its decision to leave.

Marijuana farmers, on the other hand, have been increasing their production. In June alone, they planted an additional 470,000 cannabis plants, bringing the total to 3.2 million plants statewide. This oversupply has been a driving force behind the falling prices, with many dispensaries competing aggressively for market share, ultimately cutting into profits.

The total monthly recreational marijuana sales peaked at $294.2 million in August 2024 but have seen a steady decline since, falling to $260.6 million last month, an 11% decrease. Looking back, sales in June of last year reached $277.4 million, indicating a trend of reduced consumer spending in the cannabis market over the last year.

This year, from January to May, recreational dispensaries reported sales of $1.31 billion, a decline from $1.34 billion during the same period in 2024, marking the first year-over-year drop since legalization. While dollar figures are decreasing, actual volume has increased; dispensaries sold around 20% more cannabis products by weight in May than in the same month a year prior. This paradox raises concerns about sustainability and pricing in the fiercely competitive market.

State regulators are now advocating for a moratorium on the approval of new cultivators as a means to stabilize the market amid fears that excess supply could lead to further price degradation. Despite this downturn, Michigan’s cannabis industry has generated over $1.9 billion in tax revenue since legalization, funding vital services such as education and infrastructure projects across the state.

In summary, Michigan’s marijuana market stands at a crossroads, grappling with oversupply, price drops, and an influx of new competitors, challenging businesses to adapt to the changing landscape while providing essential tax revenues to the state.