“It’s hard to maintain quality, especially against many other operators on the market right now, so it’s just easier to outsource.” “There’s just a lot of moving parts and high overhead, pest/disease pressure, turnover in staff that accumulates over time,” Sereno said. “The (capital expenditures) and operational risk associated with new cultivation facilities relative to current market pricing results in an unattractive risk/reward ratio for investors in this market.”Īndrew Sereno, CEO of Manchester-based Glacial Farms, said smaller, independent grow operations like his are benefiting from larger operations reducing their grows due to rising cost pressures. “New grows don’t stand a chance,” Elias said. Mike Elias, CEO of Marshall-based Common Citizen, said his company has not reduced plant count but his operations are at capacity, and economics are not favorable to expand. (Note: KC Crain, president and CEO of Green Market Report’s parent company Crain Communications Inc., is an investor in Lume.) ![]() “If you are blending, you need to pay for fewer (plants being grown).” Proof in point: the numbers of plants being grown between September 2021 and February 2022 rose by more than 2%.ĭave Marrow, CEO of Troy-based Lume Cannabis, confirmed to Crain’s the company does outsource some of its growing, but said the decline in plants being grown is also due to black market marijuana not counted in the state’s regulated system being blended into the market. The numbers typically fall off in the months following the October harvest of outdoor grows, but have historically recovered by the start of the new year. The number of plants actively being grown in the state for adult-use recreational consumption has plummeted 20.5% to just over 1.2 million since September, according to CRA data. “I’d be surprised if it wasn’t happening.” “… for vertically integrated with focus on edibles, oil, and other processing, that makes a lot of economic sense,” said Lance Boldrey, partner at Detroit-based law firm Dykema Gossett PLLC and part of the legal team that designed the legalization framework. Prices rose to $86 per ounce of flower last month, from $80.12 per ounce in January, according to data from the Michigan Cannabis Regulatory Agency. ![]() The decline in plant inventory is likely aiding the price rebound, as less marijuana will enter the market and reduce supply even as demand remains high. ![]() Michigan recreational marijuana prices rose in February – reversing a price free fall since Michigan dispensaries began selling in December 2019 – as growers appear to be growing fewer plants to prevent losses and state regulators up enforcement efforts.įor many producers, it’s more expensive to grow marijuana than it is to buy surplus from competitors for use in their own recipe of edibles and oils, resulting in a slowdown of new plants in grow houses, local experts told Crain’s. This story was republished with permission from Crain’s Detroit and written by Dustin Walsh.
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