Take a deeper look at the profit potential of Michigan’s adult-use cannabis market…
Rejuvenation is a romantic idea.
The thought that we can take something dilapidated and make it shine is inherently an American ideal.
Perhaps that’s what makes Michigan so interesting.
Medical cannabis has been legal in the state since 2008, but its adult-use cannabis market is still in its infancy, with recreational sales having just begun in December 2019.
Although young, researchers are predicting that the state’s adult-use market alone could generate $3 billion in sales per year.
And right now, basically anyone who can get into that market over the next two years will make money.
Today, I’m breaking down three secrets to becoming profitable in Michigan’s budding adult-use cannabis market.
That way, as more companies open up shop in Michigan, you’ll know the right ones to invest in…
1. Limited Licensees
Early movers in a state’s new cannabis industry have the best shot at success. Especially in Michigan, where licensees are severely limited.
I’ve already seen the pattern play out in other places.
Take Trulieve Cannabis Corp. (OTC: TCNNF), the first medical marijuana company to sell products in Florida. Today, it has more dispensaries open than any other retailer and sells somewhere between 50% to 60% of Florida’s overall medical cannabis volume.
Then there’s Cura Partners, which was acquired by Curaleaf Holdings Inc. (OTC: CURLF). Cura got its Select line of cartridges into Oregon and California before anyone else. For months, Select was the only brand you would see on the shelves – and to this day, Select has a major chunk of those markets. I see people who walk into my own dispensaries who refuse to buy any other cartridge.
Then there are brands like Cookies, which was not only the first to enter the retail and production cannabis space in California but was also an important operator in the medical days.
Likewise, the major players with a foothold in Michigan right now are generating a lot of profit.
2. Expensive Products
Prices are notably high in Michigan because there just aren’t enough recreational producers on the market at the moment. And the state just cut retailers off from the medical market, which was pushing thousands of pounds of black market weed into the state.
We could see prices rise until the outdoor harvest in October, which brings a lot of low-priced products into the market.
Growers are ecstatic. Retailers, on the other hand, are stressing out.
Without access to medical products, retailers won’t have a huge variety of items on their shelves. Keeping a stable supply of products is already a challenge and it will only get worse.
But there’s a saving grace for retailers: there are only 232 of them in the state supporting nearly 10 million people.
3. Quality of Product
Finally, I should mention product quality.
When it comes to Michigan’s medical market, the quality of products is solid. Michigan has its own subculture of underground and medical growers who have created beautiful genetics over the decades. And while not as well-known as products coming from the West Coast, some of these strains are truly top-shelf.
But that same quality of product hasn’t quite rubbed off on the recreational market – yet. There are a few good farms, but most of the best growers are in the middle of building out their facilities.
It’s going to take years before there’s enough production to fully satisfy the market.
Capitalizing on Michigan’s Profit Potential
There are a lot of things that make cannabis in Michigan unique.
For now, the industry will help rejuvenate the state, creating tens of thousands of jobs to replace some of those that will never return due to COVID-19.
From just its medical market alone, Michigan was projected to bring in over $800 million by 2025 in sales. Add in its relatively new adult-use market, and this state is now on the fast-track to becoming a market with over $3 billion in cannabis sales.
All told, researchers at Michigan State University predict that the marijuana market will have a $7.8 billion impact on the state, potentially generating nearly $500 million in tax revenue.
And the operators that understand the three key factors listed above have an incredible opportunity to succeed in this relatively new cannabis market. If you see a company hitting on all of those factors successfully, you know where to put your money.
Advisory Board Member, National Institute for Cannabis Investors
Is there a Starbucks of cannabis? Self-made millionaire Danny Brody hears that question a lot, and his answer – for now, at least – is always the same. Not yet. But right now, there is a massive opportunity in the cannabis market for companies to step up and create powerful, consumer-facing brands that people love. So Danny is breaking down everything you need to know to discover the next billion-dollar cannabis brand – and your next big profit opportunity – right here.
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June 08 2020