Study: 70% of Michigan Cannabis Sales Occur in Unregulated Market

The majority of cannabis transactions in Michigan—70%—happen outside retail stores, according to a Michigan Cannabis Manufacturers Association-commissioned (MCMA) study conducted by Anderson Economic Group outlined in a WZZM report. The study, which included an analysis of both regulated and unregulated sales, suggests the state’s total industry is worth $3.2 billion.

The study also found that one in five Michiganders reported using cannabis in the last year and that the state’s cannabis industry generated $169 million in tax and fee revenue in 2020.

Stephen Linder, executive director of the MCMA, said the group commissioned the study because its members wanted “facts and truth” to help inform themselves and policymakers.

“The only way to make strategic decisions to move forward as an industry is to understand the market in which you’re operating. And we thought the best thing to do, since nobody had taken the time to do it, was to do a baseline economic study.”—Linder to WZZM

Narmin Jarrous, chief development officer of Exclusive Grand Rapids Medical & Recreational Marijuana Dispensary, suggested that there were several reasons the majority of the state’s cannabis sales are happening outside of legal channels, including municipalities opting out, retail prices that are higher than untaxed products, a fear of regulatory bodies, or being anxious to shop in post-COVID world.

“When you’re depriving these municipalities from having these stores, this is what happens. People do turn to the illicit market and you can’t really fault people for trying to get their medicine in every which way they can,” he said to WZZM. “If we try to mitigate some of those problems maybe we can drive more consumers back into licensed retail stores with safe, clean, tested marijuana.”

The state’s largest city, Detroit, still does not have any recreational dispensaries despite adult-use sales commencing in 2018. The lack of sales in the city is due, in part, to court challenges to the Motor City’s so-called legacy licensing plan, which aimed to give Detroiters first chance at the licenses.

Earlier this month, a federal judge ruled those legacy rules “likely unconstitutional.” The city’s ordinance includes language that says no licenses will be issued or renewed if any part of the local law is deemed unconstitutional or otherwise struck down. The city had planned to begin issuing licenses on May 1.