“Cannabis is not just for West Coast hippies anymore. It’s a growing industry, and it’s everywhere.”
So says Kay Tamillow, research director of Brightfield Group, a CBD and cannabis market research and consulting firm in Chicago.
But does mean that Michigan could surpass Colorado in legal marijuana sales?
Well, yeah. And there are a number of reasons for this.
Step Aside Colorado
Sure, western states have dominated the market nationally. But they’ve been at it longer. It’s Michigan, Massachusetts, New Jersey, Illinois, and New York that are expected to make up 11% of the market this year.
And by 2023, their market share is expected to grow to 34%.
“The majority of growth will be driven by recreational sales,” added researchers from the Brightfield Group, “particularly from newly-opened, fast-growing states in the Midwest and on the East Coast.”
Michigan’s first recreational marijuana dispensaries are expected to open early next year.
And with a history of strong sales in the medical cannabis sector, experts predict that Michigan’s recreational market will grow three-fold between 2020 and 2023.
To state it simply, annual sales are expected to reach $650 million.
Western States Paved the Way
We don’t mean to be flippant. (It just happens naturally.)
But to be fair, early adopter states like Colorado had to blaze a new trail. And newer states are trying to learn from their foibles.
East Coast and Midwest states have instituted stricter rules and license caps. Michigan doesn’t have a license cap, but carries stringent criminal and financial disclosure requirements for cannabis license applicants.
And Federal lawmakers are becoming more enlightened. Or something like that. As such, they have recently introduced a number of federal bills to help support the cannabis industry.
None of these was in play when the western states were attempting to establish themselves.
Right now, none of the current top five markets are east of the Mississippi.
Michigan’s current marijuana market is about the same size of the recreational markets in Nevada and Oregon. But with the sizes of their populations, those states aren’t expected to see much growth by 2023.
Meanwhile, Michigan’s industry is young and still burgeoning.
But even if Michigan surpasses Colorado, California is expected to maintain its lead in the years to come with two-fifths of the U.S. market by 2023.
Furthermore, because of the intense competition, western states continue to lead in product innovation. So there’s that.
Why Michigan Could Surpass Colorado
“There is a lot of opportunity in Michigan,” Tamillow says. “It has a strong medical market, which is an indication that Michigan is a good state to get into for recreational. There’s certainly a lot of opportunity there.”
In fact, with nearly 3% of Michigan residents holding a medical marijuana card, it makes it the second largest medical market in the country.
Second only to California (overachievers).
The success of the medical market poises Michigan for a healthy recreational market as well.
Plus, a 10% excise tax will be imposed on all recreational sales. This is expected to generate $77.1 million in the 2019-20 fiscal year – with tax revenue exceeding $260 million by 2023.
And under the law, the revenue must be used on schools, local governments and roads. Yes, ROADS. So this is definitely good news for
cash-strapped local governments.
Michigan’s medical market has already attracted interest from some pretty heavy hitting companies in New York, Canada and even Colorado who are intend to open cultivating, processing and retail operations in the state.
So it’s well on its way.
Michigan Is Coming out of the Gate Strong
It seems likely that Michigan could surpass Colorado in legal marijuana sales.
Of course, it’s not a competition.
We’re just happy to witness the cannabis industry thriving in the state. And we’re even more thrilled to help in those efforts.
Arrange a consultation with us today to see what we can do for your cannabis business.