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Michigan’s $1bn Medical Cannabis Advantage

Ryan Allway, CFN Media
0 Comments| January 25, 2019

The cannabis industry is projected to generate upwards of $80 billion in revenue by 2022, according to Marijuana Business Daily , driven by the legalization of medical and recreational cannabis across a growing number of states. Investors may want to keep an eye on companies that capture market share early on in a state’s legalization efforts, since they could be best positioned to profit from the long-term growth.

Grown Rogue International Inc. (CSE: GRIN) (OTC: NVSIF) recently announced plans to build out a presence in Michigan, which recently legalized recreational cannabis in November 2018. The move marks the company’s ongoing expansion outside of its home state of Oregon, as well as California operations, and into new markets throughout the United States.

CFN Media Recently sat down with Grown Rogue CSO Jacques Habra at the Benzinga Capital Conference in Miami, Florida to discuss Grown Rogue’s strategic expansion into Michigan.

Michigan’s Cannabis Market

Michigan legalized cannabis for medical and recreational use in 2018. While cannabis was never decriminalized statewide, most cities had decriminalization laws in place to limit incarcerations and fines for cannabis consumers. Ann Arbor, home to the University of Michigan, has maintained some of the most liberal laws in the entire country since the 1970s, with marijuana possession classified as a civil infraction with a token fine.

In November 2017, cannabis supporters collected the 365,000 signatures needed for legal recreational cannabis to appear on the 2018 ballot. The state voted to legalize the recreational use of marijuana in the 2018 Michigan Regulation and Taxation of Marijuana Act (RMLA). The initiative allows adults 21 and older to possess up to 2.5 ounces of cannabis and grow up to 12 cannabis plants at home, as well as create a tax infrastructure.

The RMLA enables municipalities to prohibit or limit the number of marijuana establishments within their boundaries, as well as provide the Department of Licensing and Regulatory Affairs (LARA) with the authority to issue licenses. The Act also imposes a ten percent excise tax on the sale of recreational marijuana and a six percent sales tax on marijuana sales generated at retailers and microbusinesses (selling direct to consumers).

Analysts believe that Michigan’s current medical cannabis market is worth $711 million per year and generates about $21 million in tax revenue. With recreational legalization, analysts believe that the market could easily surpass $1 billion per year in sales. Colorado is half the size as Michigan and generates more than $1.5 billion in medical and recreational sales per year—although its cannabis market is much more mature.

Grown Rogue Plans Expansion

Grown Rogue recently announced plans to expand into Michigan through a strategic partnership with an established cannabis conglomerate. The initial expansion will include two retail dispensaries—referred to as provisional centers in Michigan, a 19,000 sq. ft. indoor cultivation and processing center in Detroit, and an interest in a 28 acre parcel located in the northern portion of the lower peninsula that can be used for cultivation.

“We invested significant time looking for the right partners for our Michigan expansion,” said Grown Rogue CEO Obie Strickler in a press release announcing the new partnership and entry into Michigan’s market. “Our Michigan partners include executives with multi-generational leadership track records in real estate development and business investment throughout the state, as well as experienced cannabis operators.”

With Michigan only recently legalizing cannabis, the company could enjoy an early-mover advantage in a $1+ billion market with high barriers to entry. The company’s fully-integrated approach of owning assets across the supply chain could make it extremely competitive in terms of price and quality compared to other operators. Finally, Grown Rogue’s existing brands provide a valuable jumpstart in commercial operations.

“There is already such a significant adoption of cannabis by the general population in Michigan that we really hit the ground running with our established brand and proven business processes,” said Grown Rogue CSO Jacques Habra in the same press release. “This strategic partnership, in one of the most exciting states in the U.S., continues our focus on building a multi-state cannabis company.”

Looking Ahead

Grown Rogue International Inc. (CSE: GRIN) (OTC: NVSIF) represents a compelling investment opportunity with a multi-state cannabis presence. With its existing strength in Oregon, the company is rapidly expanding into California, Nevada, and Michigan, where it could rapidly scale up its revenue and market share. Investors may want to take a look at the stock given these near-term catalysts and its long-term growth potential.

For more information, visit the company’s website.

For Investor Information please click here


The above article is sponsored content. Emerging Growth LLC, which owns and CFN Media, has been hired to create awareness. Please follow the link below to view our full disclosure outlining our compensation:

FULL DISCLOSURE: Grown Rogue International Inc. is a client of Stockhouse Publishing.

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