Michigan’s cannabis regulator told state lawmakers April 23 that the marijuana industry is under strain from falling prices, illicit market activity and the rise of unregulated, intoxicating hemp-derived products that compete with licensed cannabis businesses.
Brian Hanna, the executive director of Michigan’s Cannabis Regulatory Agency, said at a regulatory affairs Michigan Senate committee meeting, held in Lansing, that the biggest challenges the agency faces this year are the inability to suspend licenses for egregious conduct, the increasing supply of marijuana flower that outpaces demand and unregulated and intoxicating hemp products that are flooding the market.
“This is a very challenging environment, not only for the licensees and stakeholders, but for the regulatory agency as well,” Hanna said.
Prices for marijuana gummies have dropped significantly since these products were photographed at a dispensary in November 2021.
Michigan’s 5-year-old recreational cannabis industry is navigating a steep decline in prices. The average retail price for an ounce of recreational marijuana flower dropped to $65.14 in March, according to the most recent data from the CRA, continuing the trend of prices generally declining since sales started. The price in March was 28% lower than it was the same month a year ago.
More on the state of the industry: As Michigan cannabis prices fall, business owners point to other threats to their survival
More on the impact of declining prices: Recreational marijuana prices drop again in Michigan: What it means for the industry
State Sen. Dayna Polehanki, D-Livonia, asked Hanna what the state could do to solve the agency’s problems.
Hanna said he wants to close a loophole that prohibits the CRA from possessing cannabis even though the agency is building a state-run testing cannabis lab and wants to see changes made to laws regulating hemp.
Hanna was asked what he expects the industry will look like in five years and he said he expects there will be more consolidation, noting that because cannabis is still illegal at the federal level, companies can’t file for bankruptcy (federal courts have exclusive jurisdiction over bankruptcy cases) or file for federal tax exemptions.
“So if you lose, you lose,” he said. “People’s life savings are on the line. That’s incredibly stressful for everybody, including us. So without some of these changes that we’re talking about, you’re going to see consolidation. You’re going to see smaller businesses going out of business.”
Following Hanna, three members of the state’s cannabis industry made presentations to state lawmakers, including Robin Schneider, executive director of the Michigan Cannabis Industry Association. Schneider said marijuana growers who have invested everything into their businesses are losing everything as prices plummet and illicit cannabis floods the market.
“I had to give one of my members money at Christmastime because they didn’t have Christmas presents for their kids this year,” she said. “They should be making money. This is a family that was doing well and made a reasonable investment with a reasonable expectation that the product was going to be grown in the state of Michigan, not that people were going to bring in product and plummet our market, and that they were going to lose their entire life savings.”
Contact Adrienne Roberts: amroberts@freepress.com.
This article originally appeared on Detroit Free Press: Michigan’s cannabis market faces challenges, regulator tells lawmakers