Moratorium proposed on new cannabis grower licenses to address plummeting prices in Michigan

The state’s adult-use pot industry is oversaturated, causing prices to drop and businesses to struggle

Oct 4, 2022 at 12:04 pm
click to enlarge The recreational marijuana industry in Michigan is oversaturated with cannabis. - Shutterstock
The recreational marijuana industry in Michigan is oversaturated with cannabis.

Lobbyists for Michigan’s largest cannabis operations are calling on lawmakers to impose a moratorium on new growers to help prevent prices from continuing to plummet in the recreational market.

The proposed moratorium would prevent the Michigan Cannabis Regulatory Agency (CRA) from approving new grower licenses.

Prices for legal cannabis have hit all-time lows in Michigan, largely because the market is saturated. As a result, growers and dispensaries are often selling their products at or below cost, and some businesses are closing down.

The average price for an ounce of adult-use flower dropped from more than $512 in January 2020 to $117 in August, a 77.1% decline, according to the CRA. During the same period, nearly 1.5 million cannabis plants were growing, compared to about 400,000 a year earlier.

The number of active grower licenses surged 65% between July 2021 and July 2022.

To impose a moratorium on new growers, three-quarters of Michigan legislators would need to vote in favor of the proposal. That’s because the 2018 ballot proposal to legalize recreational cannabis called for unlimited licenses.

It’s too early to tell whether the proposal has enough support from lawmakers.

Those in the legal cannabis industry are divided.

The Michigan Cannabis Manufacturers Association, which represents cannabis businesses, says a moratorium could harm the industry.

“While the MCMA has not taken a formal position on this issue, a grow license moratorium could actually disrupt Michigan’s burgeoning cannabis market at a critical juncture,” MCMA Board Chair Shelly Edgerton tells Metro Times. “The MCMA has constructive solutions to help improve our growing industry that look at the bigger picture.”

Citing a study that found nearly two-thirds of all cannabis comes from the illicit market in Michigan, Edgerton says the state could address the plummeting prices by “cracking down on the illicit market and ramping up enforcement statewide.”

By doing so, the demand for legal marijuana would increase.

“This avalanche of illicit and potentially unsafe cannabis also threatens to destabilize our industry, putting jobs, businesses and opportunities at risk,” Edgerton says. “There is also a growing number of licensed cannabis operators providing illicit or untested product.”

The MCMA has also called for a crackdown on medical marijuana caregivers who grow cannabis at home for patients, arguing that the products are untested and unsafe. Activists have called for a boycott of businesses represented by the MCMA, saying there is little evidence to suggest that untested caregiver-grown cannabis poses a serious public health risk.

At the CRA’s quarterly meeting last month, most people who spoke during the public comment period agreed there’s too much cannabis in the recreational market.

Robin Schneider, executive director of the Michigan Cannabis Industry Association, which represents more than 400 businesses, said a majority of her members support a moratorium on grower licenses because small businesses can’t survive in this environment.

But if a moratorium is imposed, she said, it’s important that it can be lifted if supply declines and dispensaries have trouble stocking their shelves.

A moratorium would spell trouble for Detroit, which is finally beginning to issue licenses to cannabis businesses. No adult-use cannabis growers currently have a license in Michigan’s largest city.

CRA spokesman David Harns says the agency doesn’t take positions on moratoriums and will follow the path set by legislators.

“Our job is to implement the statutes and that laws that are sent our way,” Harns tells Metro Times. “If it’s determined that this is the way that industry is going to go, we of course will take the proper steps to implement.”

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