Michigan On Track To Become Second Largest Cannabis Market In US, But Businesses Are Struggling

Michigan saw cannabis sales hit record highs in July, according to new figures from the Michigan Cannabis Regulatory Agency.

Thanks to sales of $276m over the month, predominantly through adult-use sales, Michigan is expected to surpass the $3bn annual revenue mark for the first time this year, which would make it the second largest market in the US after California.

However, this sales boon is attracting a flurry of new businesses to enter the market, seeing Michigan receive 97 applications for new adult-use licences, and issue 87 licences last month alone.

READ MORE: Michigan Ends State Employment Cannabis Testing

Speaking to Bridge Michigan, senior economist for the National Cannabis Industry Beau Whitney said this is driving a ‘race to the bottom’, seeing prices go ‘down and down because there’s so much competition’.

Alongside this price pressure, companies are struggling to turn a profit in the state due to the current regulations.

Retailers face a 10% excise tax in addition to a 6% sales tax, meaning tens of millions of dollars are being brought in for local governments, leaving increasingly little for businesses.

According to FOX 2 Detroit, “Only 30% of total adult-use sales go to local governments, with the other 70% going to schools and roads. When contributions from last year are paired next to figures from 2021 and 2020, they show an industry that shows no signs of slowing down.”