LANSING- Although Michigan’s sales of recreational cannabis have lagged behind Illinois’ cash register totals, a leading expert on investments predicts Michigan’s market to be stronger in the long term.
Similarly, a recent census reveals a dramatic loss of jobs in the cannabis industry as MMFLA rules were enacted- but a well-known industry figure says that situation is turning around quickly.
The Motley Fool is recognized as a source of investment advice for millions of financial industry gurus. Sean Williams, writing on the Fool’s website, detailed a comparison of the adult-use cannabis programs in both states.
“Make no mistake about it: Illinois and Michigan are two exciting states to watch grow,” Williams observed. He cites Illinois as having sales of recreational cannabis at $39 million- in a single month- of which 22% came from shoppers which lived outside of the state. January 1, 2020, was the first day of adult-use cannabis sales in Illinois.
Compare that to Michigan. $6.5 million of cannabis was sold during December 2019, the state’s first full month of sales, and total from December 1 to February 2 was just $17.7 million.
“However, don’t be fooled by these early sales figures about which state has the better long-term prospects,” Williams writes as the last sentence of his article.
How is it that Williams is still so bullish on Michigan’s long-term prospects? By looking deeper than just evaluating sales figures alone.
Illinois allowed their 41 previously-licensed medical marijuana retailers the ability to sell recreational cannabis immediately, hence their impressive initial sales figure. Michigan rolled out a program where less than five facilities were allowed to sell recreational cannabis on the first day, resulting in the weak sales figures reported for the first two months.
That Illinois rocket is going to reach a maximum range, according to Williams. The state imposed a limit on the number of dispensaries owned by a single corporate entity to 10. This will discourage multi-state operators from making large investments in state-based operations.
Illinois has also instituted a cap on the number of dispensaries allowed at 500 for the entire state. That means limited access in the rural portions of Illinois and an under-served community in urban zones.
Michigan has licensed 43 adult-use retailers as of February 4, according to Williams. Although the MRA is described by Williams as making “gradual” improvements in licensing, Michigan’s growth rate seems much quicker in both the medical and adult-use cannabis business programs than that seen in Illinois.
And Michigan has none of those statewide caps on dispensary licensing or maximum number of licenses to a single entity, either. That may create a desirable image of Michigan to multistate operators looking to put down headquarters in a Midwestern state.
Michigan certainly has an appetite for cannabis retail locations. Michigan had hundreds of dispensaries prior to the new retail environment, according to a Leafly report which MLive reporter Gus Burns wrote about.
In a survey of Michigan businesses just two years ago, Leafly reports Michigan had approximately 15,000 jobs in the grey market cannabis distribution industry to go along with those hundreds of shops.
Now, not so much.
“We now estimate the legal industry supports a little more than 8,200 full-time-equivalent jobs,” said Leafly’s senior editor Bruce Barcott.
There’s no mystery here: the ascent of the regulated marketplace came with an associated regression of the free-market cannabis dispensaries and farmer’s markets.
That loss of businesses created a lot of unemployed dispensary workers.
When The Botanical Company provisioning center of East Tawas was looking for people to fill jobs they discovered Michigan’s employee base was already full of veteran cannabis industry workers. “We found people who already had one or two years experience at these positions,” said Jamie Lowell, Vice President of Field Operations for the Company. This makes launching a business easier and the customer experience better, he added.
Just like The Motley Fool’s Williams, Barcott sees reasons for optimism in Michigan’s cannabis industry future. “We expect many of those legal jobs to return as more cities allow licensed stores to open,” he said, predicting it could take two years to regain the estimated 7,000 cannabis industry jobs lost in 2019.
Michigan’s largest city has yet to fully embrace the medical marijuana business opportunities available there. When they do, it could be a real game changer for Michigan’s cannabis employment numbers. From 2010 – 2018 there was a high point of nearly 300 cannabis dispensaries in the city of Detroit proper.
Unsurprisingly, Detroit seems far removed from allowing recreational cannabis sales. Since most licensed recreational businesses are really just extensions of existing medical cannabis facilities, the recreational roll out currently delivers fewer new jobs per license in general, but any additional jobs in the industry are certainly welcome in the cities and townships where unemployment is still a major problem.
CANNABIS MEDIA SPECIALIST phone: 586 350-8943Publisher, Michigan Cannabis Industries Report mcirmagazine.comOwner, Michigan Cannabis Business Development Group micbd.com Editor, TheSocialRevolution.org