While California has historically been seen as the premier player in the United States cannabis market, Michigan has emerged as a formidable competitor.
Nearing its fifth year of legal recreational cannabis operations, Michigan has reportedly surpassed California in terms of total market size, as per undisclosed metrics tracked by leading cannabis intelligence agencies, a fact revealed in communications with the Detroit Free Press.
According to BDSA, a firm specializing in cannabis market analytics, Michigan has outpaced California in both recreational and medical cannabis sales, measured in grams of flower and other product units, since December 2022.
Similarly, data from another firm, Headset, indicates Michigan’s cannabis unit sales exceeded those of California as of June 2023. Specifically, in May, Michigan recorded sales of 24.2 million units, surpassing California’s 17.3 million.
Despite Michigan’s lead in unit sales, California still tops in revenue, generating $5.1 billion from recreational cannabis in 2023, against Michigan’s $3 billion. This discrepancy is largely due to lower product prices in Michigan, which, while leading to higher sales volumes, results in lesser total revenue.
Michael Arrington from BDSA commented during a market forecast webinar about the high operational costs and tax rates in California, which he believes complicate the business landscape there.
In contrast, Michigan’s cannabis market benefits from significantly lower prices, a consequence of product oversupply, which has resulted in more affordable cannabis for consumers and tighter profit margins for retailers.
For instance, April saw Michigan selling 56.8 million units of cannabis, outstripping California’s 44.6 million, as per BDSA. Even though Headset’s figures present a slightly varied insight, the overarching trend of Michigan outperforming California in recent months holds true.
Remarkably, Michigan’s per capita sales stand at $132.41, almost tripling California’s $44.21, showcasing a robust market despite the state’s smaller population.
Despite these trends, BDSA forecasts that California will continue to lead in dollar sales over the next few years, with projected growth leading to a $6.1 billion market by 2028, while Michigan is expected to reach a $4 billion market size in the same period.
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