DETROIT – Michigan has a marijuana problem that sounds like it should have an easy solution.
The state is sitting on an estimated 2 million pounds of cannabis inventory, helping drive marijuana prices to historic lows and squeezing growers, processors and retailers. With the fall outdoor harvest adding even more cannabis to the market, Michigan could soon have still more product looking for buyers.
So why can’t Michigan cannabis companies simply sell that excess marijuana outside the state?
MITechNews Editor and Publisher Mike Brennan talks with cannabis attorney Thomas Lavigne about the complicated federal laws preventing Michigan marijuana from moving across state lines — and what would have to change before Michigan growers could reach customers elsewhere in the United States or potentially overseas.
Medical Marijuana Has Changed — But Michigan Is Mostly Adult-Use
One of the biggest sources of confusion involves federal marijuana scheduling.
Lavigne explains that state-licensed medical marijuana has already moved from Schedule I to Schedule III, including cannabis sold through Michigan’s medical marijuana system.
But that change does little to address Michigan’s massive supply problem.
Michigan’s medical marijuana market has dwindled to a tiny fraction of the state’s overall cannabis business. The overwhelming majority of marijuana sold in Michigan today is through the adult-use market.
That means changing the treatment of medical marijuana alone doesn’t provide an outlet for the enormous amount of adult-use cannabis being grown and processed in Michigan.
Why Can’t Michigan Sell Its Marijuana To Other States?
Michigan’s cannabis industry operates largely as an economic island.
Cannabis grown legally in Michigan generally must be sold within Michigan’s regulated market. A grower can’t simply load excess marijuana onto a truck and ship it to another state where prices are higher.
That restriction becomes particularly important when Michigan produces far more marijuana than its consumers can absorb.
Brennan and Lavigne discuss whether interstate commerce could eventually provide an escape valve for Michigan’s chronic oversupply — and why rescheduling marijuana alone may not be enough.
Lavigne explains that additional federal action would be necessary before cannabis could move freely across state lines. The conversation examines whether complete federal descheduling ultimately would be required to create something resembling a national cannabis market.
Could Michigan Eventually Export Cannabis?
The discussion goes one step further.
If federal restrictions eventually change, could Michigan cannabis someday be exported internationally?
Lavigne discusses potential international markets, including Germany, and the regulatory barriers that currently prevent Michigan marijuana businesses from pursuing those customers.
For an industry suffering from too much supply and too few available buyers, access to interstate or international markets could dramatically change the economics.
How Did Michigan Get So Much Marijuana?
Brennan and Lavigne also examine how Michigan arrived at its current oversupply.
Lavigne discusses the original intent behind Michigan’s voter-approved marijuana system, including efforts to prevent enormous growers from dominating the market.
He also discusses subsequent regulatory and licensing decisions that he argues helped larger operators expand while making it increasingly difficult for smaller cannabis businesses to compete.
The result today is a Michigan market capable of producing enormous quantities of marijuana while remaining largely restricted to customers inside the state’s borders.
Taxes, Banking And The Michigan Supreme Court
Oversupply isn’t the industry’s only concern.
The interview also examines Michigan’s controversial 24% wholesale marijuana tax and the legal challenge now before the Michigan Supreme Court.
Lavigne discusses the argument against the tax and what its implementation could mean for cannabis companies already struggling with low prices and tight margins.
The conversation also covers banking restrictions, federal cannabis taxation and how changes in marijuana’s federal classification could affect the financial side of the industry.
Could The Courts Force Interstate Cannabis Commerce?
Another potential path runs through the federal courts.
Lavigne explains the Dormant Commerce Clause, a constitutional doctrine involving states’ ability to discriminate against interstate commerce.
Federal courts have wrestled with how that doctrine applies to marijuana, producing disputes over whether states can favor their own residents and businesses when cannabis remains federally controlled.
Those disagreements could eventually put broader questions about marijuana and interstate commerce before the U.S. Supreme Court.
What Happens Next?
The cannabis industry is now waiting on several fronts.
Federal officials continue wrestling with the broader legal status of marijuana. Courts are considering challenges that could affect how states regulate cannabis businesses. And Michigan’s own Supreme Court could have a major say in the economics of the state’s marijuana industry through the pending wholesale-tax case.
But Michigan businesses face a much more immediate problem.
There is an enormous amount of marijuana already sitting in Michigan — and growers are preparing to produce even more.
Until cannabis businesses gain access to customers beyond Michigan’s borders, basic supply and demand will continue putting pressure on prices and on the growers, processors and retailers trying to survive.
Watch the full MITechNews interview with cannabis attorney Thomas Lavigne to learn why Michigan can’t simply export its marijuana glut — and what would have to change before cannabis can legally cross state lines.
