ANN ARBOR – Michigan’s cannabis retailers are seeing a surge in traffic for the industry’s biggest holiday—but beneath the surface, the economics tell a more complicated story.
In an interview with MedsCafe CEO Josh Covert, the message was clear: customers are showing up, but the business model is under pressure.
That tension reflects broader statewide trends.
Inside MedsCafe’s 4/20 Reality: What CEO Josh Covert Is Seeing
In MITechNews’ 4/20 video interview, MedsCafe CEO Josh Covert offered a ground-level view of how Michigan’s cannabis market is actually performing during its biggest retail moment of the year.
Key takeaways from Covert:
- 4/20 is a multi-day surge, not a single spike
Sales activity ramped up days in advance, with strong traffic starting Friday—not just on April 20 itself.- Two peak seasons dominate cannabis retail
Covert identified 4/20 and the July 4 holiday period as the two biggest sales windows of the year.- Sales remain resilient—even with falling prices
Year-over-year revenue is only slightly down from 2025 levels, despite continued price compression across the market.- Flower still leads, but diversification is real
Traditional flower remains the top seller, but pre-rolls, gummies, and vape cartridges are close behind—reflecting broader consumer shifts.- Seven-store footprint gives regional insight
MedsCafe operates seven provisioning centers across Michigan—including two near Grand Rapids and five in northern Lower Michigan—offering a broad view of consumer behavior.- 24% wholesale tax hasn’t hit demand—yet
Covert said the recently implemented wholesale tax on growers has not significantly raised retail prices or slowed sales, though the long-term impact remains uncertain.- Legal battle over the tax is underway
The Michigan Cannabis Industry Association and several operators have challenged the tax—arguing it was not authorized by voters—with the case now before the Michigan Supreme Court. A decision is expected by fall.- Federal rescheduling could be a game changer
Covert said moving cannabis from Schedule I to Schedule III would allow businesses to deduct expenses and access banking more easily, significantly improving financial stability.
Taken together, Covert’s insights reflect a market that remains active and growing—but increasingly defined by pricing pressure, regulatory uncertainty, and tightening margins.
Traffic Is Up—But Revenue Doesn’t Always Follow
4/20 remains one of the most important retail events of the year. Industry data shows cannabis retailers can see double or even triple normal daily sales volumes during the holiday window, driven by promotions and increased foot traffic.
But in Michigan, that surge doesn’t always translate into higher monthly revenue.
In April 2025, for example, total cannabis sales actually declined compared to March, even though the 4/20 holiday boosted activity. The reason: consumers bought more product—but at lower prices.
That aligns with what Covert described—strong demand, but tighter margins.
The Price Collapse Reshaping the Industry
Michigan’s cannabis market has quietly entered a new phase: record volume, falling revenue.
- Total cannabis sales hit about $3.17 billion in 2025, one of the highest levels on record
- But revenue still declined year-over-year due to falling prices
- The average price for an ounce of flower has dropped to roughly $58–$60, down sharply from prior years
In short: Michigan is selling more cannabis than ever—but making less money doing it.
That’s exactly the kind of pressure Covert pointed to in the interview.
Oversupply Is the Core Problem
The root cause is simple—and structural.
Michigan has one of the most open cannabis markets in the country, with no cap on licenses and hundreds of large growers flooding the system with supply.
As a result:
- Inventory levels are massive—enough to supply the market for months, even years in some estimates
- Retailers are forced into aggressive discounting
- Profit margins continue to shrink
This explains why 4/20 promotions are so aggressive: they’re not just marketing—they’re survival.
The 4/20 Illusion: Big Crowds, Thin Margins
From the outside, 4/20 looks like a booming success.
Inside the business, it’s more complicated.
Discounting plays a major role. In some markets, average discounts jump dramatically during 4/20 promotions, driving higher basket sizes—but compressing margins in the process.
That means:
- More customers
- More product moving
- But less profit per transaction
For operators like MedsCafe, the challenge is balancing volume with sustainability.
Michigan’s Competitive Advantage—and Risk
Michigan’s low prices have made it a regional powerhouse.
Consumers from neighboring states—especially Ohio—can save tens of dollars per ounce by crossing the border, even after factoring in travel costs.
That gives Michigan retailers a built-in demand engine.
But it also reinforces the same problem:
Too much supply chasing price-sensitive demand.
Why This Matters Beyond Cannabis
The stakes go far beyond dispensaries.
Michigan distributed nearly $94 million in cannabis tax revenue in 2025 to local governments, schools, and infrastructure.
That funding depends on a healthy, sustainable market.
If margins continue to compress:
- Retail closures increase
- Tax revenues flatten or decline
- Local economic benefits weaken
Some signs of that are already emerging, with fewer licensed retailers operating in 2025 than the year before.
The Bottom Line
MedsCafe’s 4/20 surge tells only part of the story.
Yes—customers are showing up.
Yes—products are moving.
But the bigger reality is this:
Michigan’s cannabis industry is shifting from growth mode to survival mode.
For consumers, that means cheaper cannabis than almost anywhere in the country.
For operators, it means a fight to stay profitable in one of the most competitive markets in the U.S.
