Michigan’s Adult-Use Cannabis Supply Chain Takes A Hit

Michigan regulators issued new rules that govern the production of recreational marijuana last week, cutting medical marijuana caregivers out of the supply chain for adult-use pot. The change was announced in an advisory bulletin from the Michigan Marijuana Regulatory Agency (MRA) on April 8.

Since legal sales of recreational marijuana began in Michigan in December 2019, adult-use cannabis businesses have been allowed to purchase products from the state’s network of medical marijuana caregivers, who have been producing medicine legally for registered patients since 2008. The provisions allowing the transfer of medical marijuana to recreational cannabis had been scheduled to be in effect until October 1, but last week’s notice from the MRA put an immediate end to practice instead.

“Effective April 8, 2020, the MRA will not permit caregiver-produced or derived product to enter the adult-use market,” the bulletin reads.

Are Shortages Of Adult-Use Pot On The Horizon?

Medical marijuana caregivers have been supplying about 60% of the cannabis sold by licensed medical and recreational retailers in Michigan. But as more cultivators licensed to produce recreational cannabis come on line, the supply of medical marijuana should be reserved for patients, according to David Harns, a spokesman for the MRA.

“The caregiver product brought into market was meant to supplement the medical market,” he said. “And on the adult use side, things are moving toward a self-sustaining eco-system.”

Paul Samways, a Brighton, Michigan accountant who specializes in the cannabis industry, said that the move by the MRA is likely to please licensed producers of recreational cannabis eager to lose the competition from caregivers, who have lower overhead costs. But the change could lead to initial shortages as the transition takes effect.

“What this is going to do is put a crimp in the supply for recreational marijuana,” said Samways. “If rec ever gets enough supply to meet the demand, then the medical market will fall off.”

Caregiver Dumps 5,000 Pounds Of Pot On Rec Market

The move by the MRA to cut off supplies of medical marijuana from being transferred to the adult-use market came after at least one large grower dumped 5,000 pounds of caregiver marijuana flower on the recreational pot market, according to records from the state’s cannabis tracking system. That amount is far beyond what could be expected to be produced by caregivers, who are limited to growing 72 plants and serving up to six patients.

Under the new rules, cannabis produced by caregivers that has already been transferred to the adult-use market can still be sold to recreational marijuana customers. But any new requests to transfer product from medical marijuana caregivers, processors, or provisioning centers to the adult-use market will be denied by the MRA, according to the bulletin from the agency.