Michigan: A Lucrative Cannabis Market with Tight Regulations
February 27th, 2019
Exclusive, News, Top News
Several states have legalized recreational cannabis over the past few years, but almost all of these states have been progressive coastal states. Last November, Michigan became the first midwestern state to legalize recreational cannabis.
The Marijuana Business Factbook 2018 projects that Michigan could become one of the country’s largest recreational markets, generating $1.4 billion to $1.7 billion in annual sales over the coming years, citing the state’s large existing medical cannabis population. The state’s residents are already widespread marijuana usage at around 15.6 percent of the population, compared to 14.9 percent for California.
Let’s take a look at Michigan’s evolving regulatory framework and why Grown Rogue Inc. (CSE: GRIN) (OTC: NVSIF) has focused on building a strong presence in the state.
Michigan’s Complex Tiered System
Michigan’s cannabis regulations are set to become among the most complicated in the country. After briefly closing more than 60 unlicensed medical dispensaries earlier this year, legal and supply challenges forced the state to reopen them until March 31. Many of these existing businesses have experienced issues securing new permanent licenses from the state under the new regulations—a testament to how complex the process has become.
Cannabis businesses must obtain three separate licenses in order to operate in the state:
- State License: The state will not restrict the number of recreational licenses, but the process is still up-in-the-air. The state has issued licenses for medical cannabis businesses, but regulations on the recreational market are not finalized.
- Municipal License: Municipalities may prohibit or limit the number of cannabis businesses in their jurisdiction. The licensing process is completely independent of the state licensing process and many municipalities have caps in place.
- Real Estate: Real estate used for cannabis cultivation or retail must be approved by both the state and municipal authorities, introducing another hurdle to the cannabis business licensing process in Michigan.
Legal challenges have led to an effective moratorium on the state level, as well as in several municipalities. For example, the Detroit City Council recently approved a 180-day moratorium citing ongoing legal challenges and concerns about voter-approved initiatives. The council members indicated that they would use the time to develop new ordinances to regulate the licensing and zoning of marijuana facilities and caregiver centers.
Grown Rogue’s Advantage
Grown Rogue recently announced a binding agreement to expand into Michigan through a strategic partnership with Blue Zebra Community LLC. Under the terms of the deal, the partnership will include two retail dispensaries, a 19,000 sq. ft. indoor cultivation processing center in Detroit, and an interest in a 28-acre parcel located in the northern portion of the lower peninsula that could be used for cultivation.
“With the second highest total number of medical cannabis card holders in the United States Michigan’s legalization of cannabis for adult-use presents a very large cannabis market opportunity,” said Obie Strickler, CEO of Grown Rogue, in a recent press release announcing the deal. “Significant barriers to entry at the local level add meaningful value to the limited number of municipal licenses approved.”
The company’s partnership approach helps sidestep many of these licensing issues by acquiring assets that already have municipal licenses. In addition, these assets are strategically located in areas conducive for rapid growth.
- Dispensaries: Grown Rogue’s Detroit dispensary is located in midtown near popular sports stadiums, art centers, and affluent housing. The Hazel Park location is within a quarter mile of the busiest freeway system in the state, as well as population centers.
- Cultivation: Grown Rogue’s Detroit cultivation center is a converted warehouse that’s expected to house two Class C growing licenses for up to 3,000 plants, yielding an annual production capacity of 2,500 kilograms.
Once fully licensed, the retail locations will offer multiple Michigan cannabis brands as well as locally produced Grown Rogue branded products for the Michigan cannabis market—which will launch the Grown Rogue brand into the midwest region.
Grown Rogue will leverage is strong expertise developed in Oregon to build out its presence in Michigan. With a vertically-integrated model and unique brands, the company is well positioned to continue executing its multi-state strategy in Michigan.
Grown Rogue Inc. (CSE: GRIN) (OTC: NVSIF) is uniquely positioned to capitalize on Michigan’s attractive market. With a complex regulatory framework in place, the state could see significant barriers to entry for new businesses in what could become a $1.7 billion per year market. Investors also have access to existing operations in Oregon, unique product lines, and expansions into other states, including California.
For more information, visit the company’s website at www.grownrogue.com.
The above article is sponsored content. Emerging Growth LLC, which owns CannabisFN.com and CFN Media, has been hired to create awareness. Please follow the link below to view our full disclosure outlining our compensation: http://www.cannabisfn.com/legal-disclaimer
Follow Us on Social Media
About CFN Media
CFN Media (CannabisFN) is the leading creative agency and media network dedicated to legal cannabis. We help marijuana businesses attract investors, customers (B2B, B2C), capital, and media visibility. Private and public marijuana companies and brands in the US and Canada rely on CFN Media to grow and succeed.
CFN launched in June of 2013 to initially serve the growing universe of publicly traded marijuana companies across North America. Today, CFN Media is also the digital media choice for the emerging brands in the space.
Disclaimer: Matters discussed on this website contain forward-looking statements that are subject to certain risks and uncertainties that could cause actual results to differ materially from any future results, performance or achievements expressed or implied by such statements. CFN Media Group, which owns CannabisFN, is not registered with any financial or securities regulatory authority and does not provide nor claims to provide investment advice or recommendations to readers of this release. CFN Media Group, which owns CannabisFN, may from time-to-time have a position in the securities mentioned herein and will increase or decrease such positions without notice. The Information contains forward-looking statements, i.e. statements or discussions that constitute predictions, expectations, beliefs, plans, estimates, or projections as indicated by such words as "expects", "will", "anticipates", and "estimates"; therefore, you should proceed with extreme caution in relying upon such statements and conduct a full investigation of the Information and the Profiled Issuer as well as any such forward-looking statements. Any forward looking statements we make in the Information are limited to the time period in which they are made, and we do not undertake to update forward looking statements that may change at any time; The Information is presented only as a brief "snapshot" of the Profiled Issuer and should only be used, at most, and if at all, as a starting point for you to conduct a thorough investigation of the Profiled Issuer and its securities and to consult your financial, legal or other adviser(s) and avail yourself of the filings and information that may be accessed at www.sec.gov, www.pinksheets.com, www.otcmarkets.com or other electronic sources, including: (a) reviewing SEC periodic reports (Forms 10-Q and 10-K), reports of material events (Form 8-K), insider reports (Forms 3, 4, 5 and Schedule 13D); (b) reviewing Information and Disclosure Statements and unaudited financial reports filed with the Pink Sheets or www.otcmarkets.com; (c) obtaining and reviewing publicly available information contained in commonlyknown search engines such as Google; and (d) consulting investment guides at www.sec.gov and www.finra.com. You should always be cognizant that the Profiled Issuers may not be current in their reporting obligations with the SEC and OTCMarkets and/or have negative signs at www.otcmarkets.com (See section below titled "Risks Related to the Profiled Issuers, which provides additional information pertaining thereto). For making specific investment decisions, readers should seek their own advice and that of their own professional advisers. CFN Media Group, which owns CannabisFN, may be compensated for its Services in the form of cash-based and/or equity-based compensation in the companies it writes about, or a combination of the two. For full disclosure, please visit: https://www.cannabisfn.com/legal-disclaimer/. A short time after we acquire the securities of the foregoing company, we may publish the (favorable) information about the issuer referenced above advising others, including you, to purchase; and while doing so, we may sell the securities we acquired. In addition, a third-party shareholder compensating us may sell his or her shares of the issuer while we are publishing favorable information about the issuer. Except for the historical information presented herein, matters discussed in this article contain forward-looking statements that are subject to certain risks and uncertainties that could cause actual results to differ materially from any future results, performance or achievements expressed or implied by such statements. CFN Media Group, which owns CannabisFN, is not registered with any financial or securities regulatory authority, and does not provide nor claims to provide investment advice or recommendations to readers of this release. CFN Media Group, which owns CannabisFN, may from time to time have a position in the securities mentioned herein and will increase or decrease such positions without notice. For making specific investment decisions, readers should seek their own advice and that of their own professional advisers. CFN Media Group, which owns CannabisFN, may be compensated for its Services in the form of cash-based and/or equity- based compensation in the companies it writes about, or a combination of the two. For full disclosure please visit: https://www.cannabisfn.com/legal-disclaimer/.