With Ohio sparking up, has Michigan hit its weed ceiling?

LANSING — Has Michigan hit its weed ceiling?

Michigan recently hit a high water mark: More marijuana sold than California, according to MJBizDaily, a cannabis business news outlet.

California has long been the legal weed king and has nearly four times Michigan's population.

Yet Michigan has three times more sales per person than California, the runner-up, and Michigan is selling eight million more units of marijuana products a month than California, according to state agency and Headset private data analyzed by MJBizDaily this summer.

The sunshine state remains, however, the largest market in dollar terms at around $350 million a month, compared to Michigan's $287 million, in part because of Michigan's relatively low prices.

But those in the weed-growing business wonder if Michigan is becoming a dumping ground for cheap marijuana that may not be up to snuff.

"We created one of the biggest markets," said David Murray, CEO of Redbud Roots, a cultivator, producer and dispensary based in Buchanan, near the Indiana border. "We need to take an honest look and do what's good for the industry."

Along with several other marijuana industry business owners and workers, Murray came to a Wednesday meeting in Lansing of the Cannabis Regulatory Agency, where he asked for more and quicker enforcement from the state agency's regulators.

Murray said better enforcement would keep the quality higher and increase safety for customers.

Murray said it is increasingly hard to be competitive with low prices, which he suspects are driven in large part by producers who aren't following regulations.

How much weed does Michigan sell?

Michigan’s biggest month of recreational marijuana was March 2024, with $286.8 million in sales, but typically the amount of sales continues to ratchet up, according to state figures.

Often, the biggest month of sales in the state was the most recent month. The state sold $286.4 million of recreational and medical marijuana products in July.

August figures are not yet available.

Marijuana big deal to state budget

Michigan’s marijuana tax revenues are a bigger deal to the state's budget than in most marijuana-legal states.

Michigan’s marijuana taxes account for about 0.75% of the state budget. Five states have a higher percentage. Washington, Montana, Alaska and Colorado all get more than 1% of their state budget from marijuana taxes. Oregon gets 0.77%, according to data from the U.S. Census Bureau.

Ohio moves into marijuana market

The billboards near the border keep begging Ohio drivers to come and buy Michigan weed.

However, Ohio's recreational marijuana sales began in August, and could catch up to Michigan.

The state's Cannabis Regulatory Agency does not track out-of-state sales, said David Harns, a spokesperson for the agency. He said the agency would not comment on what the Ohio legalization is expected to mean for Michigan.

The Ohio legalization likely won't affect Michigan's numbers for several years because the initial price of marijuana in a legalized state is typically far higher than a mature state, Murray said.

Prices in Ohio are currently around $250 an ounce for flower, about three times the Michigan average.

State of the medical marijuana market

Medical marijuana in Michigan has nearly completely collapsed.

Once the bulk of legal marijuana sales, the market has continually shrunk, for 29 months straight, said Brian Hanna, executive director of the state's Cannabis Regulatory Agency.

Medical sales peaked at $48 million in April 2021 and there were still $6.6 million in medical marijuana sales a year ago but there was $1.3 million of medical marijuana sold in July across the state.

Some of the decline in medical sales is due to the processes and licensing, while recreational users can simply show up at a store without seeing a medical professional first.

A set of bills in the state legislature seeks to combine the recreational and medical marijuana markets, which could change how industry workers are registered. Most are now dual licensed.

"It would acknowledge the reality," said Cassin Coleman, a Lansing-based cannabis industry consultant, about the smallness of the medical market. She said the two markets already overlap in many ways.

Coleman said many of the state's medical growers are now selling their plants as recreational, which is allowed under state law. The medical grows used to be significantly cheaper for licenses so many growers would start with a medical license and if they couldn't sell their marijuana as medical, they'd pay the extra fees and sell it as recreational, Coleman said.

With such a small retail medical market, most of those producers are entirely recreational now, Coleman said.

The shift, if approved, would likely not affect the 2,200 or more medical marijuana caregivers who are able to grow small quantities, which aren't typically run through the state's retail system, so the medical side is bigger than the retail numbers show, Coleman said.

Michigan's marijuana market and local taxes

Marijuana is a $3.2 billion industry in the state, according to state figures. Local governments split $87 million in marijuana tax revenues earlier this year. Each county, city or township with a marijuana store received $59,000 for every store in the jurisdiction rather than based on the sales at specific shops.

Any reduction in the statewide sales could mean less money for hundreds of local governments.

Ingham County, the eighth-most populated county in the state, received almost $1.8 million, the fifth-highest county marijuana payment for its 30 stores, behind Bay and Kalamazoo counties (32 stores each), Washtenaw County (45 stores) and Wayne County (59 stores).

Lansing has two dozen shops. Only Ann Arbor and Detroit, with 26 and 59 shops, have more retail outlets than the capital city.

Lansing got $1.4 million in tax dollars, with Leslie and Webberville each receiving a single share of $59,000 for their individual stores. East Lansing received $236,000 for four stores.

Clinton County has one location, in Bath Township. Eaton County did not have shops until this year, so has not gotten a tax check yet.

Contact Mike Ellis at mellis@lsj.com or 517-267-0415

This article originally appeared on Lansing State Journal: Michigan marijuana sales outpace California's but Ohio is sparking up