Marijuana flower prices take over 50% dive
BIG RAPIDS - The marijuana industry has been growing in Michigan and Big Rapids, and the statistics hold the proof.
In 2018, Michigan became the first midwestern state to allow both medical and adult-use marijuana use. The Michigan Regulation and Taxation of Marijuana Act was passed by Michigan voters in November 2018 and allows anyone age 21 or older to possess up to 2.5 ounces of marijuana and to grow as many as 12 plants at home.
According to the state of Michigan as of Feb. 31, Mecosta County currently has 168 patients with medical marijuana cards, 25 licensed caregivers and 17 business licenses active.
The city of Big Rapids has the same number of licenses as Grand Rapids (17) despite a population difference of 195,315 between the two cities.
Big Rapids and Mecosta County each received nearly $900,000 in funds from marijuana dispensary sales in 2022.
The growth in Michigan's marijuana industry has affected the wholesale cost of cannabis. Between January 2022 and January 2023, the cost of one ounce of cannabis flower dropped 53.6%.
Tyler Dutcher, the founder of Vivid Farms in Barryton, said he’s seen the impacts that market saturation of the marijuana industry has had.
“The saturation has caused an influx and new cannabis-infused products to be developed which translates into new creative choices at retail shops,” Dutcher said. “From the consumer’s (standpoint), it's a great thing. On our end, there are a lot of small farms that are closing their doors, and there's a lot of consolidation happening with the larger companies as well. Since we came online, the saturation has impacted the frequency of our restocks with so many more brands coming online in the last year.”
Dutcher said his business has only seen a slight drop in its wholesale prices, around 10%.
Michigan has also seen a rise in the number of licensed caretakers designated to supply cannabis to an individual (patient) for medical purposes. The top three conditions of qualifying patients were chronic pain, severe and chronic pain, and arthritis.
As of Feb. 31, Mecosta County had 25 caregivers registered. Osceola County had 225 patients with medical marijuana cards, 50 caregivers and one business license active. Lake County had 142 patients, 21 caregiver and three active licenses.
Dutcher said several variables can impact market fluctuation.
“It really comes down to debt and the cost to produce,” Dutcher said. “How can you get your cost to produce down? Answers to those questions are really going to define the fate of our local companies and brands.
"A lot of people came into this game and developed a business plan during the green rush when prices of cannabis were going for around $4,000 a pound," he said. "They build out these high-tech facilities and take on all this debt. It's all run by computers with outrageous overhead and maintenance costs. The markets dropped 80 to 90%. Since that, they're finding themselves trying to stay above water in this time.”
Vivid Farms’ building and facility cost came out to around $400,000, according to Dutcher.
"Some licenses our size have that much just put into their irrigation system alone,” he said.
Dutcher said he doesn’t think market saturation is a good thing by any means.
“One thing you got to keep in mind is some of these places are overpopulated with licenses because there were only very few municipalities that were opted in the beginning,” Dutcher said. “Now with more and more coming online (and) getting with the program, it seems like we could spread them out a little bit more.
"If you look (at) Oklahoma, for example, they had no cap on licenses, kind of like what Michigan has. In that license market, in Oklahoma, there are two plants being produced for every one resident in the state,” he said. “You can get an ounce of flour for $15 down there, and people are losing their companies, their homes, their livelihoods because of the oversaturation. Real estate is being abandoned. It's not pretty, to say the least.”
Michigan has 1,250 active licenses for marijuana businesses as of January 2023. Its overall sales to date, including sales deliveries, totaled over $4 billion.
Dutcher’s advice for business owners is to facilitate good relationships with the partners they have.
“There's really no other way to survive in this cutthroat business,” Dutcher said. “Make sure that you’re choosing retail partners that align with your company. The main thing is to get your cost down. If you're already in the industry, liquidate stuff you don't need.
“As far as you know, trying to stay competitive, you got to get your cost to produce down,” Dutcher said. “Set yourself aside, focus your marketing strategy, and bust your a** every day.”
