Recreational weed probably won't be for sale in Michigan until March, April

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Nearly a year after Michigan voters approved legalizing marijuana for adult recreational use, the state is getting ready to hand out the business licenses that will usher in the beginning of retail sales.

But don't pull out your cash just yet. Sales of marijuana for adult recreational use probably won’t begin until March or April of next year. That's because the state is worried about a shortage of pot for medical marijuana users, and the first harvests for the recreational market won't be ready until next spring.

And the state hasn't decided yet whether it will allow medical marijuana growers, processors and dispensary owners to transfer existing medical marijuana flower and infused products to the recreational market.

“It's incumbent upon us to ensure that there's access for medical patients through the medical marijuana facilities,” said Andrew Brisbo, director of the state Marijuana Regulatory Agency. “So I would err on the side of caution and ensuring better access to their needs instead of moving products into the broader adult use market.”

Budtender Elizabeth Clifford being the counter at House of Dank, a medical marijuana dispensary in Detroit in October, 2019.

Budtender Elizabeth Clifford being the counter at House of Dank, a medical marijuana dispensary in Detroit in October, 2019. (Photo: Kathleen Gray, Detroit Free Press)

For some, it’s a disappointing delay for a market that has been itching to start since voters approved legalizing marijuana last November 56-44%. 

“Oh no — that’s going to be terrible. We’re telling everybody early 2020,” said Penny Milkey, owner of the Northern Specialty Health dispensary in Houghton. “We get phone calls every day from people in Wisconsin who want to try it as a medicine, but they can’t because it’s not legal in Wisconsin.”

Those people are even considering moving to Michigan if pot helps their ailments, Milkey said. “And adult use sales will allow them to try it first.”

The initial rules that have been written for the recreational market allow the MRA to decide whether it will allow for the transfer of plants and products from the medical to the recreational market, but Brisbo said, “We haven’t made that decision yet.”

That means that, unlike other states that have transitioned from medical to recreational markets, Michigan’s recreational market may have to start from scratch.

The state will begin accepting applications for business licenses on Nov. 1. And because most of the licenses will go to people who already have medical marijuana licenses and have gone through financial and criminal background checks, licenses should be awarded quickly, Brisbo said, perhaps even by Thanksgiving.

Most medical marijuana businesses are expected to apply for recreational licenses, but for every category except the growers, the license won’t do much good until after the first harvest of weed.

It takes time for marijuana to grow, be processed and ready for sale. Growers who are awarded licenses will be able to plant as soon as they get a license, but the first harvest probably won’t happen until late March or early April, especially if the growers aren’t allowed to transfer any of their medical plants to the recreational side.

Various strains of marijuana plants in a grow facility at Choice a provisioning center in Leoni Township, Michigan on Thursday, March 28, 2019. 
Choice is one of the first licensed medical marijuana facilities in the state and makes marijuana edibles for sale to patients and caregivers.

Various strains of marijuana plants in a grow facility at Choice a provisioning center in Leoni Township, Michigan on Thursday, March 28, 2019. Choice is one of the first licensed medical marijuana facilities in the state and makes marijuana edibles for sale to patients and caregivers.  (Photo: Eric Seals, Detroit Free Press)

Adding to the scarce supply issue is the fact that registered caregivers — each of whom since 2008 has been able to grow up to 72 plants for five medical marijuana cardholders — have been propping up the inventory at licensed medical marijuana dispensaries. That won't be true for the recreational market.

The vast majority of product being sold in dispensaries is caregiver product, according to figures supplied by the MRA. When the medical marijuana market started last year, only 2% of the products on dispensary shelves came from licensed growers, with the remainder coming from caregivers. That number has increased for licensed growers, but in September it was only 27.3% of the product sold at dispensaries.

For the most part, caregiver-grown marijuana won’t be allowed in the recreational market, Brisbo said.

“We will allow for caregivers who want to become licensed as a class A grower or a micro-business to bring their plants into the recreational market,” he said. “But that's the only mechanism that we’ll provide for at this point.”

There has been a learning curve for licensed growers, who, in addition to overseeing the crop, have to pass stringent state testing standards. In the first six months of the medical marijuana market, growers have had to destroy 40,104 plants because they didn't pass testing for a variety of reasons, including contaminants like heavy metal in the plant or mold. 

That number is expected to go down with more experience, but it also comes at a time when demand for marijuana is only going to increase with the onset of the recreational market.

Sales of medical marijuana in Michigan, which is fed by nearly 300,000 medical marijuana cardholders, have increased every quarter since sales began last year, with total sales through Oct. 18 reaching $235.4 million. The recreational market is expected to easily exceed $1 billion annually with a customer base of up to 3 million people.

Other states get quicker start on recreational sales

Other states have experienced growing pains as well as supply meets demand. But other states also have allowed medical marijuana to be transferred to get the recreational market up and running faster.

In Colorado, medical marijuana growers were allowed to transfer immature plants — 8 inches or less — to the recreational side in the four months before the market started on Jan. 1, 2014.

Girl Scout Cookie is one of several kinds of buds sold at Botaniq, a medical marijuana dispensary in Detroit, Michigan on Thursday, June 20, 2019. 
Botaniq is one of a small number of licensed minority business in the growing in marijuana market in the state of Michigan.

Girl Scout Cookie is one of several kinds of buds sold at Botaniq, a medical marijuana dispensary in Detroit, Michigan on Thursday, June 20, 2019. Botaniq is one of a small number of licensed minority business in the growing in marijuana market in the state of Michigan.  (Photo: Eric Seals, Detroit Free Press)

“But that could only happen that one time and it had to go through the production cycle,” said Shannon Gray, spokeswoman for the Colorado Department of Revenue.

So when the Colorado market started in 2014, 184 growers were licensed and 37 retail shops were ready to sell. By the end of 2014, 149 retail stores had opened and 337 growers were producing legal weed.

And while supply did not meet initial demand, the recreational market has reached a balance, Gray said.

"The highlight from our 2017 market study showed that supply and demand in Colorado is essentially in equilibrium," she said.

And that means that enough pot is being grown to satisfy the demand of Coloradans and tourists who visit the Rocky Mountain state, who consumed 131 metric tons of pot in 2014, growing to 208.6 metric tons by 2017.

In Illinois, where recreational marijuana sales will begin on Jan. 1, the state’s cannabis czar, Toi Hutchinson, said in a radio interview last week that many of the 55 medical marijuana dispensaries around the state will be allowed to open up and sell their products for adult recreational use. 

“Where exactly those locations will be is still being worked out. This is all a work in progress,” she said.

Michigan has not set a firm date for recreational marijuana sales to begin, but rather expects it to roll out gradually over time with retail shops starting to open up as product becomes available and communities decide whether to allow legal weed businesses in and how they plan to regulate the new market.

“You start kind of slowly, see things come together. You see more communities across the state start opting in, and therefore you see greater access, and you see more facilities popping up in different areas of the state,” Brisbo said. “But I don't try and predict when we'll be sort of settled into the market. … I think we're probably years away from seeing what the market is actually going to look like.”

Big players preach patience

That means marijuana business owners will have to be patient, even after investing millions into the new industry.

Mike Elias, president and CEO of Michigan Pure Med. which is running the Common Citizen line of medical marijuana dispensaries, is trying not to sweat over the delay.

Common Citizen medical marijuana dispensary in Flint where the store is divided into four "needs" stations. The "Daily Dose" section carries products for people who want to have a little extra energy boost in October, 2019.

Common Citizen medical marijuana dispensary in Flint where the store is divided into four "needs" stations. The "Daily Dose" section carries products for people who want to have a little extra energy boost in October, 2019. (Photo: Kathleen Gray, Detroit Free Press)

“When we look at more mature states that are further ahead than us, it’s about nine recreational sales to one medical. So the recreational market is critical from a business standpoint,” he said. “And we probably won’t see the first sale until the end of March or early April. But this is a marathon, not a sprint.”

The company has licenses for 34 large grows — with each license allowing for up to 1,500 plants — and two processing plants that are being built out in Marshall. Two Common Citizen dispensaries are open in Flint and Battle Creek with licenses ready to go at seven more spots. The company expects to apply for a similar number of recreational licenses on Nov. 1.

“As a CEO, I’m constantly impatient. It couldn’t happen sooner for me at all levels,” Elias said. “But sometimes you have to slow down to speed up to think conceptually about what you’re doing. Being first is a bit overrated.”

At Green Peak Innovations, which has a large grow and processing operation in Windsor Township and four dispensaries operating under the Skymint logo, getting the medical side of the business operating smoothly is a key to a successful recreational market.

“We’re prepared to turn in our (recreational) applications, but it’s been a bit of a moving target,” said Joe Neller, government affairs officer for Green Peak. “We had been predicting opening in April, but now maybe it’s May or June.”

The company plans on having nine dispensaries open by the end of the year, adding shops in Traverse City, Ann Arbor, Mount Morris, Hazel Park and Lansing to the company’s already existing line in Bay City, Newaygo, Nunica and White Cloud.

“We’ve got plenty of work to do on the medical side of things, with trying to get a good number of provisioning centers open and making quality products,” Neller said. “We’ve been largely focused on that. But everyone is eager to see what the adult use market will bring.”

Lack of action by communities adds to delays

For the smaller operators, getting approvals from communities is as much a part of the delay in the start of the recreational market as the state’s inaction on transferring plants and product from the medical side of the business.

Todd Tompkins, owner of the Riverside Provisioning Center in Grayling, said they’re waiting for the township to finish crafting an ordinance for recreational businesses before they’ll apply for a license.

The lack of product for the medical market also is stopping them from opening a second shop in Kalkaska.

“It will be open as soon as we can find enough product,” Tompkins said. “There’s a lot of demand, there’s just no product.”

Milkey also is waiting for Houghton to finish up its ordinance for recreational businesses, so she doesn’t expect to apply until January. But she was hoping to open as soon as a license is available.

The menu board at Riverside Provisioning Center in Grayling in October, 2019.

The menu board at Riverside Provisioning Center in Grayling in October, 2019. (Photo: Kathleen Gray, Detroit Free Press)

“Maybe we could have sales by 4/20, 2020,” she said, referring to 4/20, the date considered the high holiday for marijuana consumption.

That’s probably a good bet, Brisbo said.

“What I would say is that by the end of the first quarter of 2020, you will see products sold through licensed retailers,” he said. “I would be surprised if I can tell you in March of next year that the market is fully established, but I think there'll be some access."

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