Michigan’s Cannabis Regulatory Agency Reports Record-High Sales—And Robberies
- Michigan’s CRA reported that the state brought in over $221 million in revenue for December between adult-use and medical-use marijuana sales
- While the revenue news was positive, the agency also announced that there was a record amount of robberies, with 13 cases of delivery drivers reporting theft
- Even though marijuana sales have been lucrative for the state of Michigan, it’s essential to consider the implications of the fact that marijuana is still illegal at the federal level
As marijuana becomes legal in more states for adult use, reports are coming out about the possible revenue in this sector. The Michigan Cannabis Regulatory Agency (CRA) has reported record-breaking sales for December. While cannabis remains controversial, there’s no denying that some states can generate substantial amounts of revenue from the product.
We’re going to look at how much revenue the state of Michigan was able to generate from cannabis last month and what you should consider if you’re thinking about investing in this industry.
Michigan has record-high sales of cannabis
The Michigan Cannabis Regulatory Agency (CRA) reported that December was a record month.
The agency sent out the following tweet before sharing a document with the total sales figures:
“Consumers set another record in December, spending over $221 million on marijuana products. Michigan adult-use sales reached an all-time high, $208,318,037, while medical sales came in at $13,419,377. The 10% excise tax and the 6% sales tax adds up to $34.6 million in total taxes.”
The growth of cannabis sales in Michigan for the month of December led to revenue of $221.7 million, which was a year-over-year increase of 32%. This figure is about $9 million more than the original record that was set in September. It’s worth noting that even though sales are going up, the average cost of marijuana has continued to drop. The price of an ounce is about $90 now, which is down from about $180 back in late 2021.
There’s optimism that sales will continue to grow as Michigan will be paying attention to the adult-use sales in Detroit, where marijuana sales have finally started. However, with the positive news of record-high sales, some challenges must be addressed. The record-high sales have come with the price tag of record-high robberies.
A record number of robberies were also reported
With record high sales, the Michigan Cannabis Regulatory Agency (CRA) has also warned that there’s been an increasing number of robberies. The agency recently revealed that they could confirm at least 13 reports of cannabis drivers getting robbed while delivering products to customers. The agency has put out a warning for cannabis business owners about this uptick in delivery driver robberies. Based on the data, all of these thefts occurred at the residence where the delivery was being made. Some cases were armed robberies where drivers had their vehicles stolen.
All of these reports have come out because administrative rules state that marijuana license holders have to notify local law authorities and the CRA about any theft or loss of marijuana products. The business also has to report any criminal activity they experience within 24 hours of being made aware of the situation.
What’s next for the cannabis industry in Michigan?
It seems like there’s plenty happening in the cannabis industry in Michigan. With sales at an all-time high, it’s essential to consider what’s next for this space in 2023.
Security measures are in place
In order to prevent further thefts, many cannabis business owners are implementing security measures to ensure that drivers have the necessary protection to perform their tasks safely. One of the business owners spoke to the local news about what his dispensary is doing to assist drivers. The security measures include cameras in the delivery vehicles, product lock boxes, and a double verification system for customers.
In the bulletin that was issued on January 17, the CRA brought up how they had identified a pattern in the reported criminal activity in the last 6 weeks. All of the marijuana robberies occurred in residential communities where drivers thought they were delivering the product to someone’s home safely. One of the business owners noted that the crime was limited to property theft and that drivers weren’t hurt in the process.
Detroit finally launches recreational cannabis sales
After a series of delays, Detroit has finally launched recreational cannabis sales at two medical marijuana dispensaries that were licensed to sell to adult-use customers. The establishment known as House of Dank became the first marijuana dispensary allowed to sell products in Detroit. It’s a bit surprising that the largest city in Michigan wasn’t allowed to sell cannabis many years ago because Michigan votes approved adult-use cannabis in 2018, and sales started the following year in the rest of the state.
It turns out that Detroit regulators didn’t grant any first-round adult-use retail licenses until late 2022. According to reports, the original legislation ordinance in the city created multiple legal issues that forced government officials to rewrite it.
The SAFE Banking Act
The United States Congress introduced the SAFE Banking Act back in 2019 in an attempt to provide a safe harbor for banks that want to work with state-legal marijuana businesses. While this act isn’t specifically related to Michigan, it impacts the entire marijuana industry since these companies don’t have access to mainstream banking due to cannabis remaining illegal at the federal level.
The act has now failed to pass the Senate three times in a row, and it’s worth paying attention to this story. Struggles with finding lenders and banking have the potential to hamper the cannabis industry.
Cannabis laws in Michigan
When writing about cannabis, we have to stress that while it’s legal in some states, it’s still illegal at the federal level as it’s considered a Schedule 1 controlled substance. This is why it’s important to educate yourself on the legal ramifications of purchasing marijuana.
So where does Michigan law stand on the use of cannabis? Michigan became the first Midwestern state to allow medical and adult marijuana use in 2018. The Michigan Regulation and Taxation of Marijuana Act was passed in late 2018.
The act also created a financial system for marijuana distribution, with sales subject to a 10% excise tax on top of Michigan’s 6% sales taxes. The law came into effect on December 6, 2018, and marijuana retailers opened for public sales on December 1, 2019.
The following are allowed under Michigan law:
- Anyone 21 or older can possess and use marijuana
- If marijuana sales are legal, you can purchase up to 2.5 ounces with an individual limit of 15 grams as possession
- You can keep up to 10 ounces of marijuana at home in a secured destination
- You can grow up to 12 plants at home
The following are prohibited under Michigan law when it comes to cannabis use:
- Public consumption of marijuana
- Driving under the influence of marijuana
- Crossing a state line with the marijuana you purchase in Michigan
Risks to consider before investing in marijuana
Is it worth investing in marijuana right now? Here are some of the risks that you should think about before investing in marijuana stocks in 2023.
- Businesses could go bankrupt. As retail investors and businesses await the legalization of marijuana in the U.S. at large, the company you invest in may not be around by the time the process is complete. The landscape could also change depending on how the legalization works out.
- There’s no timeline for federal legalization. When you invest your money, you must act on the information available to you. The failure of the SAFE Banking Act to pass the Senate means that cannabis stocks will continue to face the challenges associated with operating as a cash-only business. The risks involved include additional security concerns, difficulties with tracking income and expenses, and legal issues when it comes to taxes.
How should you be investing?
When you look at the prices of some popular weed stocks, you may be confused about where to invest your money if you’re thinking about adding some exposure to marijuana in your portfolio.
The good news is that Q.ai takes the guesswork out of investing. At Q.ai, we include cannabis stocks in our Guilty Pleasures Kit and other “vice stocks” like alcohol, tobacco, weapons and sex-positive companies.
Interested? Download the Q.ai app for free to try it out.
The bottom line
While the news of December’s record revenue for marijuana sales in Michigan is certainly positive for the industry, it’s worth watching what happens with the robberies as drivers could have second thoughts about performing what may be a dangerous task. We will also be paying attention to how marijuana sales perform in Detroit now that the city has allowed them.
From Q.ai contributor Martin Dasko.
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