LANSING – Cannabis Regulatory Agency Executive Director Brian Hanna told state lawmakers this week that the cannabis industry is under extreme pressure from falling prices, black market activity and the growing unregulated, intoxicating hemp products sold in gas stations and other retailers that compete with licensed products sold through dispensaries.
Hanna said at a regulatory affairs Michigan Senate committee meeting April 23 that the biggest challenges the agency faces this year are the inability to suspend licenses for egregious conduct, the increasing supply of marijuana flower that outpaces demand and unregulated and intoxicating hemp products that are flooding the market, the Detroit Free Press reported.
“This is a very challenging environment, not only for the licensees and stakeholders, but for the regulatory agency as well,” Hanna said.
Image courtesy Motley Fool
Pricing Pressure A Threat To Cannabis Market Businesses
Michigan’s 5-year-old recreational cannabis industry is navigating a steep decline in prices. The average retail price for an ounce of recreational marijuana flower dropped to $65.14 in March, according to the most recent data from the CRA, continuing the trend of prices generally declining since sales started. The price in March was 28% lower than it was the same month a year ago.
State Sen. Dayna Polehanki, D-Livonia, asked Hanna what the state could do to solve the agency’s problems.
Hanna said he wants to close a loophole that prohibits the CRA from possessing cannabis even though the agency is building a state-run testing cannabis lab and wants to see changes made to laws regulating hemp.
Hanna was asked what he expects the industry will look like in five years and he said he expects there will be more consolidation, noting that because cannabis is still illegal at the federal level, companies can’t file for bankruptcy (federal courts have exclusive jurisdiction over bankruptcy cases) or file for federal tax exemptions.
“So if you lose, you lose,” he said. “People’s life savings are on the line. That’s incredibly stressful for everybody, including us. So without some of these changes that we’re talking about, you’re going to see consolidation. You’re going to see smaller businesses going out of business.”
Following Hanna, Robin Schneider, executive director of the Michigan Cannabis Industry Association, the industry lobbying group, said marijuana growers who have invested everything into their businesses are losing everything as prices plummet and illicit cannabis floods the market.
Michigan Eclipses $10 Billion In Adult-Use Cannabis Sales Since 2019
Michigan licensed retailers sold $264.7 million in adult-legal cannabis in December pushing Michigan past the $3 billion annual sales mark for 2024, to $3.27 billion, the Cannabis Regulatory Agency reported. That represents a 9.9% increase from the $2.98 billion in adult-use sales reported in 2023.
In addition, the $264.7 million in adult-use sales from December 2024 pushes the state’s cumulative market total to more than $10.2 billion since sales for those 21 years and older launched five years ago in December 2019, according to the CRA.
One notable to Michigan’s maturing market: 2024 was the first time in the state’s five-year history that retailers did not set a record in December sales figures. A year ago in December, $276.7 million in adult-use cannabis was sold. The monthly average for 2024 was $272.7 million.
Adult-Legal Sales figures for each product category are in the chart below.
Amid another record performance, year-over-year growth for Michigan’s adult-use retail market is slowing down. The state’s 9.9% sales increase comes after 46% growth in 2023 and a 55% increase in 2022, according to the CRA.
The slowing year-over-year growth rate is mostly due to falling prices on dispensary shelves. Michigan closed out 2024 with average adult-use flower prices dipping to $69.20 per ounce at retail in December, an all-time low, according to the CRA.
The state’s $82.50 average flower price for all of 2024 represents a 10.3% decrease from 2023’s average of $92 per ounce and a 35% decrease from 2022’s average of $128 per ounce.
But Michigan’s licensed dispensaries rung up record figures this past year thanks to the number of products sold, as demand was at an all-time high in 2024 even as neighboring Ohio launched its adult-use market in August 2024.
Overall, Michigan retailers sold more than 1.1 million pounds of adult-use cannabis flower in 2024, representing a 17% increase from the 947,300 pounds sold in 2023 and a 112% increase from the 522,800 pounds sold in 2022.
Michigan’s September and December 2024 adult-use sales figures were below the corresponding months from the previous year—a program first.
Still, the 102,317 pounds of adult-use flower sold in December 2024 was only slightly below an all-time high of 103,129 pounds sold the previous month.
Michigan’s best sales month on record came in August 2024, when retailers rang up more than $294.1 million in adult-use sales.
Michigan Pot Sales In March Reverse 3-Month Decline
Michigan cannabis sales recovered in March posting $276.95 million in sales, up 14.5% from February, according to newly released data from the Michigan Cannabis Regulatory Agency.
Sales growth occurred in all sales categories, but the biggest gainer was flower. The industry sold 15,000 more pounds of adult-use flower in March, totaling $121.5 million, up nearly 15% from February. Medical marijuana sales plunged to just $655,000.
However, Year-over-year sales remain down.
Through the first quarter of 2025, the legal market is trailing last year’s sales by nearly $26.5 million, hinting that the state’s regulated marijuana market may have peaked at $3.3 billion in sales last year, says Green Market Report.
If the sluggish sales continue, the state is on pace to only reach $2.94 billion in products sold – its lowest total since 2022 and the first year-over-year drop since legal sales began in late 2019.
But April sales could boost 2025 sales with the celebration of the stoner holiday called 420, the code word for cannabis friendly. Michigan dispensaries are offering 420 specials, and cannabis enthusiasts typically buy a lot more product than they typically do.
Yet product oversupply remains a major problem The inventory of fresh frozen flower – product that is usually grown outside during the summer months, harvested in October and distributed around the year for infused liquids and edibles – remains historically high, driving down prices.
On March 31, growers and processors had 1.47 million pounds of fresh frozen marijuana flower in inventory.
That’s nearly 10% down from the 1.63 million pounds of fresh frozen on supply at processors and growers in February, but 316% above the 353,587.39 pounds of inventory in March of last year.
And the state continues to issue licenses. The CRA issued 35 prequalifications, mostly for growers, along with nine grower licenses and seven processor licenses in March, but only eight more retail licenses to sell the product.
