Michigan’s Recreational Cannabis Industry Shows Signs of Overgrowth

Michigan is feeling the effects of the oversaturation of the marijuana market, industry attorney Lance Boldrey said.

A marijuana dispensary in Pueblo West, Colo., on Sept. 29, 2020. Charlotte Cuthbertson/The Epoch Times

Colorado became the first state in the United States to sell state-regulated recreational marijuana on Jan. 1, 2014. Since then, recreational marijuana has become legal in 24 states and the District of Columbia, with 17 additional states legalizing medical marijuana.

Michigan, which legalized recreational cannabis at the end of 2019, has turned its cannabis sales into a tax boon for state programs. According to data from cannabis data company BDSA, the state has become the top cannabis sales market in the United States.

Those sales numbers have translated into a windfall for the Michigan Department of Treasury, which announced it is distributing $87 million in marijuana tax payments among 269 municipalities and counties throughout the state.

However, challenges are beginning to emerge for states like Michigan and Colorado. These include rapidly declining prices and sales, too much competition, high levels of tetrahydrocannabinol (THC) in the products, and the potential for psychotic episodes in those who regularly take advantage of the increased access to marijuana.

Prices Plummet

Attorney Lance Boldrey, who works with his team of 30 attorneys in Dykema Law’s Cannabis Industry Group in Lansing, Michigan, says the state is feeling the effects of the oversaturation of the marijuana market. There are now nearly 1,800 active cannabis licenses at various levels of cultivation and sales in the state.

“The biggest factor for Michigan is our statutes do not allow for a cap on licenses, so you have a mismatch between cultivation and production capacity versus retail. That makes it a lot more expensive and less profitable from a tax structure for many operators,” he told The Epoch Times.

“Some of it is simple economics. We’re not the only state without a cap but when you could look at other states, like Colorado, you see prices dropping.”

In its monthly report, Michigan’s Cannabis Regulatory Agency reported that the state collected more than $4 million in licensing revenue in May alone, but prices have tanked. Since 2019, cannabis prices in Michigan have dropped from about $516 an ounce to $86.61 today.

Colorado is also feeling the pricing pinch. The average price per ounce was approximately $97.26 in 2023, and the number of licenses dropped nearly 11 percent to 685 as of last year. Annual sales in the state since 2021 have decreased from $2.2 billion to $1.5 billion in 2023.

Mr. Boldrey says that Colorado-like declines are also being felt in Michigan but points to new jobs in the state coming from the cannabis industry.

“I don’t see us getting to the point where we get a [heck] of a lot worse than what’s going on in Colorado. There are winners and losers and we are seeing people getting out of the business. Sometimes, businesses fail. But 50 percent of new jobs in the state last year came from the cannabis industry,” he said, adding that most of those jobs were those paying between $15 and $20 an hour.

High THC Levels, Psychosis

There is also rising concern about the high levels of THC, the main psychoactive cannabinoid in marijuana, potentially leading to psychotic episodes. Last year, a study published in the Journal of Psychological Medicine found that young males between the ages of 16 and 25 could be “particularly susceptible to the effects of cannabis on schizophrenia.”

Colorado University-Boulder Professor Angela Bryan has done extensive research on the issue but doesn’t think that psychosis is occurring at an alarming rate.

“There is now high potency concentrates where we are seeing THC levels from 75 percent to 95 percent and people are having withdrawal symptoms. Psychosis sometimes happens but rarely,” she told The Epoch Times, adding that she’s more concerned about alcohol abuse.

According to the U.S. Centers for Disease Control, about one in 10 people who use cannabis will become addicted.

Andrew Brown is the communications director for the nonprofit CARE of Southeastern Michigan, which offers programs and services to people affected by substance use disorder. A former client of the organization, Mr. Brown says that since the state legalized recreational marijuana, his organization has seen some changes in the needs of people coming to CARE for help.

“Our business has increased. We’re busier than ever, but a good amount of that is still opioid use and alcohol,“ Mr. Brown told The Epoch Times. ”We do see now, with the higher concentration of THC, more psychosis due to the higher legal potency now allowed. Higher potency marijuana can mimic a hallucinogenic drug.”

Although Michigan has set legal limits on the strength of its edible pot products, like gummies, the cannabis plants themselves have no such limits. The state relies on various cannabis labs to oversee those numbers.

Mr. Brown, who went into recovery in 2007, says he’s worried about the access people now have to a marijuana industry that has changed exponentially in the last 20 years.

“I went into a cannabis dispensary one time and expected to see all the products out in the open, but all I saw were edibles and cartridges and packages. It makes me nervous for my kids,” he said. “Personally, I’m afraid for the next generation in a lot of ways. But we’ve been adjusting programs to suit more alternatives, like those getting caught at school going into in-school programs instead of being suspended.”