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Unexpected: Nationwide Marijuana Glut Dropping Prices, Harming Businesses

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Who could have possibly seen this coming?

A national weed glut is causing prices to plummet and imperiling businesses

unintended consequencesMichigan has way too much weed.

The number of cannabis grow operations serving the state’s recreational market has almost doubled in the past year. The number of active marijuana plants now exceeds 1.2 million, roughly six times the volume seen in 2020.

By one estimate, Michigan has enough cultivation capacity to supply three times as much weed as the state’s consumers are buying — and that doesn’t include the huge illegal market that by all accounts commands a large share of sales.

Michigan is emblematic of what’s been happening across the country all year — and why the industry’s been in a funk even as legalization spreads: Ill-fated hopes that a Democratic-controlled Washington might loosen decades-old restrictions on the drug have given way to a market glut and plummeting prices that have put scores of businesses at risk of collapse.

In Colorado, prices have dropped by 51 percent over the last two years, according to BDSA, a cannabis analytics firm. The price of a pound of weed has plunged by 36 percent in Massachusetts and 46 percent in Missouri in just the last year, according to LeafLink, which tracks wholesale transactions.

The price drop is even more extreme in Michigan. Over the last two years, the price of weed in the recreational market has plummeted about 75 percent — from nearly $400 an ounce to less than $100.

Wait, how much? Now, I haven’t bought any in decades, but, even accounting for inflation, $400 an ounce sounds rather extreme. I could be wrong, like I said, it’s been a while. Anyhow, what did they think would happen when they just license a ton of people to grow, and there’s a whole bunch of “illegal” growers who skip the whole government regulated system and then sell it? Seriously, how many people did the government expect would be smoking it, having brownies, gummies, or whatever way? Again, I’m not against legalization. I’m not planning on having any, I don’t enjoy it anymore. But, they’re learning that the market does what the market does.

The slump is messy enough in Michigan that some industry officials are calling for a moratorium on cultivation licenses three years after the state launched a recreational market.

“With the glut of supply, and with so many licenses, it’s setting up businesses for failure,” said Beau Whitney, an economist who focuses on the cannabis industry, speaking of the Michigan market. “Nationally, very few people are making a profit in this industry.”

Those growing illegally are. It just goes to show that no one really thought about what would happen once it was made legal.

Companies face sky-high taxes because they’re treated like illegal narcotics traffickers. And the failure of a bipartisan effort in Congress this month to make it easier for marijuana businesses to access basic banking services means they’ll continue to face exorbitant rates to raise cash to run their operations. As Republicans retake the House, that dynamic is unlikely to change anytime soon.


But by all accounts, the state (Michigan) has also struggled to crack down on the still-vibrant illicit market. Just 30 percent of cannabis sales came through licensed retail establishments — whether medical or recreational — in 2020, according to a study by Anderson Economic Group that was commissioned by the Michigan Cannabis Manufacturers Association. The rest of the transactions were either conducted through illicit channels or the state’s “caregiver” market that developed to serve medical patients prior to recreational legalization.

Heck, if it’s legal, why not grow your own for personal use? A little greenhouse would do the trick. And then you need to pay high taxes. Michigan’s system is vastly over-regulated, hence, illegal growers, and illegal importation from other states, will proliferate. Why pay $400 when you can get for a whole lot less? Law of supply and demand mixed with too much government.

The post Unexpected: Nationwide Marijuana Glut Dropping Prices, Harming Businesses appeared first on Pirate’s Cove.


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    • westgate

      Good article! I’m right in the middle of all this here in MI.
      Bottom line, get it while you can. This can’t last forever. Your price averages in the article are much higher than what I’m seeing on the ground.
      I can find ounces of fine bud for $40 every day. No joke, and not an exaggeration.
      A gram of premium wax (formerly, hash for all you oldsters) in Michigan is $8 every day, with $10 being the norm right now.
      I never thought I’d live to see the day. Amazing. Like I’m in some alternate reality where you can buy weed every day in the store without the cops even looking your way, even encouraging you. No dry spells, no price gouging due to a black market, no cops. What could be better?
      Most people I know won’t even consider a strain of bud unless it’s over 20% THC.
      That said, even with all the universe of options, edibles, concentrates, 5 different choices for Rick Simpson Oil…….

      I still miss the days of the 70′s with the sticky Columbian Landrace strains.

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