Michigan marijuana prices are plummeting, striking fear into small growers who’ve invested nearly everything to join the state’s young and volatile market that some say is being consumed by big corporate business in a “race to the bottom.”
They cited the deep-pocket capabilities of large, multi-state corporate growers to drive down prices and push out small competitors, as well as the ever-present competition from illicit marijuana sneaking into the state from without and within.
The overwhelming majority of commenters at the Cannabis Regulatory Agency (CRA) public quarterly meeting held in Lansing Wednesday, Sept. 14, identified themselves as small players in the 3-year-old recreational market and asked regulators to stop issuing new grow licenses, at least temporarily. They also want to cap the number of plants any single business can grow to 10,000. Several requested better enforcement to keep out black-market marijuana.
Kristsa Beller, who operates Real Leaf Solutions, a 2,000-plant grow in Kalkaska, said a moratorium on new grow licenses would push back against the “capitalism gone wild” that has “ravaged other states” and protect communities from the “poverty and decay that is left in the wake of speculators.”
Over the last year, recreational marijuana flower prices have sunk 47% while recreational marijuana sales are up 126%, outgoing CRA Director Andrew Brisbo said, indicating increased market saturation.
Michigan has issued marijuana grow licenses capable of producing nearly 1.7 million plants at any given time, and the supply glut is crushing small business, many complained during the quarterly meeting.
The CRA created a controversial special excess grow licenses that allows businesses to exceed a 10,000-plant limit that some argue only benefits big business. Each license allows the grower 2,000 more plants, and 128 active excess grow licenses, capable of producing a total of 256,000 plants, are held by 25 businesses.
“It’s a race to the bottom,” said George Lynch, who identified himself as the owner of Simplicity farms, a “very small” locally owned family grow. “There’s no end to it that we can see. It looks like it’s just going to get cheaper and cheaper and more and more flower every day … We are very much in support of a moratorium on new grow licenses and excess grow licenses.”
Robin Schneider, director of the Michigan Cannabis Industry Association, the state’s larges marijuana trade organization with over 400 members, said her membership overwhelmingly supports a moratorium grower licenses.
Schneider said she observed an uptick in calls from growers sharing market concerns about a year ago. One call “startled” her.
The small, family-owned grow was looking for someone to take some marijuana it had processed and stored in freezers. Due to the declining revenue, they couldn’t make the payment on those freezers, Schneider said. The freezers were being repossessed and they didn’t want the marijuana to go to waste.
“They had invested everything,” she said. “They had mortgaged their home, done everything they could to create just enough investment to get that operation up and running.”
Schneider, who helped write the legislation that voters passed in 2018 legalizing recreational marijuana and creating the framework for the commercial market, said this isn’t the sort of situation she or other crafters envisioned.
“And since that time, I’ve heard more and more stories,” she said.
The competing Michigan Cannabis Manufacturers Association (MCMA), that represents some of the largest growers in the state and is chaired by former Licensing and Regulatory Affairs Director Shelly Edgerton, said it is “open to discussion of a grow license moratorium,” but wants a focus on eliminating unlicensed marijuana in the system.
“Iillicit sales remain the main way Michiganders get their cannabis” and ”there is also a growing number of licensed cannabis operators providing illicit or untested product,” Edgerton said in a statement issued by the MCMA following Wednesday’s meeting. “We can help address these two pressing issues by cracking down on the illicit market and ramping-up enforcement statewide.
The MCMA has lobbied for greater enforcement of caregivers, who are allowed to grow medical marijuana for registered patients, and whom they point to as significant producers of unlicensed marijuana that competes with or infiltrates the commercial market.
Rick Thompson, representing the National Organization for the Reform of Marijuana Laws (NORML), a regular political foe of the MCMA, agreed with Edgerton on one point: there should be a focus on expanding the market to combat saturation.
Fewer than 120 of Michigan’s 1,773 cities, villages and townships have opted to allow recreational marijuana sales.
Thompson, a longtime supporter of the caregiver system, disagreed with the CRA upping its enforcement of unlicensed marijuana.
“That might favor the MCMA’s position but it’s It’s not under the authority of the CRA to engage in enforcement actions on people who are not licensed by the CRA,” he said. “That is a function of the Michigan state police and it’s a misdirection of resources.”
Many commenters at the quarterly meeting bid farewell to Director Brisbo, who is departing to become director of the state Bureau of Construction Codes. They praised his work creating the regulated market and providing open lines of communication to its members.
The full meeting will be posted for review on the CRA’s public meeting page.
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