In our last issue we discussed the leverage multi-state medical operators are seemingly able to use in New York State. This issue, we’re taking a look in the Midwest, as the state of Michigan has just marked its first year of legal recreational cannabis sales.
Unlike some states, Michigan has given much of the regulatory power to local municipalities. Which means obtaining a license isn’t as much of a barrier as is getting local zoning approval. While a town’s elected officials may talk about social equity and local owner preference, in reality they often set up zoning requirements that are difficult for prospective businesses without big pockets to meet. This has caused difficulties for smaller competitors.
In Grand Rapids, the second-largest city, almost a third of the city’s 31 cannabis zoning approvals have gone to a single group of companies: High Profile Cannabis and 3Fifteen Cannabis. Right behind them is operator Humble Roots, founded in Colorado and making its mark by aggressively acquiring options to purchase desirable Grand Rapids properties months before applying for zoning approval. At one point Humble Roots had nearly 30 properties under contract.
As a result, some family-owned companies that applied for cannabis licenses were thwarted by finding the available legal locations already optioned to the big players. Today, there is only one dispensary that is both locally-owned and qualified as a social equity business (its owner had been arrested on possession charges twenty years ago.)
Expanding the “hometown” definition to encompass the entire state looks to be the trend in Michigan markets. A new dispensary just opened this month in Grand Rapids with a partnership between Ann Arbor-based Exclusive Brands — the state’s premier vertically-integrated cannabis company — and a local Grand Rapids restauranteur. Yet interestingly, whether or not future dispensaries take on neighborhood or chain personas, they may be in for a rough patch as Michigan cannabis sales have surprisingly dropped during the last half of 2020. This goes against the nationwide trend, and observers believe it is not a drop in actual consumption, just in how Michiganders get their cannabis.
Culturally, Michiganders — especially those in the Upper Peninsula — are known for being self-sufficient types. And with Michigan allowing more home-grown cannabis than any other state — up to twelve plants per household — seed suppliers and grow shops are all reporting record sales and a huge boom in both outdoor and indoor growing. Industry observers also attribute this to marginal quality of licensed products: the state’s strict contaminant requirements are behind frequent online consumer reviews of “flavorless” and “low-potency” cannabis. So a push for higher-quality, craft-caliber product could swing the pendulum back in favor of hyper-local licensed suppliers in the very near future.
Photographer: Brian Charles Watson Michigan State Capitol