Last month, Ohio kicked off its recreational cannabis sales, raising questions about how this would impact Michigan’s already thriving industry, which attracts many Ohio customers. Michigan had become a popular destination for Ohio residents seeking cannabis, with many dispensaries conveniently located near the state border in cities such as Morenci and Monroe.
Ohio’s dispensaries sold close to $55 million worth of product in the first month of the state’s legal cannabis sales, which got underway in August.
Despite this, the Michigan Marijuana Regulatory Agency has released new data indicating that the state’s dispensaries have not suffered. In actuality, sales kept rising: recreational marijuana sales at Michigan dispensaries reached $294 million in August, up 3% from July’s $286 million. Sales increased significantly from $271 million even in August of the previous year, indicating a 9% growth overall.
A closer look at sales figures from regions bordering Ohio shows a similar trend of increased sales. In southwest Michigan, recreational sales reached $86 million in August, up from July’s $82 million. Likewise, the southeast and east regions of Michigan saw sales grow from $121 million to $123 million.
These increases indicate that Ohio’s entry into the recreational market has not slowed down Michigan’s cannabis industry, particularly in border regions.
However, not everyone in Michigan is seeing that same trend. Sean Lyden, CEO of Green Labs Provisions, a dispensary located in Luna Pier, which is six miles from Ohio’s border, reported a 15% drop in sales during August compared to the previous month. Despite this decline, Lyden remains cautiously optimistic, believing that the most significant challenges may have already passed.
One factor that still draws Ohio customers to Michigan is the price difference between the two states. In Ohio, the cost of an ounce of marijuana flower is around $250, while in Michigan, the same amount was priced at around $80 in August.
Michigan’s cannabis market, now almost five years old, has experienced a substantial drop in prices due to increased competition and supply. For the time being, Ohio’s higher prices and limited number of dispensaries may continue to encourage Ohio residents to cross state lines to purchase marijuana in Michigan, where competition is fiercer and prices are lower.
However, Lyden anticipates that as Ohio’s market grows and becomes more competitive, the situation may change. To stay ahead of potential market shifts, he is considering expanding his business with additional dispensaries in Michigan and possibly in Ohio. This expansion could help his company become less dependent on Ohio customers visiting the Luna Pier location.
The growing sales in these two states are helping to strengthen the reach of the industry, and enterprises in other jurisdictions, such as Aurora Cannabis Corp. (NASDAQ: ACB) (TSX: ACB), will be hoping that the momentum keeps building in those new markets.
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