By David Fleet
Editor
Brandon Twp.— In July, a group Ortonville Residents for Action circulated a petition to get the measure on the ballot for residents to decide if marijuana establishments should be allowed. The ordinance passed with 221 votes for the ordinance and 216 votes against it.
Now, in November township voters will decide on a proposed ordinance that would amend the code of ordinances to allow for one recreational marijuana retailer in the township, and prohibit others. It would also repeal the current ordinance that prohibits recreational marijuana establishments.
December 2019 marked the start of recreational marijuana sales in Michigan following state voters’ approval from the 2018 ballot proposal to legalize it. Now, more than $1.1 billion of legal marijuana was sold in Michigan just last year.
According to the Michigan Cannabis Regulatory Agency fewer than 165 of Michigan’s 1,773 cities, villages and townships have opted to allow recreational marijuana sales. Between July 2021 and July 2022, the number of active grower licenses has increased 65 percent and the number of active retail licenses has increased 34 pecent.
But while the number of outlets along with product growth continues to increase statewide, the cost per ounce for consumers is dropping.
Between July 2021 and July 2022, the average retail price for an ounce of flower has declined 48 percent in the medical market (from $213.89 to $110.72) and 44 percent in the adult-use market (from $217.94 to $121.58). In August medical marijuana had dipped to $109 and adult-use to $116. The decline in cost comes at a time where the county is gripped by an 8.3 percent rate of inflation, the highest in more than 40 years.
Douglas Mains, is a partner at Detroit-based Honigman LLP who helped draft recreational and medical cannabis legislation. He specializes in government relations and regulatory law, with a particular emphasis on providing strategic advice to clients regarding public policy, legislation, and regulatory issues.
“I think almost everyone in the cannabis industry would tell you the same thing: even with record sales numbers, the supply of cannabis in Michigan is outstripping demand, and the resulting reduction in wholesale prices is negatively impacting the entire supply chain, jeopardizing a number of licensed businesses throughout the state,” said Mains, during an interview with The Citizen.
In the short term, as the state grapples with how to create some sort of supply and demand equilibrium, he does not think this will have any significant impact on potential municipal revenue, which primarily comes from the excise tax revenue they receive from licensing retailers and microbusinesses.
“Regardless of the economic environment and the size of a municipality, we continue to see that retail licenses are in high demand as businesses look to expand the scope of their retail footprint and branding,” said Mains. “Moreover, I believe that cannabis sales will continue to be robust, absent significant macroeconomic issues. Longer term, however, as the market matures and becomes more saturated, I think we will reach a tipping point. As more retail establishments are licensed, the amount of tax revenue municipalities receive for each will be reduced, and it likely won’t be as much of a windfall as it has been for communities.”
According to the CRA, within about 20 miles of Brandon Township there are about 17 recreational cannabis retail outlets.
“Additionally, as more stores open and home delivery becomes more prevalent, consumers will have more choices, and it may be harder for retail businesses in smaller communities to compete against larger operators in neighboring communities, which, in turn, would result in some of those businesses closing and taking jobs and tax revenue with them,” added Mains.
Robin Schneider, director of the Michigan Cannabis Industry Association, Michigan’s marijuana trade organization with more than 400 members, said each municipality, like Brandon and Ortonville, must determine how many facilities are needed to best serve their community.
“Generally speaking it’s true that the more retail locations there are in one community the lower the profitability will be for each location,” said Schneider. “In the long term it’s the customers who will determine which facilities are successful as they patronize their favorite stores.”