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You can’t currently walk into a Michigan marijuana shop and peruse the shelves, but that hasn’t stopped product from flying off them.
Close to $1 million a day in marijuana flower, vaping oil and edibles is still being sold, despite coronavirus restrictions that limit sales to curbside pickup and delivery.
With approximately $27 million in April sales, the recreational marijuana industry continues its ascent as governments fill their coffers with new tax revenue, despite the coronavirus pandemic and a forced about-face within the industry.
The state experienced a record high in weekly sales, nearly $8 million, during the first week of May.
Since the first recreational sales began on Dec. 1, the industry, now with 106 recreational stores and more than 200 total businesses, has racked up $91 million in sales, which translates to $15.2 million in new tax revenue, between a 6% sales and 10% excise tax.
Recreational marijuana is for now being passed through the windows of parked cars by gloved budtenders and dropped at front porches like delivery pizza.
The young industry seemingly didn’t flinch amid the uncertainty that came when Gov. Gretchen Whitmer issued a stay-home order that halted large segments of the state economy, but allowed marijuana businesses to remain open on a limited basis.
“We’ve had to hire staff during this time,” said Brett Stephens, general manager at Freddie’s, a retail store in Clio. “We’ve grown. We’ve seen retail sales go up by 100%.”
Freddies opened as a medical dispensary in August and received its recreational retail license Feb 22, just a couple weeks before the first two coronavirus cases were confirmed in Michigan and the governor issued a state of emergency.
“I wasn’t surprised (marijuana was deemed an essential item),” he said. “I was excited they made that distinction.”
The Marijuana Regulatory Agency, which oversees the industry, quickly pivoted to expedite delivery service licenses to numerous businesses and created rules for curbside transactions.
Freddie’s, a small store, is now servicing up to 200 people in its parking lot each day, Stephens said.
“Everybody is masked up and gloved during the entirety of the interaction,” he said. ” … Everything is put into a sterilized basket and that basket is sterilized between every interaction with every customer.”
While many customers place online orders prior to arrival, others receive one-time-use menus to make their selections.
Another quickly growing offering that received a turbo boost by way of the coronavirus pandemic and social distancing rules is delivery service.
While there were only a dozen businesses licensed to deliver marijuana as of Feb. 12, that figure had blossomed to 63 as of Tuesday.
“You don’t even have to leave your house” to get marijuana during these “uncertain times” Stephens said.
Freddie’s expanded it’s delivery service across the state, including once-weekly deliveries to customers in Grand Rapids, more than 130 miles from the retail location. Due to state rules that limit the number of deliveries to 10 orders per driver, per trip, Freddie’s had to hire multiple delivery drivers just to keep up with its Grand Rapids customer base.
Larger, vertically integrated players in the industry are seeing similar trends.
“The curbside experience is something that has been successful to make sure that everyone in state continues to have access,” said Doug Hellyar, the president of Lume Cannabis, which operates its own grow facility and eight stores, including seven that are licensed to sell recreational marijuana.
All have delivery licenses.
“We are hoping that we get to continue (curbside sales) when things get back to a more normal situation down the road,” Hellyar said. “(Customers) do their research online. They can place their order from the comfort of their home, receive a text message or email communication that your order is ready for pickup, and then at their convenience drive to the store … and their product will be hand delivered to them.”
In the meantime, the company is preparing for the day its retail stores reopen their doors, Hellyar hopes by June.
The company installed dividers to separate customers and employees at cash registers, there are marks on the ground to direct customers while maintaining social distance and personal protection equipment is being purchased for employees.
While much of Michigan’s economy has slumped since mid-March, Hellyar said, “to the contrary, we have seen an increased rate of growth at each of our locations. It has been significant.”
Based on sales figures released by the Marijuana Regulatory Agency, the rate of growth industry-wide has slowed since the coronavirus pandemic arrived in Michigan.
Sales increased 41% between December and January, 51% between January and February, 48% between February and March, and the expansion decelerated to 23% in growth between March and April.
Steve Linder is president of the Michigan Cannabis Manufacturers Association, which describes its members as the “General Motors, Fords, and Chryslers of Michigan’s cannabis industry.
“They were allowed to be listed as an essential industry because of the medical nature of the product,” Linder said. ” … There are thousands of people that are not only still working but people that need the products … for medical reasons.
” … And with people staying home, obviously there’s more people using (marijuana) … There was a pretty large spike when the federal checks started arriving.”
Another hurdle for the recreational marijuana industry to overcome appeared in early April, when the state banned caregiver products from being transferred into the recreational market.
“Caregiver” is a designation created when medical marijuana was legalized by voter initiative in 2008. They were intended to be small-scale growers who helped supply medicinal marijuana to up to five designated medical marijuana patients.
As the rules stand now, all recreational marijuana products must originate from a licensed grower or processor.
Stephens of Freddie’s said he’s not sure how the change might impact the industry in the long run, but said there are already supply shortages that have affected prices and variety.
“We haven’t found enough stock to really start comparing to prior prices yet, but there is a shortage right now,” Stephens said.
State data shows there is a large price gap between the cost of medical licensed and recreational licensed marijuana flower.
While the average retail price per ounce declined from about $516 in December to $471 in March, the average cost for an ounce of medical marijuana average only $281 in March.
No matter which way the industry goes after the coronavirus pandemic subsides, most agree it will be up.
A March 20 report by the Michigan State University Product Center, which aims to improve opportunities in agriculture, said the state marijuana industry “appears to be maturing rapidly.”
Using data from other states that legalized marijuana prior to Michigan, the report forecasts recreational marijuana sales to reach about $3 billion per year, supporting nearly 13,500 jobs “along the marijuana supply chain” when it becomes “widely available.”
Nearly 1,400 cities, townships and villages, including Michigan’s largest city, Detroit, have barred recreational marijuana businesses.
Linder of the Michigan Cannabis Manufacturers Association is taking a conservative approach to his predictions for the post-coronavirus marijuana industry normalcy.
“It’s still too early,” he said. “It’s seems like it’s been forever. It’s only been 60 days … That word, normal. We’ll have to wait and see what that is.
“This industry is new, it’s growing and there are a lot of very smart people.”
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