By Kathleen Gray
Detroit Free Press
WWR Article Summary (tl;dr) Michigan’s soon-to-explode marijuana business is drawing entrepreneurs back home with visions of tapping into a market that is ready to take off. The prospect of a recreational marijuana ballot proposal that could open the market to millions has investors betting on the state as their next potential gamble.
LAS VEGAS
For Hilary Dulany, long roots in Michigan and the prospect of expanding her Oregon marijuana business are luring her back to the Great Lakes State.
For Nancy Whiteman, the prospect of taking her business national has her looking for partners in Michigan.
For the two women and many other entrepreneurs attending the MJ Biz Conference in Las Vegas last week –the pre-eminent conference where 18,500 professionals looking to get into the cannabis industry gathered — the common thread was Michigan’s soon-to-explode marijuana business.
Michigan’s 272,215 people who hold medical marijuana cards — second only to the number of medical marijuana users in California — are a potent enough clientele to attract business to Michigan. But the prospect of a recreational marijuana ballot proposal that could open the market to millions more has investors betting on the state as their next potential gamble.
“Michigan has no idea what’s coming,” said Dulany as she talked with conference attendees about the vaporizer her Michigan-based company — Accuvape — sells around the country. The device, which she now sells in about 100 retail outlets in Michigan, allows users to vaporize marijuana-infused oils and cartridges without the hassle of rolling their own.
Dulany already has licenses to process marijuana into extracts in Oregon and wants to expand that business into Michigan.
She wasn’t the only vendor talking about Michigan. Among the 678 vendors populating the Las Vegas Convention Center exhibit floor, there was an excitement about the potential of the Michigan market.
Cannabis Property Brokers of Michigan in Bloomfield Hills, which has purchased 25 acres in Bay County, was hawking 22 parcels where people who get coveted licenses from the state could grow up to 1,500 marijuana plants.
By Thursday afternoon, eight of the 22 parcels had been gobbled up.
“Michigan would be a massive market. It would definitely rank up there with the top recreational markets,” said Chris Walsh, editorial and strategic development director of Marijuana Business Daily, which tracks the marijuana market nationally and internationally. “You’ve got a fairly big state, you could draw from other regions. It would be a substantial market.”
The state will transition to a fully regulated market next year that will make medical marijuana more readily available through licensed growing operations, processing facilities and dispensaries in communities that decide to allow the businesses in their towns.
In addition, if Michigan voters approve full legalization of marijuana for adult use next year, the state would become the second-largest market, behind California, among the seven states and the District of Columbia to legalize cannabis. California’s market, which begins its recreational market rollout in January, is expected to grow to $5 billion when it becomes fully mature in a few years, Walsh said.
In Michigan, what’s expected now is a market that estimates $711 million in medical marijuana sales a year and $21 million in tax revenue. If full legalization happens, that number is expected to surpass $1 billion sales a year. Colorado, the first state to fully legalize marijuana, is about half the size of Michigan and is projected to have more than $1.5 billion in sales of medical and recreational marijuana this year.
Dulany, who splits her time between Michigan and Oregon, wants to expand her business from the vaporizers to the growing and processing business. She and her partner Chuck Senatore have bought land in the state with the hope of getting a state license.
“We moved back to Michigan to do the land acquisition so we we can start expanding the brand,” she said. “We’ve gotten approval from townships, so on Dec. 15, we’ll be able to apply for licenses for our facilities and hopefully, we’ll be a lot bigger than we are in Oregon.”
She doesn’t need a license to sell the vaporizer in Michigan, but she will need one to make the marijuana infused products — called Aardvark extracts — that are used in the vaporizer.
Whiteman, the founder and owner of Wana Edibles in Denver, hopes to partner with a Michigan company to produce and sell her brand of marijuana-infused products, including their best-selling gummies.
“I think when you have a state like Michigan that has a large population, it can be self-sustaining as a business opportunity just in the medical marijuana market,” she said. “But if you get a foothold in the business and then it goes recreational, the market grows exponentially.”
It’s not legal to ship marijuana products across state lines, so Whiteman’s company is looking for a Michigan partner with whom it could share its established branding and packaging, recipes, training and technical support. The partner would be its “brand ambassador.”
“We started the company in 2010 so we’re one of the original companies in Colorado,” she said. “We’re also in Oregon and Nevada and about to expand to Illinois, Arizona, Florida, Pennsylvania and Maryland and we’re already in discussions with potential partners in Michigan.”
The company will do $14 million in sales in Colorado alone in 2017, Whiteman said, “and that’s a lot of gummies.”
MJ Biz Daily’s Walsh said Michigan’s new regulated market will only help the state.
“California and Michigan are the last two standing and they need to fall. These are the last unregulated markets where the industries have operated in this weird legal gray area, where they’re almost violating the law,” he said. “But in the long run, if they can survive this transition, it’s going to be better for everyone.”
Organizers of the petition drive to get the recreational legalization issue on the November 2018 ballot were in Las Vegas also, drumming up support for the upcoming campaign. The group, the Coalition to Regulate Marijuana like Alcohol, has seen a renewed interest in the Michigan market.
“I’m here to help with building the coalition and fundraising. There’s a ton of support for this and we’re going to have people and groups from all over the country who are going to support our effort,” said Robin Schneider, finance director for the coalition.”Now that we’ve gotten the number of signatures and are ready to turn them into the state, we’ll find financial support coming from all over the country.
Applications for five categories of licenses — growers, processors, testers, secure transporters and dispensaries — will become available from the state Department of Licensing and Regulatory Affairs on Dec. 15. The Michigan Medical Licensing Board is expected to begin awarding licenses in first quarter of 2018.
Altogether, three states are expected to have marijuana legalization on the ballot in 2018 — New Jersey and Michigan for recreational adult use and Oklahoma for medical use.
Organizers of the petition drive to put the issue of legalizing marijuana for all adult users on the 2018 November ballot in Michigan expect to turn in signatures to the Secretary of State on Monday.
Licenses from the state
The Department of Licensing and Regulatory Affairs has set the license application fee for each of the five medical marijuana licenses at $6,000. That amount will be on top of up to $5,000 that communities can charge for their permits and the regulatory assessment the state will charge that will run from $10,000 to $57,000.
