With roughly 300,000 registered patients, you might expect more purchasing power than the $42 million spent on medical cannabis since last November. But that figure, which represents monthly per patient spending of about $35, only tallies sales at state-licensed “provisioning centers.” It doesn’t count sales made at the dozens of unlicensed dispensaries still operating under “emergency rules” that permit cannabis sales without a permit. Still, $42 million hints at the larger figure of total spending on medical cannabis in Michigan, spending the state would like to direct entirely to the businesses it can tax.
The $42 Million in Sales Michigan Dispensaries Have Posted Since November Could Be Even Higher
Michigan medical marijuana sales exceeded $42 million in four months. But that figure could be even higher. Despite legalizing medical cannabis in 2008, Michigan didn’t begin to establish a licensing and regulatory framework until 2016, when a group of conservative state lawmakers began passing legislation aimed at controlling the informal medical cannabis economy that grew out of 2008.
The sudden push toward taxation, regulation and licensing was disruptive to the medical cannabis industry that had meanwhile established itself. To deal with the difficult transition, the Department of Licensing and Regulatory Affairs implemented rules that let dispensaries continue operating. Regulators tried to set deadlines for unlicensed businesses apply for a permit or shut down. But each time, businesses sued the state and won.
As a result, roughly 50 dispensaries are still operating across Michigan without LARA licenses. That number is down from last year, when it hovered around 215. And it roughly equals the number of dispensaries, aka “provisioning centers,” LARA has licensed since last November. Those 54 licensed provisioning centers generated more than $42 million in sales. A reasonable estimate might put sales figures in a similar range for the 50-odd unlicensed dispensaries still doing business.
March 31 “Drop Dead Date” Should Push More Patients to Purchases from Licensed Provisioners
On December 6, 2018, most of Michigan’s Regulation and Taxation of Marijuana Act went into effect. But as was the case in California in 2016, where voters legalized weed but couldn’t buy it right away, Michiganders will have to wait until December 2019 to purchase retail cannabis products. (No, there won’t be any THC-infused beverages.) But when retail sales finally do begin, state officials expect sales—and tax revenue—to explode. Currently estimates predict $1 billion in retail and medical cannabis by the end of 2020.
Until that happens, however, regulators are trying to choke out the last vestiges of Michigan’s informal cannabis economy. And that means a likely crackdown on the dozens of unlicensed dispensaries still operating under LARA’s emergency rules. Michigan has set a March 31 deadline for those businesses to apply for a license or close up shop. And unlike past deadlines, which courts compelled regulators to compromise on, the state says March 31 isn’t just a deadline. This time, it’s a “drop dead date.”
The stricter approach this time around is likely the result of the additional pressure and added scrutiny LARA has recently faced over cannabis recalls. Due to the necessary shortcomings of the emergency rules, untested, essentially home-grown medical cannabis has made it on and off of dispensary shelves. Subsequent tests revealed mold and pesticide contamination in some of those products. For that reason, Michigan Gov. Gretchen Whitmer supports the March 31 drop dead date. “This is the right thing to do in order to provide for continued patient access while ensuring that only tested products are being distributed,” Gov. Whitmer told the Detroit Free Press.