Saturated industry presents challenges for marijuana growers as supply rises and prices fall – Macomb Daily
John Bartlett and Ronnie Whittle started Local Grove (LG) when medical marijuana was legalized in Michigan and became one of the first growers in Harrison Township to be licensed for the adult recreational marijuana market.
It was in 2019.
Now that cannabis has become one of the fastest growing cash crops in the country, Bartlett and Whittle compete in a saturated market of hundreds of growers, driving recreational marijuana prices as low, if not lower. , than states that have been growing cannabis for a decade.
“There are definitely a lot more growers than when we started,” Whittle said, noting that Harrison Township alone has 20 growers, while Warren has more than 40. “The average price of an eighth (3.7 grams) was $60. Now it’s $50. This makes it very difficult for many start-up businesses that don’t have a strong brand image.
Become a farmer
LG has become a strong brand. But it took work from the young entrepreneurs, who always held the belief that marijuana was a valuable plant that could be used to help people and after setting up their business they worked to produce a product worthy of the hype. Whittle’s own father had lung cancer and used marijuana to ease his pain while battling the disease.
They have also used their research and experience as producers to educate the public and lobby for the industry.
“We went to a lot of Harrison Township board meetings,” Whittle said. “It was a first for everyone. Nobody really knew how it would all work. There was a lot of misinformation and concern.
Once these issues were resolved, the township’s position changed.
This was the first hurdle for LG.
Once their municipality agreed, they still needed a license to become a recreational cannabis grower. At that time, it was not an easy task. They had to appear before a five-member board and go through rigorous background checks, not to mention a pile of paperwork. “They wanted to know everything except your underwear size,” Bartlett said.
At first their license was denied, but they appealed the decision and a year later joined the ranks of growers entering the Michigan market in 2019. “It was like we ran a marathon and won the race, at that time,” Bartlett said.
Once they were approved for recreational marijuana, they expanded their business, but not their way.
“We honed our cultivation technique to grow 72 plants and once we got the license we decided to stick with the nurturing process that we perfected,” said Bartlett, who compares the LG model to that from a Michigan craft brewery.
“We have a lot of small grow rooms that make it easier to manage,” Whittle said of the business that has been successful despite the saturated market.
“Another key to our success is the relationships we have with our distributors,” Whittle said. “We were very selective about where we put the product and that helped create demand.”
Puff Cannabis Company Utica.
Center line of the jars.
House of Dank.
Mary Jane’s house.
These are just a few of the retailers in Macomb County that are licensed to sell recreational marijuana and if you think their names sound like fashion designers, you should check out the inside of their stores.
On the outside, some may look unattractive – as many cities allow licensing, provided retailers set up shop in an industrial park surrounded by wrought-iron fences. However, once customers clear all security and reach the Bud Room, as it is known, they are greeted by bright lights and a savvy team of buds who know their stuff.
“We have 70 people there. They’re all very knowledgeable and friendly,” said Marvin Kiezi, owner of Puff Utica, which averages between 1,400 and 2,000 customers a day.
“We offer over 200 strains and varieties of cannabis,” Kiezi continued, including those produced by Bartlett and Whittle. “There are a lot of brands but I feel like Michigan (retailers) tends to support craft brands like Local Grove.”
Michael DiLaura would agree.
“It’s a very competitive industry, but it’s still not a cutthroat environment. Everyone is trying to do their best,” said DiLaura, chief executive and general counsel of the House of Dank (HOD).
It’s like the Wild West.
When the families headed to the new frontier, they were all looking to succeed while keeping in mind that they were part of a community.
This may change in the future, but the cannabis industry continues to evolve.
That’s not to say retailers won’t carry other brands. In fact, HOD has become the Hudson of the cannabis industry, carrying everything from Michigan brands to foreign brands adding to the competition in the Midwest.
“If it’s in the market, it’s in HOD,” DiLaura said, citing Jeepers as an example of a California brand, which has its own emerging trend in the cannabis industry that offers customers looking to reconnect, to improve their well-being, stimulate their creativity or relax in an ancient grove of redwoods with an all-inclusive cannabis experience. Like the wine lover looking for a VIP vineyard tour, estate tasting, wine education, and food and drink pairings, cannabis enthusiasts are also looking for trippy experiences.
Forbes estimates that cannabis tourism is now a $1.7 billion industry, which Michigan could tap into in the near future.
One thing is for sure, retailers and producers have their customers in mind.
“I think that’s why we were successful,” DiLaura said. “We strive for the best variety, of great weed, and through our depth with local Michigan growers, we are able to offer a variety of prices.”
This attracts customers from across the state.
“I’m from Grand Rapids,” said Kole Mannisto, who said the selection and prizes were worth it. “They had everything I wanted and I was out in five minutes.”
Last fall, Michigan had 466 licensed growers.
In June, there were 711.
The number of growers has nearly doubled, and many people are wondering if Michigan’s Cannabis Regulatory Agency should limit licensing. However, the law passed by the people in 2019 deliberately created a free market system and this authority was specifically reserved for municipalities.
“I don’t think it was intended for municipalities to coordinate across the state to identify market trends and an appropriate balance,” said Andrew Brisbo, executive director of the Michigan Cannabis Regulatory Agency.
The Michigan Cannabis Manufacturers Association estimates that the adult consumer market in Michigan will reach approximately $3 billion in annual retail sales when mature.
“This year we’ll probably get to just over $2 billion,” Brisbo said. “So there is still room to conquer the market. This puts us on a much better path than states in the same situation. »
Having many more producers than retailers also has an impact on prices. Once the plain becomes more even, the climate could change for growers.
For now, it is the decline in cannabis prices at the wholesale level that remains their biggest challenge.
“I think a lot of people assumed wholesale prices would go down over time, but Michigan had a much faster progression to a lower price than many other states,” Brisbo said.
Changes to the agency’s regulatory fees, which Brisbo says have been reduced every year since they implemented the program on both the medical and adult sides, are providing some relief to producers.
“We are still reviewing the regulatory landscape and trying to address concerns,” he said. “We can make changes to improve the business climate as long as it doesn’t sacrifice public health, safety and welfare.”
Another obstacle producers still face is the lack of bank resources and the tax environment at the federal level.
“I’ve heard of people paying federal tax rates of 60% to 70% because they can’t deduct normal business expenses like other types of industries can. Right off the bat, these cannabis businesses are going to be at a disadvantage in terms of profitability, leading people to try to isolate themselves in a way that other businesses don’t have to deal with being taxed. tax,” Brisbo said. “It requires a very competitive business model to be successful. These are things that Congress could take advantage of to make these legal businesses more competitive, efficient, and profitable.
Bartlett said they pay a lot of taxes but don’t get the same treatment as other businesses. During COVID-19 they were considered an essential business and although they kept all of their employees at work, the business was not eligible for any of the funding provided to support small businesses during the crisis.
“It was tough, but I’m glad we did it,” Bartlett said. “We survived all the trials and tribulations it took to get us here. And we will continue to be here because we love what we do.
Oakland Press writer Mark Cavitt contributed to this article