Demand outpacing supply for legal marijuana

Michigan

GRAND RAPIDS, Mich. (WOOD) — The first week for recreational marijuana in Michigan generated a lot of money for the five shops in the state actually selling to customers.

The Michigan Marijuana Regulatory Agency says that between Dec. 1 and Dec. 8, there were more than $1.6 million in sales. The state collected $163,000 in excise tax and another $107,000 in sales tax for a total of more than $270,000.

The demand has been so great that dispensaries have been running out of product. On Friday, people waited in line outside of Lit Provisionary Centers in Evart for more than two hours to get the legal weed. By Sunday, the store was sold out.

Owner Doug Hellyar estimated the shop served 750 people, with the average customer spending more than $100. That works out to upwards of $75,000 in sales.

Lit hopes to be restocked sometime next week.

“There’s been this pent up demand for this product and, if the numbers are correct (that) 1 in 6 people use, well, that’s a lot people in the state of Michigan who would be trying to get it,” Benham Wrigley, a partner at Cannalex Law in Grand Rapids Township, said.

And more shops are starting to make it available. Park Place Provisionary in Muskegon is still waiting for approvals at the state and local level. The owner hopes to be open before Christmas. In White Cloud, the owners of White River Wellness aim to have an opening by next week. In Lowell, Meds Café, which plans to operate out of a former Family Video, is looking at an early 2020 opening.

For David Overholt, a longtime medical marijuana advocate who once was prosecuted for doing exactly the thing that brought in all that money for the state and businesses, the mad rush for marijuana is just proof of what he has been saying for years.

“There’s plenty of places to show (it’s) user-friendly, nothing to be scared of, crime rates haven’t soared,” Overholt said.

What has soared is prices. Marijuana at the five recreational shops as well as the medical marijuana provisionaries is up to between $400 and $500 per ounce, at least 50% higher than black market prices and several times what it was just 18 months ago.

Overholt said that at that time, the prices dropped so low that medical marijuana caregivers could not cover their costs and many dropped out.

“So now some of the caregivers are all starting to wonder, maybe I should fire back up again,” Overholt said.

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For now, there is a decrease in supply at the medical level, as well.

“Now everybody who’s 21 with a driver’s license can enter these facilities. That’s going to be quite a drain on the system,” Overholt said.

“You have medical, which was created to serve essentially 360,000 people if you got them all,” Wrigley said. “With adult use though, you now have 9 million possible people as opposed to 360,000.”

The testing, the taxes and the overhead all add to the cost of legal marijuana.

There is a lag in the building and supplying of facilities, especially when it comes to testing: Only six facilities exist and experts say at least 20 will be needed. A facility that sells or grows cannot test its own product. It has to be totally independent.

“It’s a huge outlay of cost to get into that particular business,” Wrigley said.

But there will be plenty of people adverse to breaking the law, who want safe, certified product and variety, so they won’t go to the black market, Wrigley said. He said the price of legal marijuana and black market will come become more closely aligned over the next couple of years.

“They’re within 25% of each other, who knows? But it will happen. Give it time,” Wrigley said.

Officials say there are protections in place to make sure that medical marijuana remains available, including allowing only 50% of existing supply to transfer from medical to recreational and only for a limited number of recreational outlets, Michigan Licensing and Regulatory Affairs spokesman David Harns said. He said LARA is working to balance the demand for both sides of the marijuana issue.

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