Will Michigan’s recreational market opening crash the medical cannabis supply?
After months of delay and speculation, Michigan’s announcement yesterday—that the first adult-use cannabis sales will start December 1, 2019—caught most by surprise. Many were elated, but some patients in the state’s robust medical cannabis system worry that the rush to open adult-use stores may squeeze their own supply. That’s because adult-use cannabis products will be taken from the inventory originally intended for medical patients.
Michigan has had medical cannabis since 2008. Voters approved adult-use legalization via a statewide ballot initiative in late 2018. Beginning Dec. 1, recreational cannabis will be sold in only a limited number of facilities.
The only businesses that can do so must have adult-use licenses and already be licensed under the state’s medical cannabis system. If they meet those qualifications, they can transfer up to half of their inventory to the recreational side of the house.
“Similar to the medical market, we expect it to be a slow build-out as the production of plants and products increases,” said Marijuana Regulatory Agency spokesman David Harns. “This will create an environment where businesses can supply the market as quickly as possible.”
However, the Michigan Cannabis Industry Association (MCIA) expressed concern over the rule change, specifically about shortages in the supply chain for medical patients. Robin Schneider, MCIA’s Executive Director, said it would be “taking medicine away from sick people and giving it to the recreational market.”
There are more than 284,000 medical cannabis patients across the state, and many of them have no other way to obtain medical cannabis except via a dispensary.
The ganja is in the details
From the Marijuana Regulatory Agency Advisory Bulletin:
“Beginning December 1, 2019:
Growers may transfer up to 50% of their harvest batch from their marihuana facility to their marihuana establishment. All product transferred must have passed test results in the statewide monitoring system.”
Similar wording outlines that processors and provisioning centers can also transfer up to 50% of their harvest batches for sale in the new recreational market.
Yes, Michigan spells it weird—the state is in the middle of deciding which spelling, “marihuana” or “marijuana,” is appropriate. The word “marihuana” has deep roots in anti-Hispanic bias originating in the 1930s.
Here’s the primary bottleneck
Omar Hishmeh, co-owner of Ann Arbor dispensary Exclusive Brands, said there is a bottleneck in the system—but it’s not product inventory; it’s lab testing. Testing standards that cannabis products sold in Michigan go through are more stringent than in any other state.
“We don’t want people consuming unhealthy goods,” said Hishmeh. “But the tests our products go through are much more difficult to pass than in legal markets in any other state, so that’s slowing things down considerably. It really is the primary bottleneck. But the state is aware that there just needs to be a little adjustment, and we’re confident that things are moving in the right direction. The state is responsive to issues that we raise and always has been.”
Come Dec. 1, Hishmeh’s shop could be the first legal recreational cannabis facility to open in the Midwest.
Breaking the ban
Some communities with adult-use stores may see an increase in business directly from adult-use cannabis sales and tourism, as well as residual traffic and cash influx from cannabis customers stopping for gas, food, and other supplies. But there are a number of areas in Michigan that are still trying to keep them out.
More than 1,300 communities have banned recreational cannabis in Michigan.
At the same time, however, by late 2020, it is expected that cannabis revenues across the state will reach almost $1.5 billion.