Cannabis Sales Soar in Michigan and Colorado

Michigan’s recreational cannabis sales hit a total of $9.8 million in January, according to new figures released by the state’s Marijuana Regulatory Agency (MRA).

This represents a 40 percent increase on the nearly $7 million in sales generated in December, the state’s first full month of legal recreational cannabis sales.

These numbers still paled in comparison to recent figures from the Colorado Department of Revenue, which recently announced the mountain state earned $1.75 billion last year in cannabis sales. But the record high revenues from both states will be welcomed by the US cannabis industry, which has recently been hit by mass layoffs.

Taxes and prices

Michigan formally legalized recreational cannabis in December 2018, and the first sales were expected to start in the spring of 2020. But, thanks to a provision in the law that would allow existing some medical cannabis producers to sell recreational products, sales were able to begin months ahead of schedule.

For January, the state is estimated to have generated around $1.63 million in tax revenue from the sale of recreational cannabis – $980,000 from the state’s 10 percent excise tax, and a further $646,800 in sales tax.  

Under the rules of the ballot proposal approved by Michigan voters in 2018, the first $20 million in tax revenue generated in the first two years of recreational cannabis sales is earmarked to go towards supporting cannabis research for healthcare applications.

Any additional revenue generated in this timeframe is to be split: 15 percent to cities, towns, and villages which allow recreational cannabis businesses; 15 percent to counties which do the same; 35 percent to the state’s School Aid Fund for K-12 education; and 35 percent to the Michigan Transportation Fund for road and bridge repair.

In Colorado, which legalized recreational cannabis in 2014, cannabis dispensaries and other outlets netted more than $302.4 million last year in state tax revenue. This money reportedly goes on to support state-wide efforts such as youth prevention efforts, behavioral health treatment, and public health and safety initiatives.

The cost of cannabis

According to the figures in the MRA report, the average cost for an ounce of recreational cannabis in Michigan dipped slightly in January to $512 per ounce, down from $516 per ounce in December.

Conversely, the average cost of medical cannabis increased from $267 per ounce to $276 per ounce. Medical cannabis sales figures also rose slightly, up to $25.2 million in January from $24.9 million the month before.

In Colorado, the record high sales have largely been attributed to two factors: an expanding range of products, and changes in consumer behavior.

Speaking to CNN, Tom Adams, a managing director at the cannabis market research firm BDS Analytics, said that “the profusion of edibles, beverages, vapes, and concentrates resulted in a smaller market share for the familiar flower.”

“Separately, people are growing comfortable with buying cannabis products and integrating those purchases into their shopping patterns.”

Cannabis in Michigan

Despite the boom in Michigan’s cannabis sales, licensing figures were actually down last month. The MRA reported approving 24 new recreational cannabis business licenses in January, a slight reduction from the 32 approved in December. But it did approve 53 medical cannabis licenses, up from 29 approved the month before.

And while the state cannabis sales grew, so, too, did the cost to administer the state’s licensing and registration programs, which increased by nearly 20 percent.

In January, Michigan spent $766,910 on medical cannabis licensing, $556,892 on recreational cannabis licensing, and $412,419 on the state’s patient-caregiver registry program. For comparison, these figures were $655,109, $444,720, and $280,389 respectively in December.

In keeping with the regulations in many other US states with legal cannabis, anyone over the age of 21 in Michigan can purchase recreational cannabis from a licensed retailer, provided the show a valid state ID or driver’s license.

State residents can legally possess up to 2.5 ounces of cannabis on their person at any one time, though possession on federal land or in federally funded facilities remains prohibited. Residents can also possess up to 10 ounces of cannabis at home and self-cultivate up to 12 plants for personal use.