Michigan has become the leading cannabis market in the United States in terms of units sold, surpassing even California, according to data from market intelligence firm BDSA. Since late 2022, Michigan consumers have purchased more packages of cannabis products, including gummies, pre-rolls, and grams of flower, than those in California. This shift is significant, given California's population is nearly four times larger than Michigan's.
The primary reason for this trend is the price difference between the two states. While California's cannabis market generates more revenue overall—over $5 billion last year compared to Michigan's $3.06 billion—cannabis products are significantly cheaper in Michigan. For example, a one-gram pre-roll of the Cookies' Ridgeline Lantz strain costs $17.50 at Dr. Greenthumb's Cannabis dispensary in Los Angeles but only $7 at Gage Cannabis in Ferndale, Michigan.
California's higher prices are largely due to its taxation system. The state imposes a 15% excise tax on cannabis sales in addition to state sales taxes that range from 7.25% to 10.75%. Municipalities can also add local taxes, pushing the total tax rate on cannabis purchases up to 38% in some areas. In contrast, Michigan has a 10% excise tax and a 6% sales tax, with no additional local taxes allowed.
These high prices in California discourage consumers from transitioning from the illicit market to the legal one. California has long been a major supplier of illegal cannabis, and the established black market continues to thrive, presenting a significant challenge to the legal market.
Michigan's rapid legalization and market expansion also played a crucial role in its current standing. The state legalized recreational cannabis in late 2019, with an approach that allowed for unlimited state-level licensing. This policy enabled swift growth in cannabis production, leading to an oversupply that caused prices to plummet from $494.77 per ounce in February 2020 to $88.15 in May 2023.
This price drop has made legal cannabis competitive with, and often cheaper than, illicit market cannabis, driving more consumers to purchase from legal sources. In May 2023, Michigan's cannabis industry sold over $278 million in recreational cannabis, and the state is on track to exceed $3.2 billion in sales for the year.
While other states like Colorado and Washington have seen declines in cannabis sales, Michigan's market continues to grow. A report from Oregon-based Whitney Economics indicates that over 75% of cannabis sales in Michigan occur within the legal market, compared to only 44% in California. This discrepancy suggests that California's overall cannabis market is worth more than $11.5 billion annually, while Michigan's is around $4 billion.
Despite Michigan's current success, it is unlikely to maintain this position indefinitely. California is already making efforts to address its market issues, including reducing or suspending local marijuana taxes to boost sales and considering regulatory changes. While the future of California's cannabis market remains uncertain, it is expected to stabilize and potentially reclaim its dominance.
For now, Michigan's cannabis industry can celebrate its achievements and focus on sustainable growth to maintain its market position. However, stakeholders should be prepared for changes as other states, especially California, work to resolve their market challenges.
Share this article:
Spotted a typo, grammatical error, or a factual inaccuracy? Let us know - we're committed to correcting errors swiftly and accurately!
Helpful Links Categories Recent News 
