And that’s all about cost. The average cost of an ounce of flower in July 2020 was $402.72. In July of this year, the average cost of an ounce of recreational flower was $98.65 — prices have stabilized since a low in January this year of $80.16 per ounce.
That price collapse, of course, has crippled several business operators — Skymint and at least six others are under a court-ordered receivership — a natural byproduct of any new industry wrangling supply and demand.
Businesses still struggle under the weight of operating at low margins, but it’s certainly helped demand. Low prices and abundant product has pushed more and more Michiganders into the legal marijuana market, according to 2022 data provided by Oregon-based Whitney Economics and published by the National Cannabis Roundtable.
According to the data, 75.5% of all marijuana sales are in the legal market, as opposed to the illicit market. California is only at 44% legal sales; Oregon at 74.8% legal sales; and Washington state at 61.3% legal sales. Colorado is the bright spot here, with Whitney Economics projecting 99.8% of all marijuana sales in the state are in the legal market.
That means it’s likely Michigan still has some runway to its total market potential, but also shows there is a peak. Whitney Economics projects the total market demand for marijuana in Michigan to top out at just over $3.2 billion, compared to $11.93 billion in California. Michigan is likely to come near that total in 2023.
The industry is yet to recognize any slowdown in the market. As of June 31, there were roughly 1.9 million marijuana plants actively being grown in legal operations for recreational sales, according to CRA data. That’s well up from the under 1.3 million plants in June 2022.
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