March 8, 2022

Michigan Wholesale Cannabis Prices Drop as Supply Balloons

Photo: Sigmund/Unsplash

The Michigan Marijuana Regulatory Agency (MRA) has issued its January 2022 report detailing sales, licensing, and production data in the state’s adult use and medical cannabis markets. Michigan’s January 2022 combined adult use and medical cannabis sales, at $153 million, fell 9.2% month-on-month from $168 million in December 2021. Year-on-year, January 2022 sales are up nearly 41% from $108.5 million in January 2021.

January 2022 Adult Use Market Summary

Adult use sales have fallen in two of the past three months, likely due in part to cratering Michigan cannabis prices and exacerbated in the past month by post-holiday demand slippage. Michigan has no state-level license cap, saw the first significant outdoor crop hit the market beginning in Q4 last year, and has seen aggressive price-cutting by newly licensed growers, all of which are weighing on price and monthly sales figures.

Michigan Adult Use Cannabis Sales

Average daily sales fell to $4 million in January from $4.4 million in December 2021 but are up 46% year-on-year from $2.2 million in January 2021.

Retail flower sales volume jumped 15.6% in January 2022, after rising 15% in December 2021, even as sales revenue fell by 5.5%, emphasizing the effects of crashing wholesale spot market prices even as demand increases. Cannabis Benchmarks has learned new growers, some outdoor, are undercutting price to attract buyers and establish their brands in what is becoming a very competitive market.

Michigan Adult Use Cannabis Flower Sales

Inventory of flower held by growers that has passed the state’s required testing was at 46,065 pounds at the end of January. Combined with the amount of flower held in inventory at retailers, 43,306 pounds, the amount of immediately marketable flower in Michigan’s adult use market as of the end of January was 89,371 pounds, or the equivalent of 3.6 months of supply based on January flower sales of 24,884 pounds.

The number of plants reared and harvested in the most recent three months is shown in the table below. Vegetative and flowering plant figures are as of month-end, while the harvested plant figures encompass all those successfully harvested throughout the month of December.

Vegetative plant count fell 4.3% month-on-month in January and flowering plant count rose by 7.4%. Harvested plant count rose by 1.5% in January.

Michigan Cannabis Plant Count

The average retail flower price fell for the fourth month in a row, shedding over $32 per ounce from December to January. The extrapolated retail price per pound is now what the wholesale spot flower price was in November 2021. Year-on-year the average price of an ounce of retail flower is down nearly 53%.

  • November 2021: $190.71 ($3,051 per pound)
  • December 2021: $184.90 ($2,958 per pound)
  • January 2022: $152.74 ($2,444 per pound)

January 2022 Medical Cannabis Market Summary

January sales in the medical cannabis market returned to trend, falling 15% after a 3.2% gain in December, making for the fourth month of lower sales in the past five months. Average daily sales fell 15.2% to $900,921 in January from $1,062,211 in December 2021. Medical sales as a percent of total Michigan cannabis sales were 18.3% in January, down 0.9% from December 2021, and down over 50% from January 2021’s 37.9% market share.

Michigan Medical Cannabis Sales

Retail sales of flower in the medical market and month-on-month changes for the past three months are depicted in the table below.

Michigan Medical Cannabis Sales Volume

Retail flower sales in the medical market have also returned to trend, falling for the fourth time in five months and at a pace not previously observed. Significantly lower prices and shrinking medical demand from patients moving to the adult use market are weighing on medical sales and supply.

Inventory of flower at medical cannabis growers that passed the state’s required testing stood at 22,001 pounds at the end of January. Combined with flower held in inventory at dispensaries – 28,918 pounds – the amount of immediately marketable flower in the medical cannabis market stood at 51,819 pounds, or 7.7 months’ worth of supply based on January medical market demand.

The number of plants reared and harvested in the medical sector in the most recent three months is shown in the table below. Vegetative and flowering plant figures are as of month-end, while harvested plant figures encompass all those successfully harvested throughout January 2022.

Michigan Medical Cannabis Plant Count

Vegetative plant count fell 1.6% in January and flowering plant count saw little changed as well, rising just 0.3%. The medical sector appears to be maintaining the status quo regarding production capacity in the face of sharply falling prices and a diminishing share of the state’s overall cannabis market.

MRA data shows retail flower prices in the state’s medical cannabis market have cratered, falling 31.8% month-on-month, or $56 per ounce, to below $120 per ounce.

Trailing three month retail ounce and extrapolated pound prices are listed below.

  • November 2021: $173.77 ($2,780 per pound)
  • December 2021: $175.57 ($2,809 per pound)
  • January 2022: $119.64 ($1,914 per pound)

February 1, 2022

Michigan Cannabis Sales Take Huge Leap in 2021

Michigan Cannabis Sales Take Huge Leap in 2021
Photo: Kid Circus/Unsplash

The Michigan Marijuana Regulatory Agency (MRA) has issued its December 2021 report detailing sales, licensing, and production data in the state’s adult use and medical cannabis programs. The release of December data completes full-year sales tallies for last year.

In 2021, retail sales in Michigan’s adult use market reached over $1.31 billion, up 157% from $510.6 million in sales in that sector of the market in 2020. 2021 medical sales amounted to $481.3 million, up 1.5% from $474 million in 2020. Combined sales in 2021 climbed to over $1.79 billion, up 81.8% year-on-year from $984.6 million in 2020. 2021 is only the second full year of adult use sales in Michigan, which commenced in December 2019.

Michigan’s combined adult use and medical cannabis sales jumped 10% in December 2021, hitting nearly $168 million versus November 2021 sales of $152.7 million. Year-on-year, December 2021 sales were up 66% over December 2020 sales of $101.1 million.

Despite strong growth in demand year-on-year, Michigan’s Spot price remains under significant pressure with new growers coming to market, the first substantial outdoor harvest last fall, and a determination on the part of at least some new growers to undercut the pricing structure to establish their brands.

Year-on-year to mid-January 2022, Michigan’s Spot price is down over 36%. More than half the year-on-year losses have accumulated since late November 2021. Michigan has no cap on the number of grower licenses it can issue so price pressure is likely to increase over time.

December 2021 Michigan Adult Use Market Summary

Adult use sales have risen in two of the past three months, with holiday demand likely providing the extra bump in sales in December. Given relatively low flower prices, rising sales can be explained by the likelihood that the number of cannabis consumers is expanding due to lower prices, due in part to the wide availability of outdoor flower for the first time, as well as the continued proliferation of retailers.

Michigan Adult Use Cannabis Sales

Average daily sales jumped 8.2% in December, from $4.02 million in November to nearly $4.4 million in December. Outdoor product may be hitting the market at significantly lower price than indoor and greenhouse product and that too is likely pulling in consumers.

Retail flower sales volume jumped 15% in December. Sales revenue jumped in December as well, gaining 11.5% in the month.

Michigan Retail Cannabis Flower Sales

Inventory of flower held by growers in the adult use sector that had passed the state’s required testing was at 40,413 pounds at the end of December. Combined with the amount of flower held in inventory at retailers, 38,127 pounds, the amount of immediately marketable flower in Michigan’s adult use market as of the end of December stood at 78,540 pounds, or the equivalent of 3.7 months of supply based on December sales volume.

The number of plants reared and harvested in the most recent three months is shown in the table below. Vegetative and flowering plant figures are as of month-end, while harvested plant figures encompass all those successfully harvested throughout the month of December.

Vegetative plant counts rose 14.9% month-on-month in December and flowering plants leapt by over 46% month-on-month, likely reflecting the work of new growers in the market. Harvested plant count fell by 13.1% in December.

Michigan Cannabis Plant Cultivation

The average retail flower price fell again in December, slipping over $5 per ounce as more growers come into the market and more products at lower price points weighed in. In December, the extrapolated retail pound price fell below the $3,000 barrier, coming in at $2,958 per pound.

  • October 2021: $203.81 ($3,261 per pound)
  • November 2021: $190.71 ($3,051 per pound)
  • December 2021: $184.90 ($2,958 per pound)

December 28, 2021

Michigan Adult-Use Marijuana Sales Decreasing as Supply Overflows

Michigan Theater, Ann Arbor, MI
Photo: Brad West/Unsplash

The Michigan Marijuana Regulatory Agency (MRA) recently issued its November 2021 report detailing sales, licensing, and production data in the state’s medical and adult use cannabis markets. Overall, Michigan’s combined medical and adult use sales were $152.7 million in November, down 6.5% from October 2021’s combined sales of $163.5 million, but up 66% from the November 2020 combined sales figure.

Michigan spot prices have undergone a bit of a rout amid what is the first significant outdoor harvest season, the recall and subsequent reversal that put what MRA claims is “moldy, contaminated marijuana” product back on the market, and the steady entrance of new growers into the market. Growers tell Cannabis Benchmarks the price correction is exactly that: a correction of prices that were too high. Additionally, we are told there is now significantly more lower priced product in the Michigan market because new cultivator licensees are offering inexpensive wholesale rates in an attempt to penetrate the market and build their brands.

November 2021 Michigan Adult Use Cannabis Market Summary

Adult use sales have fallen in three of the past four months, which coincides with employment circumstances in Michigan. The Bureau of Labor Statistics shows unemployment has actually worsened from summer to fall with the unemployment rate in August at 4.7%, rising to 6.3% in September, and ticking down to 5.9% (preliminarily) in November, making for significantly less money in some consumer’s pockets. Seasonality of demand may also be playing a role, as the late autumn and winter typically see lower sales in more mature markets.

Michigan Adult Use Cannabis Sales

Retail flower sales revenue fell 4% in August, eked out minor gains in September and October, but fell sharply in November.  Flower sales volume and revenue figures for the trailing three months are shown in the table below.

Michigan Retail Marijuana Flower Sales

Inventory of flower held by growers in the adult use sector that had passed the state’s required testing stood at 32,495 pounds at the end of November. Combined with the amount of flower held in inventory by retailers – 36,484 pounds – the amount of immediately marketable flower in Michigan’s adult-use market as of the end of November stood at 68,979 pounds, or the equivalent of 3.7 months of supply based on the November flower sales volume.

The number of plants reared and harvested in the most recent three months are shown in the table below. Vegetative and flowering plant figures are as of month-end, while harvested plant figures encompass all those successfully brought in during the entire month.

Michigan Cannabis Cultivation Statistics

Vegetative plant counts fell 8.6% in October, but increased 0.8% in November. Flowering plants fell by 17.8% month-on-month and harvested plants fell 36% in the post-harvest period.

As more Michigan growers come to market, retail price competition appears to be picking up with ounce prices falling over $13 and extrapolated pound prices falling by $210.

  • September 2021: $203.84 per ounce ($3,261 per pound)
  • October 2021: $203.81 per ounce ($3,261 per pound)
  • November 2021: $190.71 per ounce ($3,051 per pound)

November 29, 2021

Why are Michigan Wholesale Cannabis Prices Continuing to Decline?

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Photo: Kaleb Tapp/Unsplash

The Michigan Marijuana Regulatory Agency (MRA) recently issued its October 2021 report detailing sales, licensing, and production data in the state’s medical and adult use cannabis markets. Overall, Michigan’s medical and adult use sales were $163.5 million in October, up 1.4% from the September figure of $161.4 million. This month’s gain in sales reverses the two previous months of declining sales figures.

Michigan’s Spot Index underwent a 17.5% sell-off, nearly $500 per pound, from January through June 2021. Since then, the market has undergone a failed rebound that brought price climbing up before the sell-off resumed, leaving the spot down 12.5% from the January high. Much of the initial 2021 sell-off was spurred by the proliferation of licenses and increased production in the state.

October 2021 Michigan Adult Use Cannabis Market Summary

Sales are now at a level not seen since July 2021, a month in which sales skyrocketed by 19.5%.  Year-on-year, adult use sales soared 115% from $59.7 million to $128.4 million. This magnitude of year-on-year sales increase is more typical in markets that are just moving into their second year of adult use legalization when retail footprints are still expanding rapidly. Michigan has had adult use sales since December 2019 and demand growth is still strong, due in part to an initially slow rollout of the market and nearby states with no legal adult use sales.

Michigan Adult-Use Cannabis Sales

Retail sales revenue in the adult use market increased by 2.8% in October and flower sales eked out a 0.3% increase in the month. Revenues and flower sales are seeing narrower gains and losses, suggesting the supply is better meeting demand at about $152 less per pound than this time last year.

Michigan Retail Cannabis Flower Sales

Inventory of flower held by growers in the adult use sector that had passed the state’s required testing stood at 23,682 pounds as of the end of October. Combined with the amount of flower held in inventory by retailers – 35,836 pounds – the amount of immediately marketable flower in Michigan’s adult-use market as of the end of October stood at 59,518 pounds, or the equivalent of 3.2 months of supply based on the October flower sales volume.

The number of plants reared and harvested in the most recent three months are shown in the table below. Vegetative and flowering plant figures are as of month-end, while harvested plant figures encompass all those successfully brought in during the entire month.

Michigan Cannabis Production

Vegetative plant counts fell over 41% in September and fell a further 8.6% in October.

Flowering plants fell by 36% in the last month of outdoor harvests as the number of harvested plants peaked for the season at 271,322, up 119% month-on-month.

The mean retail price of an ounce of flower in the state’s recreational sector, shown below, trended upward from June through August. Price then flattened out in a well-supplied market with little change in per ounce retail prices from September to October.

  • August 2021: $222.42 ($3,559 per pound)
  • September 2021: $203.84 ($3,261 per pound)
  • October 2021: $203.81 ($3,261 per pound)

November 2, 2021

Ohio Retail Cannabis Prices Driving Patients Across State Lines

highway
Photo: Markus Spiske/Unsplash

While Michigan has undergone a price rout in 2021, with wholesale flower prices falling nearly $500 per pound, the state is virtually guaranteed to attract business from neighboring Ohio where medical cannabis is legal, but prices are significantly higher. Under Michigan law, licensed dispensaries are permitted to sell to registered patients from other states with legal medical cannabis.

Historical data from the Ohio Medical Marijuana Control Program indicates that, as of the end of September, a tenth of an ounce of plant material (flower) cost $28.81 or $288.10 per ounce, equivalent to an average retail price for patients of $4,610 per pound. In September in Michigan, as we covered above, the average retail price for flower in the medical cannabis sector was $3,065 per pound, about a third lower than what patients are paying in Ohio. With price differentials at this level, prices falling in Michigan, and Ohio patients upset about local pricing, Ohio patients traveling to Michigan to purchase is bound to occur until Ohio medical cannabis prices come down.

Ohio’s medical market opened in January 2019 but prices have not fallen appreciatively. A report from the The Dayton Daily News quotes the CEO of an Ohio dispensary as stating, “Everybody’s selling pretty much at the same price, all of the locations. There’s no price-gouging by any individual owners.” However, the report notes she continued, saying there is also an understanding among owners to not undersell it “just so they can get all the sales.” The seller further opined, “that happens in other industries, but I think there’s a respect among all of the owners to sell for what the going rate is.” State officials have promised to address medical market issues, but their efforts have had virtually no effect on prices according to the historical data provided by the Ohio Department of Commerce.

The number one patient complaint in Ohio is the price of medical cannabis, as documented in a recent Ohio State report. With Michigan prices under pressure due to the proliferation of cannabis licenses and expanding production, some Ohioans will almost certainly continue to cross the border seeking a less expensive alternative.