In a significant move within the Michigan cannabis sector, Boone Labs, a family-owned cannabis processing facility, has announced a strategic partnership with Melk Cannabis, a leader in premium solventless cannabis products. This collaboration is a merging of two family-founded entities aiming to set a new standard in quality, variety, and innovation in Michigan's regulated cannabis market.
Boone Labs, based in Buchanan, Michigan, has been a prominent figure in the industry, known for representing leading brands such as Kush Masters and Elevated Lakes. The partnership with Melk Cannabis, under the guidance of Nick Young, a cannabis industry expert with ten years of experience and a Marketing Professor at Western Michigan University, signals an exciting fusion of educational depth, seasoned expertise, and a shared passion for crafting premium cannabis products that appeal to consumers.
Melk Cannabis, driven by Young's visionary leadership, has gained a reputation for its superior solventless products. The brand stands out for its unique milk carton packaging and innovative approaches to cannabis consumption. With a commitment to quality and consumer preferences, Melk Cannabis has become a favored brand in Michigan's cannabis market.
This strategic partnership brings together Boone Labs' manufacturing excellence and Melk Cannabis' expertise in solventless cannabis production. The collaboration is set to provide retailers and consumers with an enhanced selection of high-quality solventless products, showcasing the combined strengths of Boone Labs, Kush Masters, Elevated Lakes, and Melk Cannabis.
Nick Young, the founder of Melk Cannabis, expresses his enthusiasm for the collaboration, viewing it as an opportunity to reinforce their commitment to providing enjoyable and solventless cannabis experiences. Similarly, Boone Labs is optimistic about the partnership, with Max Boone, the Director of Sales and Partnerships, emphasizing their shared goal to uplift the cannabis experience in Michigan by offering top-tier solventless products.
The partnership has already yielded results, with Boone and Melk producing a solventless concentrate batch that has successfully passed state testing and is ready for distribution. This collaboration not only signifies a growth in business operations for both Boone Labs and Melk Cannabis but also represents a promising step forward in elevating the standards and experiences for cannabis consumers in Michigan.
In 2023, Michigan's cannabis sector demonstrated significant expansion, with total marijuana product sales surpassing $3.06 billion, as reported by the state's Cannabis Regulatory Agency (CRA). This growth trajectory is expected to continue, according to industry experts.
Mid-lower Michigan, including Mecosta and Osceola counties, contributed notably to this success, recording sales exceeding $16 million in December alone. Tyler Dutcher, the owner of Vivid Farms, a grow facility in Barryton, foresees further industry growth, citing increasing consumer demand and innovative consumption methods.
Since Michigan legalized adult-use cannabis in November 2018, the industry has witnessed remarkable growth, with a 474% increase in sales from 2020 to 2023. Additionally, CRA data indicates a 78% reduction in the average price of flower since the early days of legalization, reflecting market growth and saturation.
Dutcher also highlighted the challenges and cyclic nature of the cannabis industry, noting that not all businesses are equipped to handle the industry's fluctuations. He mentioned the significant scale of operations, with some farms planting hundreds of thousands of plants, poised to become national leaders in cannabis cultivation.
A notable development in the industry is the formation of the 'Blacklist of MI Cannabis' Facebook group by Brandon Hauck and Kate Sikkila of Emerald Fire Farms. This initiative aims to address payment issues faced by growers, and it has already facilitated the settlement of numerous debts. The CRA has shown support for this effort by considering non-renewal of licenses for retail establishments that fail to pay their debts.
Chivonne Rush, a marketing representative from Timber Cannabis, reported successful growth for their Big Rapids location since its opening in January 2022. The company's expansion, including the launch of its sixth location in Mount Pleasant, reflects increasing societal acceptance and decreasing stigma surrounding cannabis.
Timber Cannabis focuses on product innovation and education, with Rush noting the popularity of products like infused pre-rolls and live rosin. The company collaborates with High Minded, a grow operation, to develop new strains and products. She emphasized the importance of community involvement for dispensaries and grow operations, as well as the potential for continued industry growth and the passion of new industry entrants.
Dutcher also commented on the diminishing viability of the Medical Marihuana Facilities Licensing Act in the face of recreational cannabis industry growth. He observed a trend of locations across Michigan adopting recreational ordinances, which often provide similar benefits to those of medical dispensaries but with a broader product selection.
According to Michigan Cannabis Information, the state boasts over a thousand CRA-licensed marijuana dispensary locations, including approximately 330 active medical marijuana dispensaries and over 660 active recreational cannabis shops.
The Cannabis Regulatory Agency (CRA) has imposed significant penalties on 664 Vassar, LLC, operating as Premier Provisioning Center #2 in Vassar, Michigan, for multiple compliance violations. The regulatory action includes a substantial fine of $212,000 and a 30-day suspension of the facility's operations, effective from February 3rd through March 3rd, 2024.
During a compliance check on April 21st, 2022, CRA inspectors discovered several regulatory breaches at the facility. Key violations included:
In response to these findings, the CRA requested 30 days of video surveillance footage on April 22nd, 2022. However, 664 Vassar, LLC failed to provide fully functional footage, leaving the origins of the mentioned products untraceable.
To address these infractions, 664 Vassar, LLC is required to update and implement standard operating procedures (SOPs) within 40 days, covering various aspects of operation including the statewide monitoring system, sales, transfers, storage of marijuana products, and chemical storage. Additionally, the facility must conduct thorough training for all managers and employees on these SOPs, providing comprehensive documentation of the training process.
Furthermore, within 160 days, 664 Vassar, LLC is obligated to organize the destruction of all untagged marijuana products in the presence of a CRA staff member, alongside providing video evidence of compliant destruction. The facility is also required to conduct an inventory audit and report any discrepancies between physical inventory and the statewide monitoring system records.
This enforcement action underscores the CRA's commitment to maintaining regulatory compliance within Michigan's cannabis industry, ensuring safety and adherence to established standards.
In a significant development in Michigan's cannabis industry, Comco, LLC, known for its involvement in the cultivation, production, processing, and distribution of both medicinal and recreational cannabis, is set to have its business assets auctioned. This move comes under the directive of Gene R. Kohut of Trust Street Advisors, LLC, who is acting as the court-appointed receiver for Comco.
Comco, with its cannabis provisioning centers located in Jonesville and Hanover, Michigan, has been a player in the local cannabis market. The upcoming auction, as per the Jackson County Circuit Court's order dated January 12th, 2024, is scheduled for February 26th, 2024, at 12:00 p.m. Eastern Time.
Interested parties wishing to participate in the auction are required to submit a qualified bid in accordance with the guidelines set by the court's Approval Order by February 16th, 2024. This order not only authorizes the Receiver to conduct the auction but also outlines the bidding procedures. It allows for the sale of Comco's assets free from any liens, interests, and encumbrances. Furthermore, the order includes a proposed form of a purchase agreement, known as the Stalking Horse Purchase Agreement.
For those seeking more detailed information, the Approval Order, Stalking Horse Purchase Agreement, Bidding Procedures, and other related materials are available upon request from the Receiver's counsel.
On January 18th, the Marine City Commission revisited discussions concerning the city's ordinance to license and regulate adult-use marijuana facilities. This followed the approval of the ordinance's first reading in the fall, which proposed a 1,000-foot setback from residential areas, churches, rehabilitation centers, childcare facilities, and schools.
However, during the October 19th, 2023, meeting, the second reading was postponed due to unavailability of Geographic Information Systems (GIS) maps from the county. City Manager Scott Adkins highlighted issues with the 1,000-foot setback, as it left no viable locations for marijuana facilities. Subsequent maps with 750-foot setbacks also did not yield additional property options, leading to the exploration of 500-foot setbacks.
The revised map, showcasing 500-foot setbacks, identified two potential locations for marijuana facilities—one near King Road and West Boulevard, and another by South Parker Street and Thompson Drive. Adkins emphasized that the decision to work with the 500-foot setbacks rests with the commission, and that the ordinance language could be modified accordingly.
During the discussions, Mayor Pro Tem Lisa Hendrick pointed out discrepancies in the zoning of certain areas on the map, noting a mix of industrial and residential designations. Commissioner William Klaassen inquired about the possibility of areas within the original 1,000-foot setbacks. Adkins clarified that although some zones were thought viable, they were disqualified due to their residential usage.
Commissioner Brian Ross raised concerns about the lack of parcels fully within the permissible area, considering the setbacks. Adkins mentioned that lot splits or subdivisions might be necessary, with the ordinance and map being updated to reflect such changes.
City Attorney Robert Davis elaborated on the application process for marijuana facilities, highlighting the need for comprehensive plans covering odor, lighting, security, and other operational aspects. He also stressed the importance of compliance with state regulations and detailed site planning requirements.
The commission, acknowledging potential changes in property usage and sales, discussed the need for updating the map as necessary. Davis noted that each application would require a review of the buffer zones.
Concluding the session, Hendrick moved to bring the ordinance back for a second reading with the 500-foot setbacks. The motion was approved with a 6-1 vote, with Commissioner Klaassen dissenting.
The prime real estate location of Gage Cannabis' premier outlet in Ferndale, Michigan, has been listed for sale. Occupying over 46,000 square feet on a 1.52-acre site at 1523 Academy Drive St., the property is being marketed for $7.06 million. This sale initiative, as detailed by Northmarq, a Chicago-based property brokerage firm, does not signal any operational changes for Gage Cannabis.
TerrAscend Corp., the Canadian company that owns Gage, reassured through CFO Keith Stauffer, that Gage's lease agreement would continue unaffected. The property operates under a triple net lease agreement, placing responsibility for property taxes, insurance, and maintenance on Gage Cannabis, with a 2.33% annual increase in rent.
BJ Feller, Northmarq's Managing Director and Senior Vice President, emphasized the investment appeal of the property, noting the stability of cannabis real estate compared to traditional retail sectors. This stability, coupled with higher than average capitalization rates and returns, makes such properties attractive to investors.
Northmarq's portfolio also includes other Gage properties in Kalamazoo (operating under the Cookies brand) and Traverse City, as well as Lume Cannabis Co. dispensaries located in Holly and Birch Run. Additionally, Gage's Battle Creek location is up for sale, with the Battle Creek property listed at $1.7 million, Traverse City at $2.55 million, and Kalamazoo at $2.9 million.
Ownership of these properties varies. The Ferndale and Kalamazoo sites are held by Troy-based Spartan Partners Properties, while the Traverse City property is under Strategic Koach Properties LLC, and the Battle Creek location by Battle Creek Downtown Central LLC. These entities, as reported by CoStar Group Inc., a real estate information service based in Washington, D.C., have not provided immediate comments on the listings.
The cannabis industry has been a vibrant sector in real estate for several years, offering investors an opportunity to engage in the marijuana market without direct involvement in its cultivation or sale, thereby navigating the complexities of federal drug regulations. However, the value of these real estate investments is highly dependent on local market conditions, particularly the level of competition in the area.
For example, in 2022, a modest 2,400-square-foot building in Pontiac, still awaiting its recreational marijuana market launch, was listed for $3.5 million. Contrastingly, Battle Creek's high dispensary density might explain its lower $1.7 million price point, as opposed to the less saturated Traverse City market, where property values reach $2.55 million.
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