Grown Rogue: Cannabis Opportunities in Michigan (1 of 3 Michigan Series)
The great lakes, national parks, camping, expansive forests, and the gateway from major US cities such as Chicago, Cleveland and Detroit to our friends to the north, Canada, is what reigns for the state of Michigan. It is not a place one might expect to be a major player in the future of cannabis cultivation and business. The western states are the original locations for growing and will always be major players in the market. Michigan is a state where recreational legislation has passed and the future looks green in more ways than one.
When evaluating a new cannabis market, one must look at a number of factors that include growing opportunities, number of potential users, tourism (people coming in and out of the market), regulation, and selling potential.
Michigan is home to the highest ratio of medical cannabis users per capita of anywhere in the world and is second only to California in total number of users. And for the record, that is more medical card holders than the entire nation of Canada. And we all know how many multi-billion dollar cannabis companies came out of Canada. For any successful destination, there needs to be enough of a market and Michigan has 300,000 registered users and growing.
In addition to the medical card holder perspective, Michigan is a state that attracts lots of tourism. There are college football games played in Ann Arbor (University of Michigan) and East Lansing (Michigan State University) watched by gigantic alumni bases from all over the world. Mackinac Island is in the north of the state and is a town with no cars, showing what life was like before the automobile and the motorhead brethren from Detroit. Fort Mackinac was home to a French fur trading post and was a settlement until 1781. Sleeping Bear Dunes National Park is close to Traverse City along the shores of Lake Michigan, spanning some of the world’s most picturesque dunes and beach landscapes. Diversity of activity in the great outdoors can also be found at Pictured Rocks National Seashore. This locale brings people to camp, fish, boat, and ski and snowboard in the winter. Those loving wildlife often venture to Isle Royale National Park. This island on Lake Superior was shaped by ice age glaciers and is home to wolves, moose, otters, osprey and bald eagles. Michigan saw 113.4 million tourists in 2014, an all time record.
From a cannabis perspective, BDS analytics expect sales to increase from $950mm(2018) to $1.4 billion in 2020. There are only 22 licensed cannabis operators in Michigan. As one can see there is huge potential to be able to develop business in the Great Lakes State.
Another benefit of selling in Michigan is the economics of cannabis. Supply and demand affect prices in any market, but this favors Michigan due to the aforementioned 22 licenses coupled with the increasingly high number of users. Cannabis is selling in the range of $700-2,000 per pound in markets such as California and Oregon, but in the great lakes State prices are north of $3,000 per pound, traveling as high as $4,000 for premium product.
At a production cost of roughly $500 per pound (based on Grown Rogue best practices), the margins are superb to say the least.Michigan is a market that is growing, yet is still undiscovered by most. They say the trend is your friend and this new market growth is at a very exciting early stage. Michigan is an opportunity not to overlook.
In part 2 of our 3 part series, we will be discussing western Michigan, growing facilities and opportunities and what that means for investors.