Marijuana growing moratorium?: Supply and demand could lead to changes in Michigan

DETROIT - Marijuana growers in Michigan are making too much product and it’s outpacing demand.

In just the past year, the price for an ounce of flower went down by 44%.

The Cannabis Regulatory Agency is now seeking input on how to solve the problem.

"The agency has been hearing concerns that the supply of marijuana produced by licensed growers exceeds, or may soon exceed, consumer demand. The concerns include that the wholesale price of flower is lower than the cost of production – or will be when harvests are highest in October," CRA said in a statement

CRA listed three potential forms of action for the public to consider prior to their quarterly meeting, which will be held on Sept. 14 at 9:30 a.m.

Questions for consideration from the state’s website include:

• Would you support a change in the law to place a moratorium on the issuance of grow licenses? If so, under what conditions? If so, for what period of time?
• Should the agency eliminate the excess grower license established in the administrative rules, as authorized by Sec. 8(2)(a) of the MRTMA [MCL 333.27958(2)(a)]?
• Should the agency promulgate a rule as authorized by Sec. 9(3)(d)(3) of the MRTMA [MCL 333.27959(3)(d)(3)] to authorize an individual to hold an interest in more than five marijuana growers or in more than one marijuana microbusiness after January 1, 2023

With an abundance of supply, life is good for cannabis consumers

When it comes to pricing at Puff Cannabis Company, Dave Pallack has no complaints.

"The past few months, really the whole summer, they've been doing a great job at keeping the prices reasonable for the customer," Pallack said.

Back in July of 2021, the average price for an ounce of cannabis flower was about $218.

Fast forward a year later and the price has dropped to roughly $122.

"It's not good for vendors because we need them to stay healthy and be profitable and not have lay off hundreds of people," said Nick Hannawa, legal counsel for Puff Cannabis. “Quite frankly, like many companies are starting to do and shuttering their doors."

Big players in the cannabis industry like Rick Wershe support a moratorium on grow licenses.

It could stifle the expansion of cannabis industries in cities like Detroit, which is just now issuing licenses for recreational use stores and grow operations.

"It's kind of sad in that sense, but there has to be exceptions to everything," said Wershe, who launch the 8th Cannabis brand.

"I hope we can all come to a happy medium and get recreational cannabis in every city," he added.

CRA says the number of active grow licenses jumped 65% in the last year.

Cannabis Councel attorney Matthew Abe says about 100 out of 1,700 communities in Michigan have adult-use cannabis stores.

"As more of the market opens up, I think they'll be more capacity for the growers," Abel said. "I think this oversupply is probably a temporary situation."

He doesn't think a moratorium is the right move.

"Certainly, a moratorium does not help the consumer, it's more of a price protection thing," Abel said.

Hannawa doesn't believe consumers would be hurt by a halt on grow licenses. He thinks over time, things will level out.

"I don't think consumers have anything to worry about because the whole point of the moratorium is to combat the excessive supply we already have," Hannawa said.

These are the kinds of issues CRA wants to flush out and ultimately address.

Abel says the industry is still developing and it needs less regulation, not more.

"We would have been much better off if they just lifted the caps entirely, let it build out until it’s unstainable, and then pass a moratorium," Abel said.

The agency itself cannot enact the moratorium; it would take action from legislators on both sides of the aisle to get the proposal on the ballot.