California has a reputation for being one of the most cannabis-friendly places in the world. Despite legalizing cannabis for all uses in 2016, California still has a black market issue and Michigan is also seeing the same trend. Four of five municipalities closed their borders to cannabis companies in Michigan, while others are simply concerned about the impact on their communities.
Four out of five municipalities have closed their borders to companies related to cannabis in Michigan.
Many take a wait-and-see approach, allowing the pros and cons of legalizing recreational use (sales were to start on Sunday) before allowing businesses to open up. Others are simply concerned about the impact of drugs on their communities.
The shortage of hosting communities and questionable regulatory measures, combined with the fact that the Michigan Cannabis Regulatory Agency did not license cannabis producers, led to a product shortage.
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Shortage of cannabis in Michigan leads to pricing hikes
This shortage has led to an increase in prices. Prices have gone up as high as $480 per ounce for high-end medical cannabis in Michigan, compared to only $300 per ounce for the same product on the illegal market.
All this is contributing to a high probability that the cannabis black market will continue to thrive.
California regulated the adult cannabis market in 2017. However, this year, illegal cannabis sales are expected to triple to nearly $9 billion, according to data from the United Cannabis Business Association.
Only 89 of California’s 482 cities allowed recreational clinics according to the Los Angeles Times. More than 1,200 of Michigan’s 1,773 cities, townships and other municipalities have decided not to allow adult recreational cannabis companies to operate at their borders.
Only six recreational cannabis clinics in Michigan have been authorized by the MRA to sell cannabis products to adults, and only three in southeast Michigan, all located in Ann Arbor, are expected to be selling products.
The government may be to blame for black market cannabis in Michigan
“What happens when you have insufficient access is less competition, higher prices, and less product variety,” said Andrew Livingston, Director of Economics and Research at Denver-based cannabis law firm Vicente Sederberg LLP.
“All this leaves the consumer wondering why they’re going to buy in this store window 45-minutes away and stand in line to pay 35% more above the market price? Is it any better than the (illegal) dealer who visits their home?” said Livingston.
Livingston said that communities often choose to withdraw because it is easier than writing their own regulations and policies.
“States define the framework, but local governments are responsible for managing local zoning, opening hours and other rules,” Livingston said. “Sometimes local governments just don’t want to work with all this, not because of obvious cultural problems with cannabis, but because there are many things to deal with.”
Legalizing cannabis for medical purposes
The MRA is aware of the inaccessibility of its experience in legalizing cannabis for medical purposes, which voters approved in 2008 but was not fully operational for nearly 10 years.
As of Nov. 12, 40 of Michigan’s 83 counties did not have municipalities that allowed a single medical clinic for cannabis in Michigan.
“This will create very large bands of inaccessibility for cannabis products and where there is a demand, it will be met in one way or another,” said Andrew Brisbo, Executive Director of MRA. “I think part of our approach is to provide access to the regulated market, because at the end of the day if consumers want to use cannabis products, we want them to use safe products.”
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