Cannabis Knowledge & Insights

Will Michigan Be The Next BIG Cannabis Market?

Michigan is one of the hottest growing cannabis markets to keep an eye on. Their recreational cannabis sales doubled in 2021 during the program’s second year in existence. As a result,  overall cannabis sales are more than offsetting a decline in medical cannabis purchases.

The rapid growth in the past two years is driven by strong demand. As a result, Michigan’s overall monthly sales have increased ahead of those in more established markets such as Colorado. Combined sales of medical and recreational cannabis products in Michigan reached $168 million in December 2021. This is just shy of the $171 million monthly sales record set in July of the same year.

How does Michigan compare to other cannabis markets across the nation and in the midwest?

By comparison, Colorado’s recreational market launched in 2014 and has been nation-leading in terms of sales and success. According to the Colorado Department of Revenue, medical and recreational cannabis sales generated $168 million in sales in December of 2021. The total amount of sales topped more than $2.2 billion last year. While December represents a lower sales month in 2021 for Colorado, Michigan is still an impressive market in terms of early success and potential growth. 

On the other hand, much of the neighboring midwestern states are more limited. Especially, in terms of the full scalability of a legalized market for both recreational and medicinal sales. For more information on how neighboring states are performing, check out our interactive map. We provide a complete breakdown of fees and overall rating by state.

Why is the Michigan market excelling? 

Michigan’s adult-use program has benefited from a relatively large number of retail outlets, as well as the state’s proximity to major Midwestern population centers.

According to the Michigan Department of Licensing and Regulatory Affairs, there were 247 medical dispensaries and 208 adult-use stores operating in Michigan at the beginning of 2022. 

In contrast, according to Colorado’s Marijuana Enforcement Division, they had 4,531 licensed retail stores as of the beginning of 2022. 

This significant difference in retail locations from one state to the other demonstrates the huge opportunity for new retailers in this fast-growing market. Data indicates the demand is strong in Michigan. Operators and investors searching for new markets can avoid over saturation with the current market landscape in Michigan.

What To Know About the Michigan Cannabis Market Before Jumping In

The rise in adult-use sales has come at the expense of the medical market, which has seen a decline in average purchase prices. 

There are a number of factors contributing to the shift toward adult-use products. This includes the lower price point and the increasing availability of products that appeal to recreational consumers, such as vape pens and edibles.

There is no state cap, although local municipalities are responsible for determining the availability for each license. The annual fees are tiered for each different license type. Check out the tables below for a full breakdown. 

Next Steps

To learn more about expanding your cannabis business, reach out to our team of financial experts at GreenGrowth CPAs. We are here to help your cannabis venture through any level of the accounting, tax filing, or business cycle. 

We employ several financial programs to assist the company with its fiscal responsibilities, including tax planning and compliance, outsourced CFO support, audit preparation, tax controversy support, and much more.

For recommendations and assistance with tax planning and accounting services, schedule a free consultation or contact us at 1-800-674-9050.