WASHINGTON DC – Michigan cannabis growers are sitting on a staggering supply problem: nearly 2 million pounds of adult-use flower and fresh-frozen marijuana were already sitting in the state’s legal supply chain at midyear — and another major outdoor harvest is approaching.
As of June 30, roughly 659,000 pounds of flower and 636,000 pounds of fresh-frozen cannabis were held by processors, another 477,000 pounds of flower was at grow operations and roughly 184,000 pounds was sitting at retailers.
And October brings “Croptober,” when Michigan’s outdoor marijuana fields are harvested, potentially sending another wave of cannabis into an already oversupplied market.
For consumers, the glut has helped produce some of the lowest marijuana prices in America. The average retail price of an ounce of adult-use flower fell to $58.18 in June.
For growers, it’s a very different story. Relentless downward pressure on prices has squeezed cultivation margins and made it increasingly difficult for some operators to cover their costs.
That’s why a developing federal court battle over cannabis licensing could have much bigger long-term implications for Michigan than its dry constitutional language suggests.
A new Congressional Research Service analysis says conflicting federal appeals court decisions have increased the likelihood that the U.S. Supreme Court eventually could be asked to settle whether the Constitution’s Dormant Commerce Clause applies to state-legal marijuana markets.
The immediate issue is whether states can favor their own residents when awarding cannabis licenses.
But for Michigan’s chronically oversupplied marijuana industry, there’s a much bigger question lurking behind the legal fight:
Could Michigan eventually become a cannabis exporting state?
MICHIGAN’S CANNABIS GLUT BY THE NUMBERS
Nearly 2 million pounds: Adult-use flower and fresh-frozen cannabis sitting in Michigan’s legal supply chain as of June 30, 2026.
659,342 pounds: Flower held at Michigan processors.
635,668 pounds: Fresh-frozen cannabis held at processors.
About 477,000 pounds: Flower inventory at grow operations.
About 184,000 pounds: Flower held by Michigan retailers.
$641.41 per pound: Michigan Treasury’s Q3 benchmark average wholesale price for flower used for wholesale marijuana tax purposes.
$58.18 per ounce: Average retail price of adult-use flower in June.
806,300 plants: Cannabis plants harvested in July — 79% more than in July 2025.
And Croptober is still coming: Michigan’s outdoor crop is harvested in the fall, potentially adding another large wave of cannabis to the supply chain.
Consumers benefit: Oversupply and intense competition help keep marijuana prices extremely low.
Growers struggle: Depressed prices squeeze margins and make covering cultivation costs increasingly difficult.
Why exports could matter: If federal law eventually permits interstate cannabis commerce, Michigan growers could sell surplus marijuana outside the state rather than forcing virtually all production through the Michigan market.
Michigan Courts Already Have Weighed In
For Michigan, the constitutional fight isn’t simply unfolding somewhere else.
Thomas M.J. Lavigne of Cannabis Counsel said federal courts in Michigan already have confronted cannabis licensing systems that favor Michigan residents or local applicants.
The Eastern District of Michigan addressed the issue in Lowe v. City of Detroit, involving Detroit’s marijuana licensing system. Another Michigan case, Attitude Wellness LLC v. Village of Pinckney, also involved challenges to local cannabis licensing preferences.
The Dormant Commerce Clause generally prevents states from engaging in economic protectionism by discriminating against businesses or residents from other states.
Lavigne also points to an important Supreme Court precedent outside cannabis.
In Tennessee Wine & Spirits Retailers Association v. Thomas, the Supreme Court struck down Tennessee residency requirements for liquor licenses. That case came through the Sixth Circuit, the same federal appeals circuit that includes Michigan.
Cannabis, however, presents a complication alcohol doesn’t.
Marijuana remains federally controlled, creating an unusual collision between state-legal cannabis markets and federal law.
Federal Courts Split Over Cannabis
The First and Second Circuit Courts of Appeals have concluded that federal marijuana prohibition doesn’t automatically give states permission to discriminate against out-of-state cannabis businesses or applicants.
The Ninth Circuit has gone the other way, reasoning that because marijuana commerce remains prohibited under federal law, courts shouldn’t use the Dormant Commerce Clause to protect participation in that federally prohibited market.
That disagreement is significant.
The Congressional Research Service says the split likely increases the odds that the Supreme Court eventually reviews the issue.
A Supreme Court ruling could establish a national standard determining how far states and municipalities can go in protecting local cannabis businesses from outside competitors.
But it would not automatically legalize interstate marijuana sales.
That’s a separate — and potentially much bigger — issue.
Could Michigan Become A Cannabis Exporting State?
For Michigan’s cultivation sector, this may be the more important long-term question.
Michigan has developed enormous cannabis production capacity, but virtually all marijuana legally grown here must be sold into the Michigan market.
When production exceeds what Michigan consumers want to buy, growers can’t simply put the surplus on trucks and ship it to Ohio, Illinois or other higher-priced markets.
Instead, Michigan growers compete against each other for the same finite pool of customers.
The result is great for consumers: lots of marijuana and extremely low prices.
For growers, the economics can be brutal.
Legal interstate commerce could dramatically change that equation.
Michigan growers potentially could sell excess production into higher-priced markets instead of forcing all of that supply through Michigan dispensaries.
That could reduce the chronic surplus weighing on Michigan prices and give cultivators access to millions of potential customers beyond the state’s borders.
Consumers might not like every consequence. Reducing Michigan’s surplus could put upward pressure on the exceptionally low retail prices they currently enjoy.
But for growers and the broader industry, bringing supply and demand into better balance could help create a more financially sustainable market.
Michigan doesn’t necessarily need more cannabis consumers inside its borders.
It needs a larger potential market for the cannabis it already produces.
Interstate commerce could therefore transform one of Michigan cannabis’ biggest weaknesses — chronic oversupply — into a competitive advantage.
Michigan’s experienced growers, established cultivation infrastructure and low production costs could potentially position the state as a major cannabis exporter.
Supreme Court Wouldn’t Open The Border
There is an important legal caveat.
The Supreme Court licensing dispute itself would not allow Michigan growers to start shipping marijuana to other states.
The cases concern whether states can discriminate against out-of-state businesses and residents when awarding cannabis licenses.
Federal law remains the principal barrier to ordinary interstate marijuana commerce. The legal analysis provided by Lavigne emphasizes that court decisions involving licensing discrimination have not established a right to transport marijuana commercially across state lines.
Even moving medical marijuana to Schedule III would not automatically open interstate trade.
Medical marijuana operating within a Schedule III framework still would face Controlled Substances Act requirements, DEA registration and applicable Food and Drug Administration rules.
In other words, changing marijuana’s schedule isn’t the same thing as creating a national cannabis market.
Congress ultimately may have to act before anything resembling normal interstate cannabis commerce becomes possible.
Why Michigan Operators Should Watch
Nothing about this court battle changes the Michigan cannabis market tomorrow.
But the legal foundation beneath America’s patchwork of isolated state marijuana markets is being tested.
Michigan already has seen litigation over local licensing preferences. Federal appellate courts now disagree over whether federal marijuana prohibition allows states greater freedom to favor their own residents.
Congressional researchers say that disagreement increases the possibility of Supreme Court review.
For Michigan businesses, the immediate issue is who gets to compete for cannabis licenses.
The much bigger issue sits farther down the road.
Michigan growers currently have to sell virtually everything they produce into a state market already struggling with excess supply — with another Croptober harvest approaching.
If federal policy eventually allows cannabis to cross state lines, that equation changes.
Michigan could go from operating one of America’s most oversupplied marijuana markets to becoming one of its major cannabis exporting states.
And for growers struggling to make the economics work, access to tens of millions of potential customers outside Michigan could fundamentally rewrite the business of marijuana in the state.
