Michigan Archives - Green Market Report

StaffSeptember 21, 2021
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Michigan-based SKYMINT, is buying 3Fifteen Cannabis and also closing its $70 million Senior Secured Term Loan from Tropics LP, an affiliate of SunStream Bancorp Inc., a joint venture initiative sponsored by Sundial Growers Inc. (Nasdaq: SNDL), and its $8 million equity investment from Merida Capital Holdings. The acquisition will bring Skymint’s workforce to 730 employees and a combined retail portfolio of 27 locations totaling 101,000 square feet, with an additional 18+in the 2021-2022 pipeline.

The combined company will now have a dominant market share in four key Michigan regions: Grand Rapids, (4 locations), Greater Lansing (4 locations), Detroit / Metro Detroit (5 locations), and Ann Arbor (2 locations). In addition, it will have two indoor cultivation facilities totaling 77,000 square feet with a third indoor cultivation facility – totaling 184,000 square feet – due to come online next year and a 1,000acre sustainable, sun-grown farm (Michigan’s largest outdoor cannabis farm).

“Skymint was founded on a mission to become a leader in the cannabis industry while leveraging our leadership position as a positive catalyst for change,” said Skymint CEO and co-founder Jeff Radway. “With this acquisition of 3Fifteen Cannabis, we have a monumental opportunity and responsibility to truly shape the market for the better, bring more jobs to our state, provide Michiganders increased access to clean, handcrafted, premium products and experiences at the best value, and continue our commitment to uplift the communities we are fortunate to serve.”

The company said in a statement that with the acquisition of 3Fifteen Cannabis, it now has the capability to serve nearly 90%of adult Michigan residents in a market valued at $3.2B that has embraced the freedom to consume cannabis recreationally since 2019. Three additional Skymint stores are planned to open in 2021, and 15 more locations are set for 2022.

“Merida has already invested deeply in Michigan through 3Fifteen, due to the attractive population dynamics. Skymint’s leading vertical position augments 3Fifteen’s leading retail presence,” explained Mitch Baruchowitz, CEO of Merida Capital Holdings and will be joining Skymint’s board of directors upon closing of the transaction.

The announcement comes on the heels of Michigan’s record-breaking July 2021 sales. According to an August 2021 report from industry analyst HeadsetMichigan celebrated a 56% year-over-year increase in July 2021 sales totaling $171M, with adult recreational products comprising the largest share of $128M; and in May 2021Michigan’s cannabis sales were less than $8.5M short of surpassing Colorado’s, which presently holds the No. 2 state ranking for national cannabis sales.

“We couldn’t be more excited to have a partner like Skymint to execute our shared vision for aggressive expansion,” said Tommy Nafso, President and General Counsel of 3Fifteen. “Skymint’s operational efficiencies and meticulous focus on quality, combined with best-in-state cultivation operations and innovative approach to retail, creates the perfect operating environment for continued success.”


Debra BorchardtAugust 24, 2021
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Michigan is on fire when it comes to cannabis sales. While the state is relatively new to legal adult use sales, the market is quickly becoming a force to reckon with. A new report issued by cannabis data collection firm Headset digs deeply into where the sales are coming from and what Michigan consumers like the most.

Watch Out Colorado

Headset noted that from January to July 2021, Michigan has recorded $970.4 million in sales, exceeding both Washington and Oregon markets. Michigan is only $145 million behind Colorado. At this rate, Michigan could give Colorado  run for its money. Headset said that adult-use sales continue to grow at an average of 10% month over month. In May, Michigan’s cannabis sales ($148.9M) were less than $8.5 million short of overtaking Colorado’s sales ($157.2.7M)

Chart provided by Headset

“When we break down Michigan’s medical and adult-use cannabis markets, we find that in January, Michigan’s medical sales made up 38% of total sales but decreased to 27% of sales in July.” The report did caution that growth in both portions of the market were slowing down slightly. That could be a sign that the market is beginning to stabilize. Headset also pointed out that Michigan is following the same month over month growth as other more mature markets.

Michiganders Love Edibles

Like most cannabis markets, flower is the top category for consumers. Michigan flower represents 50% of the market share, second only to Nevada where flower takes a 55% market share. Vape pens are second place taking 19% of the market share. However edibles are the big category winner in the state. Edibles have captured a 13.8% market share – the most of any state. The state’s cannabis consumers are less inclined to buy pre-rolls and concentrates. 

Headset wrote that California has sold more edibles so far in 2021 than Colorado and Michigan combined. However, Michigan has sold more edibles than Colorado by 416K so far this year. “Michigan is selling their Edibles at an average item price of $14.48, which is 11% lower than California’s average item price of $16.23.”

While gummies are usually the biggest edible winner in most states, Michigan consumers actually have a high preference for Caramels, Chews, and Taffy. Gummies do command 71% of the state’s edible sales, but 10% of the sales to go to the “chews” category. By comparison, only 5.8% of the California market goes to the “chews” category and in Colorado only 5.6%. 

 

 


StaffJuly 21, 2021
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Gage Growth Corp. (CSE: GAGE) has added two more provisioning centers (dispensaries) to its portfolio, which will be located in Flint and Burton, Michigan. The company now has 15 provisioning center locations in its retail portfolio.

“These latest additions to Gage’s retail and cultivation portfolios enable the Company to broaden and solidify its position in the Michigan market,” said Fabian Monaco, CEO of Gage. “We look forward to bringing our world-class cannabis experiences to new communities through our increased retail locations. Gage is committed to investing in the communities in which it operates, and we will approach Flint and Burton with the same high level of integrity, focus on diversity, and dedication to offering a variety of quality products to provide the best cannabis experiences to the region’s patients and consumers.”

Gage’s first retail dispensary in Flint will be located at 4174 W. Pierson Rd., a heavily trafficked area accessible to residents in Flushing and downtown Flint. Gage will also open a retail location in Burton, located at 1234 N. Center Rd. Gage’s portfolio includes city and state approvals for 19 “Class C” cultivation licenses, three processing licenses and 15 provisioning centers (dispensaries).

The company also announced it has entered into a contract grow agreement with a third-party Michigan cannabis license holder, adding its eleventh expected Contract Grower to the Company’s portfolio for the 2021 calendar year. The company said it expects to receive the product from the Contract Grower in the fourth quarter of this year in an amount of approximately 250 pounds of dried cannabis per month. As previously disclosed, Gage expects adding several more partners and expanding its total cultivation facilities by year-end to fourteen locations.

Completion of this transaction and the Company’s opening of storefront retail dispensaries in Flint and Burton are subject to state and local regulatory approvals.

 


Julie AitchesonFebruary 24, 2021
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January has been a watershed month for cannabis in the state of Michigan, as the Michigan Marijuana Regulatory Agency announced sixteen proposed changes to the state’s cannabis laws and regulations. Aimed at improving access to capital for people of color seeking to break into the cannabis market, this initiative also seeks to address other hurdles commonly faced by minorities in the marijuana industry. These obstacles include overwhelmingly bureaucratic application processes, prohibitive licensing fees and wait times, and the outsized impact of the War on Drugs for communities of color. Should the changes be implemented, Michigan would boast the most progressive social equity program in the nation, thanks in large part to the MRA’s Racial Equity Advisory Workgroup (formed in July 2020). 

Cimone Casson is a Workgroup member, owner of cannabis insurance brokerage firm Cannas Capital, Michigan Chapter President for Minorities 4 Medical Marijuana, and the driving force behind another initiative that is poised to push Michigan to the forefront of social equity. Casson’s objective is to create a local stock exchange, the Michigan Marijuana Market, that focuses on raising capital for minorities in local communities impacted by the War on Drugs. The crowdfunding platform, to be housed and supported on the MRA’s website, would serve as a portal for local marijuana investors and businesses located in impacted areas. Though the MRA would operate the Michigan Marijuana Market, a broker-dealer would have oversight over the project and assets would be held by a state-chartered custodial bank. The MMM would be a solely intrastate investment system targeted towards minority-owned and capitalized businesses.

As the Michigan Marijuana Regulatory Agency’s Subcommittee Chairwoman, Cimone Casson is working with director Andrew Brisbo to develop the Michigan Marijuana Market as a means not only of assisting local minority-owned businesses in gaining access to capital but providing a pathway for minorities to build wealth and strengthen their local economies.  “We must provide a consensus pathway to rebuild communities and offer a viable entry for minorities into this market,” Casson says. “Local stock exchanges have historically boosted the likelihood of success for locally-owned businesses, which are critical to a community’s economic, social, and political vitality.”  

Social equity is always top of mind for Casson whether in regards to her own business, Canna Capital, or her work in the regulatory environment. The MMM involves leveraging existing Michigan state laws such as the M.I.L.E. Act (Michigan Invests Locally Exemption), which allows small businesses to raise capital by reaching out to Michigan residents to invest in their companies, and the M.I.M. Act (Michigan Investment Market Act), which regulates a class of intrastate broker-dealers and facilitates intrastate securities transactions among individuals. Still, as the MMM proposal will almost certainly require funding for administrative costs, additional legislative changes will be necessary in order to launch and maintain the initiative. 

Passing MMM-supportive legislation in a Republican-dominated legislature will pose a challenge, but Casson is confident that the Michigan Marijuana Market could be the key to overcoming barriers to participation in the booming cannabis economy and building generational wealth in communities that have yet to reap its considerable rewards.   

 


Marissa GoldOctober 5, 2020
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In December of 2019, Michigan became the tenth state in the U.S. to legalize adult-use cannabis. Less than a year in, it’s already outpaced Nevada to become the fifth highest-grossing state for cannabis sales and is on track to surpass $1 billion in sales, according to data from Headset. In addition to its fast-growing new adult-use market, Michigan’s medical market is ranked #2 in the country, second only to California. Now, all eyes are on The Great Lake State as cannabis operators and investors across the U.S. seek to claim their share of this high-potential market.

A Strong Medical Market Paved the Way

Though Michigan’s recreational market is still less than a year old, medical cannabis has been legal in the state since 2008. 

“Michigan has historically boasted the second-largest medical cannabis program in the country, and therefore, the adult-use market has a phenomenal base of consumers to grow from,” explains Fabian Monaco, President of Gage Cannabis Co, a Michigan-based cultivator and dispensary operator. 

“Because of this, adult-use sales are now experiencing exponential growth, along with the fact that the state has 7.3 million adults over the age of 21, with a total population of 9.9 million,” adds Monaco. 

By continuing to serve both medical and recreational markets–a move not always followed by other states–Michigan reaches a maximum potential consumer base. 

Michigan Consumers Are Top-Spenders

Perhaps the biggest standout finding was the amount Michigan consumers were willing to spend on cannabis. Headset data shows the average basket size in Michigan is $84.58, a notable increase from California’s average purchase amount of $64.13. This data puts Michigan consumers at the top of the food chain, spending-wise, and is especially attractive to cannabis brands that offer premium products at higher price points.

Gage Cannabis, which has exclusive cultivation and distribution rights to premium brands like Cookies, Grandiflora, and Minntz, currently operates just 1% of Michigan’s medical dispensaries but has commanded 10% of the state’s medical market share. 

Monaco attributes this to Michigan consumers’ apparent preference for high-quality brands, and a willingness to spend more on their purchases. Despite plenty of competition and lower-priced options, Gage continues to command premium pricing on its flower products.

“The average basket size of a Gage customer has been $175 for five straight months, which are industry-leading numbers to say the least,” Monaco underscores.

The Pandemic Only Boosted Business

With the onset of the pandemic, many retail businesses were forced to close, but the state’s newly-legalized cannabis industry was considered essential and allowed to remain open–with a few precautions. 

“Delivery saw incredible adoption in the wake of the COVID-19 pandemic,” says Meredith Mahoney, president of Lantern cannabis delivery platform. Despite the fact that Lantern was brand-new to the Michigan market, the pandemic created a demand, and her technology was able to step in and fill it. 

“Curbside pickup or delivery were the only ways to purchase, with delivery being the much easier and more convenient way to shop, and this accelerated our progress,” says Mahoney.

Consumers Come to Michigan from Out of State

Michigan’s unique geographical location also brings in consumers from neighboring states, some of which only allow medical purchases or none at all. Monaco notes that “Consumers travel to our stores from nearby states such as New York, Ohio, and Indiana, among others.” 

Though he says Gage will remain a single-state operator in Michigan, he has an “aggressive” expansion plan beyond his five current retail locations to meet the current demand. “We are preparing to open an additional eight locations within the next six months in new markets including Battle Creek, Kalamazoo, Bay City, Buena Vista, Center Line, Grand Rapids, and Lenox Township,” he says.

More Firsts and More Expansion Ahead 

With recreational sales growing from $9.8 million in January to $65.5 million by August, according to Headset, there’s no questioning Michigan’s potential. Brands operating within the state are expanding their services to keep up with the Michigan consumer’s appetite. 

Mahoney plans to launch on-demand cannabis delivery next: “Lantern will be the first on-demand cannabis e-commerce platform operating in Michigan that enables recreational cannabis delivery into Detroit in 60 minutes or less from when an order is placed,” she says. After teaming up with local dispensary 3Fifteen for its launch, Lantern will now broaden its network of dispensary partners to expand its service across the state.

Joe Crouthers, CEO of investment firm Ceres Group Holdings, agrees that more industry leaders are likely to follow suit. “Michigan is a big contributor to the cannabis industry’s momentum. They have explosive growth from their new recreational market, a friendly state government with progressive regulation, diverse (canna-educated) consumer mix, and a platform for well-established brands to expand,” he says. 

And while he cautions investors with some general advice, “To maintain tempered valuations, achievable forecasts, and prudent cash flow management,” one thing is clear: “The state certainly warrants our attention.”

 


Debra BorchardtMay 27, 2020
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Up and coming Michigan cannabis company Gage Cannabis has announced a partnership with Slang Worldwide Inc. (OTC:SLGWF) to produce and distribute Slang products. While Slang is the better-known company, Gage has been quietly building a solid business in Michigan.

Michigan

Gage is focused on becoming a leader in the state as the cannabis industry has switched from building huge national footprints to targeting specific states. Adult-use cannabis sales in Michigan began in late 2019 and have been growing steadily since then with 27% month-over-month growth from March to April 2020, based on data from the Michigan Marijuana Regulatory Agency. A recent study by Michigan State University estimates that total cannabis sales in the state could reach $3 billion within the next five years. It is currently the fourth largest market in the country.

Gage Cannabis

Gage has licenses for 13 dispensaries of which four are operational at this time. There are four licenses for cultivation with three operational and one processing license. The average basket size for Gage in March was $130 and that number has jumped to $175 in April.

For now, Gage is privately owned with 60% of the company held by management and insiders. The company has raised $60 million and has $7 million in cash and no debt. Bruce Linton is the Executive Chairman, while Fabian Monaco is the President.

“Gage understands that partnering with industry-leading brands like SLANG elevates the Michigan cannabis market and provides consumers with a range of products that are of exceptional quality,” said a representative of Gage. “Gage is unwavering in its commitment to bringing only the best cannabis products and brands to Michigan.”

The company made a big splash with its Cookies partnership when it opened a Cookies branded dispensary on the well known 8 Mile road in Detroit. The 3,500 square-foot Cookies store employs 40 Detroiters and the company has in place a social equity program through which it will share $950,000 with social equity participants in cities disproportionately impacted by marijuana prohibition.

Slang

The partnership means that Gage will be including its category-leading products O.penVAPE, Pressies, District Edibles, and Bakked in its dispensaries. SLANG will also provide sales consulting services and will receive royalty payments for each branded product sold in the state.

“Partners are the backbone of the SLANG network, and we are excited to embark on this initiative with a great operator like Gage,” said Peter Miller, CEO of SLANG Worldwide.  “Gage has demonstrated an ability to scale as leaders in a rapidly growing and competitive market. By supporting their business with the diversified SLANG product offerings, we expect an even greater mutual scale and success. This deal is directly on target with our licensing and partnership strategy, and we look forward to growing together.”

The addition of the SLANG brands will strengthen Gage’s offering in the vape, edible, and concentrate product categories. Production of the additional products will utilize Gage’s increasing cultivation and processing capacity in the state.

“I am very excited to see this collaboration between two companies that are each innovators and leaders in their own segment of the cannabis market,” said Bruce Linton, Executive Chairman of Gage and an investor in SLANG. “Partnerships like this are a great way for both companies to accelerate their growth in a capital-efficient manner, which is crucial in today’s market.”

 

 

 


Kaitlin DomangueDecember 3, 2019
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Over a year has passed since Michigan voted to legalize recreational cannabis for those 21 and older. Sales for adult-use cannabis began on December 1st and the Michigan Regulatory Agency reported that consumers spent $221,000 on their first day. People lined up for blocks in the cold to have a chance to buy legal marijuana for the first time.

Michigan already had a strong medical cannabis program already in place, bringing in approximately $970 million in sales this year. Though they have a strong medical program, at this time, Ann Arbor is the only place in Michigan where customers can purchase cannabis recreationally. Exclusive Brands, Arbor Wellness and Greenstone Provisions are currently the only three shops in operation in the state. T

Three additional retail shops, Lit Provisioning Center in Evart, Skymint in Ann Arbor, and Michigan Supply and Provisions in Morenci were approved for their state licenses to sell recreational cannabis on Wednesday, but they weren’t expected to be ready to start sales on Sunday. Cities in Wayne, Oakland, and Macomb county, for example, have either banned recreational use in their area entirely or are working on regulations in their area/deciding who will receive a license to operate.

In November, Detroit’s city council unanimously voted to opt-out of recreational sales until January 31st. They cited their reasoning as wanting more time to draft regulations for their area. USA Today reported that approximately 80% of municipalities in Michigan voted to opt-out of recreational cannabis sales being permitted in their communities, at least at this time. This does not seem to affect the states’ projections for its newest industry, Canaccord Genuity estimated the market to reach $1.5 billion in 2020. The state House Fiscal Agency has estimated that when the market is fully established after 2020, annual sales will be approximately $949 million, bringing in $94.9 million from the states’ excise tax and $57 million from the 6% sales tax.  

Michigan only began accepting applications for business licenses on November 1st. It has awarded a total of 18 licenses thus far, including dispensaries, processors, and growers. Another 63 licenses have been pre-qualified already.

 


Debra BorchardtMarch 14, 2019
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Michigan-based cannabis ag-tech company Green Peak Innovations LLC closed on a $30+ million capital raise in an oversubscribed mezzanine debt round. The company plans to use the money for expansion purposes within its home state.

“This is an important step for Green Peak Innovations as Michigan’s largest holder of vertical medical marijuana licenses,” CEO Jeff Radway said. Canaccord Genuity and Beacon Securities acted as co-lead agents for this funding round.

Green Peak Innovations is fully licensed by the LARA Bureau of Medical Marijuana Regulation as the largest holder of “Class C” cultivation licenses, processing, and has plans in place to open 19 provisioning centers.  The company said it anticipates opening the first of its 19 Skymint-branded provisioning centers within the next few months.

Radway continued: “Significant demand resulted in exceeding our planned funding goal in record time. Clearly, our investors are excited about our business strategy and our first mover advantage in the Michigan marketplace.”

Plans are currently in place to expand the Windsor facility up to two times its current footprint.  “Our investors participated in this funding based on the team we’ve built, our business and financial strategy, and the assets we have amassed,” added CFO Al Gever.  “All of this speaks volumes about how serious Green Peak is about being the country’s premier cannabis company.”

“Our first priority is to solidify our position as the state’s premier cannabis company that supplies Michiganders with the safest, highest quality products,” added Radway. “Only then can we begin our next step of taking our proprietary and scalable model to other states.”

“Green Peak has invested significant capital into our fully operational 60,000 square foot state-of-the-art headquarters facility in Windsor Township and our R&D facility on Jolly Road to produce a quality product in a clean, contaminant-free environment,” said CFO Al Gever.

During the recent, mid-term elections Michigan voters passed a ballot initiative to legalize, regulate, and tax marijuana for adult use through the measure known as Proposal 1.

 


Emerson BrownDecember 11, 2017
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In all aspects of life, the ability to start strong and finish even stronger is a must, but what happens in between the start and the finish varies depending on the situation, and I must say, the state of Michigan is surely shaking things up going forward when it comes to the culture of cannabis.  Michigan has been able to produce and provide medical marijuana to patients since 2008, but this Friday all this is going to change. The state department of licensing and the regulatory board will start accepting and rejecting people looking to set up shop within the state boundaries of Michigan.

Last year,  the Michigan Legislature passed and the governor signed into law three bills (House Bills 4209, 4827 and 4210) that will create a licensing and regulatory framework for medical marihuana that must be implemented by December 15, 2017. This new deadline for a prequalifying licensor has been the topic of discussion for some time now because at the moment any dispensary that’s operating in Michigan is under a legal, but illegal cloud.  

Michigan is the home to nearly 272,215 medical marijuana patients. There are expectations of adding nearly $71 million in tax revenue for the state and you best believe that there’s major competition for the right space to operate. Michigan is second to California for medical marijuana users and outside investors believe that number could go even higher.

Harvest Park Uses Industrial Park Model

An example of this is Harvest Park in Windsor, Michigan. It is using the industrial park model and applying it to medical marijuana. This company has 130 acres positioned and poised to become the state of Michigan’s epicenter for medical marijuana cultivation, processing, testing and secure transportation. I know you’re wondering how this township of Windsor, a place slightly west of Lansing, Michigan executed this future economic and medical platform for the culture of cannabis and how this recent announcement made Windsor the largest medical marijuana development east of the Mississippi.  The Township has set up its program for approval of 138 medical marijuana licenses, 10 class A, 10 class B and 100 class C cultivation licenses. Then another 10 for processing, 3 for secure transporting and 5 for lab testing.

This is where  Hudson Park Managing Director Jeff Donahue comes into play. “We’ve worked with the Township and gained approval for the local zoning and ordinances required to enable licensure for all levels of cultivation, processing, testing and secure transport,” said Donahue. Harvest Park has been granted easy access to I69 and I96, which is located directly in the center of Michigan. When it comes to the heavy power demands of this industry, Harvest Park has partnered with one of the major utility companies to ensure all licensed operators have an ample supply of power, redundancy, and competitive rates.

The state of Michigan plans to begin licensing, regulating and taxing medical marijuana by early 2018. Harvest Park is already one leg up on the competition with 70 percent of their fully improved lots sold or pending approval.  Also, with the projection of phase two opening early first quarter of 2018 the economic and medical future for the state of Michigan is looking modernly massive with the opening of Harvest Park. The industrial park expects to bring 1000 new jobs. According to the Bureau of Labor Statistics, Michigan is experiencing  4.5% unemployment as of October 2017, which is higher than the nationwide average of 4.1%. Making this a desirable project for the community.

Michigan’s Recreational Use Status

According to the Marijuana Policy Project, “Coalition to Regulate Marijuana Like Alcohol officially submitted ballot language to the state of Michigan today that would legalize adult consumption of marijuana in Michigan and establish a system in which marijuana is regulated and taxed similarly to alcohol. The Coalition to Regulate Marijuana Like Alcohol’s initiative would create six categories of licensed marijuana businesses that would be regulated by the state and also be subject to local control.” The site said that the coalition must submit a petition with at least 252,523 valid signatures of registered Michigan voters. MPP also stated that if approved by voters in November 2018, Michigan would follow Alaska, California, Colorado, Maine, Massachusetts, Nevada, Oregon, and Washington in legalizing marijuana.


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