Despite its youth and immaturity, America’s state-legal cannabis industry has been dubbed one of the fastest-growing sectors in the country. The sector has generated billions of dollars in revenue for businesses and provided jobs for hundreds of thousands of people. In addition, projections have the space pulling in $43 billion by 2025. Cannabis is a high-risk industry and potentially a high-reward industry, especially for companies that can weather the risks, and many businesses are looking to throw their hats into the ring.
Michigan, for instance, legalized recreational cannabis only one and a half years ago, and its large population coupled with favorable cannabis policies make it an increasingly attractive market. Since last April, Michigan’s recreational cannabis sales have exceeded $100 million, and cannabis sales are expected to surpass $1.2 billion this year. According to projections by the 2021 MJBizFactbook, recreational sales in Michigan are set to quadruple from around $500 million in 2020 to roughly $2 billion–$2.5 billion in 2025.
Presently, Michigan has an estimated 200 recreational cannabis stores, putting it at one dispensary for every 34,000 residents. According to Frank Colombo, the director of data analytics for Viridian Capital Advisors, the state has little market penetration and is still in a “process of consolidation.” As such, interested cannabis companies can pitch tent in Michigan’s recreational cannabis sector with relatively little competition, at least for the moment. In fact, a report that was recently released by the New York-based Cowen Group states that Michigan is home to one of the biggest cannabis markets in the country.
The state’s cannabis policies make its cannabis space enticing to businesses in the cannabis space. For starters, Michigan currently has unlimited licensing on a statewide basis, which has led to lower acquisition prices compared to states such as Illinois. This allows established businesses as well as new entrants to acquire other cannabis operators without having to break the bank. On the municipal level, however, the state has seen several municipalities opt out of launching legal markets. While more municipalities are expected to opt in over time, probably with licensing caps, limiting licenses will allow existing businesses to retain their market share and profitability for longer without having to contend with competition.
Thanks to an uptick in cultivation facilities, there are fewer cannabis flower shortages, and flower is more affordable than it was when Michigan first launched its recreational industry. Beginning Oct. 1, 2021, the state will also reduce its licensing fees from $25,000 to $7,500, which, coupled with cheaper cannabis flower, will reduce operational costs.
It goes without saying that cannabis companies such as Red White & Bloom Brands Inc. (CSE: RWB) (OTCQX: RWBYF) that have a presence in Michigan have contributed to making the industry successful.
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CNW420 spotlights the latest developments in the rapidly evolving cannabis industry through the release of two informative articles each business day. Our concise, informative content serves as a gateway for investors interested in the legalized cannabis sector and provides updates on how regulatory developments may impact financial markets. Articles are released each business day at 4:20 a.m. and 4:20 p.m. Eastern – our tribute to the time synonymous with cannabis culture. If marijuana and the burgeoning industry surrounding it are on your radar, CNW420 is for you! Check back daily to stay up-to-date on the latest milestones in the fast -changing world of cannabis.
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