Cannabis outlets are feeling the pinch of oversaturation

Cannabis outlet 3Fifteen on Jos. Campau has closed temporarily, but it’s possible that might be permanent. The Michigan marijuana business is oversaturated with product, which has resulted in declining revenues for outlets.

By Charles Sercombe
Michigan’s budding cannabis business has hit an interesting snag.
While sales are expected to increase from $1.7 billion last year to $2.5 billion this year — according to a study by Headset, a cannabis market research firm –a number of dispensaries are struggling.
Why is that?
There’s so much “product” that the market is now oversaturated. That, in turn, has resulted in about a 75 percent drop in consumer prices.
An ounce of flower has gone from around $160 to about $60 an ounce.
On top of that, a number of people now grow their own marijuana plants at home, since it is legal, and thus they don’t need to go shopping for the product.
That’s good news for consumers, obviously, but it could spell the death knell for some dispensaries.
In Hamtramck, this oversupply has resulted in the closure of 3Fifteen dispensary. A sign on its Jos. Campau door says it’s a temporary closing, but the buzz around town is that it’s not likely to re-open.
If so, that would leave only three other dispensaries operating.
The Review reached to all four for comment, but no calls were returned.
The City of Hamtramck has benefited financially from the four outlets. Last year, the dispensaries generated over $200,000 in tax and fee revenue for the city.
If 3Fifteen does not reopen, that leaves a question of what happens to that license. The city has limited the number of dispensaries to just the current four, and according to the city’s rules, the licenses cannot be transferred to new owners.
The city could change that rule, but it’s highly unlikely, as many in the conservative Muslim community were vehemently opposed to the industry to begin with.
The city council and mayor are all of the Muslim faith.
If the 3Fifteen license is not allowed to be transferred, that will mean a loss of about $50,000 in revenue for the city.
While there has been significant opposition to the cannabis business in Hamtramck, another benefit to the city, besides tax revenue, is that all four dispensaries located in long-vacant commercial spaces.
In the case of Pleasantrees on Holbrook, that dispensary revitalized a dilapidated building that had long stood vacant.
Posted March 31, 2023

Leave a Reply

Your email address will not be published. Required fields are marked *