2-week total for Michigan marijuana sales: $3.1 million, $515,051 in tax revenues

Kathleen Gray | Detroit Free Press

Show Caption Hide Caption First day of legal weed sales attracts hundreds to Ann Arbor Michigan logged its first day of recreational marijuana sales Sunday, attracting long lines to three shops in Ann Arbor.

In the first two weeks of legal weed sales, $3.1 million worth of marijuana products were sold at five state-licensed pot shops in the state.

It was a speedy start to a new industry in Michigan that only began on Dec. 1: the sale of legal marijuana to anyone 21 or older. Sales in the first week were $1.6 million.

Jeff Hank, a leading force behind the 2018 ballot proposal legalizing recreational marijuana, said he's not surprised by the steady rate of sales after the state decided to let licensed marijuana retailers shift 50% of the inventory on their shelves from the medical to the recreational side of the business.

"This early roll out spurs everybody to action, but it's going to be a rough year for everybody no matter what," he said. "The overall numbers are relatively small because we don't have enough growers yet."

More: Why Lions' Devon Kennard believes NFL's stance on marijuana should change

More: Hundreds wait in line for first day of legalized recreational marijuana sales

The state has awarded 10 Class C grow licenses, which allows up to 2,000 plants. Five of those licenses have gone to Green Peak Industries, a large cannabis company in Dimondale near Lansing, with grow and processing facilities and retail stores under the brand name Skymint. Four of the licenses have gone to Lume Cannabis Company in Evart, which also is vertically integrated with grow, processing and retail operations under the name Lit Provisioning. And the 10th went to Exclusive Brands, which was one of the first retail stores to open on Dec. 1.

While five retail stores are operating now, another 13 have been licensed by the state but most don't have opening dates yet.

Om of Medicine in Ann Arbor, one of the longest operating medical marijuana dispensaries in the state, is the exception and will open for recreational sales on Monday.

Many of the shops have been forced to wait to open because they can only shift medical product over to the recreational side if it's been on their shelves for at least 30 days. That policy set by the Marijuana Regulatory Agency in an effort to ensure that the recreational side of the business didn't starve the medical side.

But it has also left some of the shops that are operating to run out of product and those that are licensed, but not open yet to be more strategic about their plans to open.

"Business appears to be steady from week to week and it's clear that people are making business decisions on which products to move over from week to week," said David Harns, spokesman for the MRA.

Shortages of product will be a problem for a while, Hank predicted.

"As a store owner, you can't find enough product yet. Licensed growers can't produce enough and people are sitting on inventory for 30 days to fuel the adult use side," he said. "It takes a long time for these facilities to get up and running. There's going to be a shortage in the long term no matter what."

The $3,102,714 in total sales since Dec. 1 translates into $310,271 from the state's 10% excise tax and $204,779 in revenues from the state's 6% sales tax.

According to the ballot proposal approved by voters in 2018, the first $20 million in tax revenues in the first two years of recreational marijuana sales goes to research on the benefits of marijuana to treat ailments such as post-traumatic stress disorder.

The remainder is split between payments to cities and counties that allow marijuana businesses in their towns, the school aid fund and the transportation fund to improve roads.

The revenues from the 6% sales tax are earmarked for the school aid fund, revenue-sharing payments to cities, townships, villages and counties, and the state’s general fund.

Contact Kathleen Gray: 313-223-4430, kgray99@freepress.com or on Twitter @michpoligal.