Michigan's regulatory agency has created an arduous and challenging process for licensure. Beyond that, the state has given extraordinary powers to local municipalities regarding the types of cannabis companies allowed to operate in their geographies. As such, the development of this state's supply chain has been relatively slow and is still ongoing.
There is no better example than Detroit, which has established a regulatory framework for awarding 75 new licenses, half of which will be dubbed the "Detroit Legacy." Applicants can only qualify for the "Legacy" certification if they have either lived in Detroit for 15 of the last 30 years, lived in Detroit for 13 of the last 30 years and are considered low-income, or lived in Detroit for 10 of the last 30 years and have a past marijuana-related conviction. We're glad we're not sifting through that paperwork.
September 2020 | Red White and Bloom acquires Platinum Vape
September 2020 | IIPR closes $25 million Sale-Leaseback with Holistic Industries
November 2018 | Acreage Holdings acquires Michigan-based Blue Tire Holdings LLC
At $1.2B and growing, the Great Lakes State is thriving. The state cannabis industry now employs more than 18,000 workers, more than twice the number of positions reported in the sector just one year ago.
Although the county-by-county regulatory framework initially stunted this nascent market's development, the more than 120 new retail locations opened in the last six month indicate operators have figured out how to navigate the municipality nightmare.
Major MSOs are taking a wait-and-see approach to Michigan, but this market ultimately is too large to ignore. We anticipate continued capital inflows to support existing and pending projects. Adult-use cannabis in Michigan is projected to be a $2.4B market by 2024, and operators adept at competing in rapidly maturing markets will find sufficient growth opportunities.
Current wholesale prices support additional investment in production and retail capacity, but the number of active projects ultimately will impact the supply-demand equation. We don't expect material price declination for at least the next three years. In the end, Michigan is likely to develop similarly to Colorado - this is a state worth watching.