Cannabis Legalization: Spotlight on Michigan

On December 1, 2019 Michigan became the 10th US state to allow recreational ("adult use") marijuana.  The expansion into adult use followed years of regulated medical cannabis, which was first allowed in 2008 and expanded in 2016. The most recent licensing process is overseen and directed by the Michigan Marijuana Regulatory Agency (MRA).  Information about the regulatory agency and other useful information can be found at this link.  The state is also working on legislation that would result in the expungement of many low level cannabis related offenses.

cannabis business michigan

The reality of the rollout in Michigan has been heavily impacted by the fact that the majority of Michigan jurisdictions opted out of legalizing the operation of cannabis businesses.  In fact, 1,411 cities and townships, including Detroit, prohibit adult-use cannabis sales and as of early 2020 there are only 43 active adult use dispensary licenses.  

This market dynamic created supply chain challenges that posed a threat to ensuring adequate supply for the needs of the state's medical patients.  Furthermore, as we sit here in Spring of 2020, the state is working through changes to the laws around which dispensaries (medical vs. adult use) can legally access cannabis provided by medical caregivers.  Cannabis has been cultivated by medical caregivers since it became legal in Michigan in 2008. 

As the market evolves and in light of the challenged supply chain, it seems likely that additional business opportunities will continue to present themselves in Michigan, as the supply chain stabilizes and (hopefully) additional jurisdictions eventually decide to join the regulated legal market. As we have seen in many cities and states, a ban on legal cannabis does not eliminate cannabis but rather props up the illicit market.

Despite the slow adoption by local jurisdictions, indications are that the Michigan market could ultimately be as high as $1.7B in annual revenue.  The future is should have plenty of opportunity, with the potential for significant market size and the fact that the state ordinance contemplates several progressive ideas including on-site consumption and cannabis events.


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