There’s not denying that cannabis is a fast-growing industry. Like laser fast. With more than $221million in profits in December of 2022 alone, it seems like it’s thriving.

Seems is the operative word.

After defaulting on a $127 million loan, one of the state’s largest cannabis producers recently entered into receivership. And it’s the fifth one to do so. So are Michigan cannabis businesses in trouble?

Receiverships Are Not Surprising

All industries experience ebbs and flows. Emerging industries face the additional challenge of a huge influx of businesses all competing for the same marketshare.

You’ve heard the saying, it takes money to make money. This is no less true in the cannabis industry. For those looking to start a cannabis business, it takes a considerable amount of money to make just the first couple of dollars.

Add in the fact that there was a nearly 90% price drop in wholesale cannabis prices over the last 18-24 months and it’s the recipe for considerable financial strife.

As such, many companies found themselves borrowing sizable amounts of money from private lenders in other states are (willing and) able to charge higher rates. So given all of these challenges it was only natural that some of these businesses would falter.

So Then Are Michigan Cannabis Businesses In Trouble? Really?

There’s a smorgasbord of challenges that cannabis entrepreneurs face that other industries don’t.

First of all, insurance is a lot more expensive.

Then there’s the ongoing issue with banking. Because cannabis is STILL federally prohibited, cannabis companies can’t seek loans or take advantage of traditional banking. They can’t take credit cards. And the bankruptcy protections provided to traditional businesses are not available to them.

Even so, most experts don’t believe that the Michigan cannabis industry is facing a serious threat. The receiverships are a natural byproduct of companies with poor management, weak marketing strategies, or any number of other foibles merely getting “weeded” out.

In reality, many cannabis businesses in the state continue to thrive and expand – despite recent receiverships. And though every company won’t and simply cannot survive, most believe the industry will continue to grow larger.

Slow and Steady Wins the Race

Some of the more successful businesses are those run by industry folks versus money folks. Their companies were self-funded and slow to scale. And they sought out experts in cannabis marketing who knew in the legal ins and outs of managing their advertising and public relations.

Meanwhile, the big box cannabis companies swooped into the market early and ignored the shortcomings they’re dealing with now. So it’s no big surprise that some of the largest companies are entering into receiverships.

At the end of day, the vast majority of cannabis professionals are hopeful and positive about the future of weed. The hope is that one day it will be federally legal, the stigma will be greatly reduced, the extra taxes will be slashed, and the industry will thrive.

Looking For Stellar Cannabis Marketing Services?

The appearance that there are some Michigan cannabis businesses in trouble is not completely false. But that doesn’t mean there’s not future for the industry.

Cannabis has certainly captivated the population. And there’s still room for more. The key is in standing out from all the rest.

So if you’re ready to take your cannabis marketing to the next level, contact us. We’ve been experts in this arena for nearly a decade. We know what works and, more importantly, what doesn’t.