Michigan's Cannabis Market Faced With Oversupply And Falling Prices

A recent article by Dustin Walsh published in Crain's Detroit points out that Michigan’s legal cannabis market is facing a sharp decline in September, with sales dropping nearly 10% from August.

Total sales for the month amounted to $266.9 million, down from the record-breaking $295.4 million in August.

According to the author, this decrease reflects not only the end of summer but also the oversupply issue plaguing the state's industry.

Drop In Prices

The drop in cannabis prices in Michigan is significant, with the average price of an ounce of recreational flower hitting an all-time low at $78.68, down 15.6% since January. In September an ounce of flower cost $80.14.

In regions like the Upper Peninsula, retailers offered heavy discounts to maintain sales, even though the overall sales totals still fell by 16.9%.

One probable reason behind this drop in prices is the surge in Ohio’s recreational cannabis market, which particularly affects the eastern and southeastern parts of the state. Ohio sold over 5,200 pounds of marijuana in September, with sales totaling $87.1 million, which likely contributed to Michigan’s 23% drop in sales in that region.

Read Also: Michigan Cannabis Market Hits Record Sales Amid Low Weed Prices And Rise In Cultivation Licenses

Competition Intensifies

On the supply side, overproduction is said to be the largest factor affecting Michigan's market.

With 3.77 million active cannabis plants being grown, a 45% increase from the previous year, the market is flooded, driving prices even lower. Market production has intensified. By September, growers were using 82% of their licensed grow capacity, up from 56% in April, further intensifying the price pressure.

Also, the State has registered a significant increase In cultivation licenses this year.

Another shadow over Michigan's legal market is the infiltration of unlicensed cannabis, which law enforcement believes has been illegally integrated into the licensed market following a court ruling in 2023, the author states.

Though this ruling has been reversed, concerns about organized crime and the impact of unlicensed products remain high.

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The Market Perspective

In recent years, Michigan's cannabis market has expereienced explosive growth, reaching a record $3.06 billion in sales in 2023, showcasing one of the largest growth spurts in the recent history of the US cannabis market.

Driven by increased consumer demand, expansion of dispensaries and cross-border trading, the Michigan cannabis market soared to $294.1 million in recreational sales in August and nearly $1.3 million in medical marijuana sales.

Now, oversupply and a drop in prices might be telling the story of a market that has matured and is finally reaching its peek.

• Read Next: EXCLUSIVE: Decoding Michigan’s Cannabis Boom – Record Sales Of $3B And $457M In Taxes In 2023

Cover: Photo by Anon via Pexels