Michigan cannabis industry trends are on track with several national cannabis industry trends. At the same time, the Great Lake State continues to set trends of its own. After a year full of record-breaking marijuana sales, the cannabis industry in Michigan is continuing to position itself as a national leader.
After reviewing state and national data from multiple sources, we’ve identified these six main trends that you’re likely to witness in Michigan’s cannabis industry during 2022.
Michigan Cannabis Sales Will Break More Records
Michigan cannabis sales skyrocketed during 2021. The state broke its own sales records several times during the year. Cannabis sales in Michigan will break more records in 2022. December of last year closed out by setting another record-breaking month for recreational cannabis sales. There were over $135 million in recreational purchases and nearly $33 million in medical marijuana sales.
This topped the previous recreational cannabis sales record in Michigan, which was set in October at $128 million. Michigan’s current record for a combined total of recreational and medical marijuana sales in one month is from July of 2021, with nearly $171 million in total sales. This comes as no surprise since summers are always a big sales season for the cannabis industry. We expect to see cannabis sales in Michigan continue to increase and set new records, especially in big summer months like July.
Michigan Will Get Upgrades With New Cannabis Tax Revenue
The newest data report from the Michigan Marijuana Regulatory Agency (MRA), shows the total cannabis sales for Michigan in 2021 was almost $1.8 billion. Adult-use accounted for the bulk of the sales, with over $1.3 billion, and medical marijuana accounted for over $480 million. All of these purchases resulted in almost a quarter of a billion dollars in state tax revenue.
MRA spokesperson, David Hearns, commented on the impact of the state’s new flow of tax revenue. $115.4 is going to the state sales tax fund, which is used for the general funding of several state projects. Then, another $131.2 million is being placed in the marijuana excise fund. These funds are divided up between local government, roads, and schools.
With new money for local government to spend, residents throughout Michigan can expect to start seeing more upgrades. Roads and schools will get some extra attention, as will other infrastructural and community projects as local municipalities see fit.
Michigan Cannabis Prices Are Expected To Keep Dropping
The growth of Michigan’s cannabis industry has led to a decrease in prices. In December 2020, the cost of an oz of adult-use cannabis was $350, and an ounce of medical cannabis was $265. As of December 2021, the prices dropped to $185 an ounce for adult-use and $175 an oz for medical.
This decrease in prices is largely a result of the number of licensed cultivators. Michigan had issued a total of 451 grow licenses as of January 1, 2021. That number almost tripled, and now there are 1,130 licensed grows in Michigan. More grow licenses means higher supplies of product, and we know when supply is high, prices are low. Lower prices are great for consumers. Although we believe prices will continue to fall, the decline may be slow and will eventually level out at some point in the future.
Cannabis Companies in Michigan Will Continue To Consolidate and Expand
Local Michigan news reports consolidation and expansion were a trend that started last year and will continue. At the beginning of 2021, there were 211 adult-use cannabis retailers. A number which doubled to 432 by the end of the year.
Many of the new adult-use retailers belong to chains. At the beginning of 2021, there were only 12 business owners that had a chain with three or more locations. At the end of December, the number of cannabis chain owners in Michigan tripled to a total of 36.
This falls right in line with national cannabis industry trends. Industry experts predict that “Smaller M&A deals will likely continue at a rapid pace and even accelerate across the United States as capital-flush multi-state operators build out their footprints in high-growth marijuana markets”. With Michigan poised to be one of the leading states for cannabis sales in the U.S., we can almost guarantee to see more mergers and acquisitions as the industry evolves.
Consumption Lounges In Michigan Are On The Horizon
Licenses for cannabis consumption lounges in Michigan have been available since 2018 when voters passed adult-use. However, there has been no consumption lounge license issued in Michigan to date. Consumption lounges are hot topics of interest for cannabis investors, business owners, and consumers. It’s a market that’s ready to integrate into the hospitality industry.
Despite having not issued any licenses, there is talk about potential lounges coming to Ann Arbor and Kalamazoo. If, and when, cannabis consumptions lounges open in Michigan, they will have an uphill battle. Between social distancing and concerns about cross-contamination from shared devices or accessories, consumption lounges could prove to be a challenging but potentially lucrative business opportunity.
New Michigan Cannabis Products Will Start Hitting Shelves
National data on the cannabis industry indicate a lot of changes in consumer habits. Three product categories stand to gain a good portion of the market share. The categories include edibles, vape pens, and topicals. All of these product categories are increasing in popularity, and because of this, we can expect to see new products for each category hitting the selves in Michigan later this year.
Edibles are the fastest-growing category by popularity, making them the most likely category to see new products. Although flower remains a top-selling category, consumers are starting to choose alternatives to smoking. THC-infused beverages, in particular, are already becoming a big focus for cannabis product manufacturers at a national level. This leads us to believe that Michigan will also be likely to see more edibles in general, and especially beverages infused with THC.
No matter what’s trending in the cannabis industry, having an experienced accountant can help you achieve your goals. Take a look at our services, and contact us today for your free quote.