Michigan dispensaries wait and watch as Ohio votes on recreational marijuana. Here's why

Ohio voters will decide Tuesday whether to approve a proposed law to legalize recreational marijuana, which would allow people 21 and older to buy, possess and grow recreational marijuana.

Proponents say it will bring in tax dollars that Ohio residents are currently sending to Michigan.

But Michigan dispensary owners are some of the biggest opponents of the proposal, the spokesperson for the group behind the effort to legalize recreational marijuana in Ohio has said.

That's because it's widely acknowledged that Ohio residents cross state lines to buy marijuana in Michigan and if it becomes available in Ohio, that could mean fewer customers for Michigan dispensaries, leading to an oversupply of marijuana that could drive prices even lower than what they've fallen to in the last few years.

Counting on Ohio customers

There are a slew of dispensaries near the Ohio border. Monroe, Michigan, about a 30-minute drive from Ohio's fourth-largest city by population, Toledo, has more than a dozen dispensaries. Morenci, Michigan, which shares its southern border with Ohio and has a population of about 2,000, has five recreational marijuana dispensaries.

Michigan dispensaries even advertise their proximity to Ohio on their websites and on signs displayed at their stores.

Green Labs Provisions' website, a medical and recreational dispensary in Luna Pier, south of Monroe, describes itself as "Only 15 Minutes from Downtown Toledo" on its website.

That's a big reason why the company chose to open a dispensary in Luna Pier, said Sean Lyden, president of Green Labs Provisions. Lyden said he, and some of the owners of the company, are from the Toledo area.

"We're already Ohio people," he said. "We love the fact that we have so many great Ohio customers and that they already know and love our brand and will continue to stay loyal to us, hopefully."

Lyden estimates more than half of the dispensary's customers are from Ohio and are both medical marijuana patients and recreational shoppers. Ohio legalized medical marijuana in 2016.

Lyden said he's not particularly worried about what happens Tuesday because "we feel that our level of quality and our established customer base is going to remain loyal to us even if some stores pop up across the border."

While it's legal for an out-of-state visitor to buy recreational marijuana in Michigan, it's illegal for them to drive the products to states where recreational marijuana isn't legalized. However, there's no way for stores to verify where customers are traveling after they make a purchase.

Setting the price of marijuana in the Midwest

Not all cannabis company executives are as optimistic about what happens to Michigan's cannabis industry if Ohio, and other Midwest states, legalize recreational marijuana.

Dave Morrow, founder and CEO of Lume Cannabis Co., one of the biggest cannabis companies in Michigan, describes that scenario as a "gigantic shoe to fall."

Morrow said in an interview with the Detroit Free Press earlier this year that he estimates about one-third of the cannabis sold in Michigan is leaving the state. Lume has dispensaries in Adrian, Monroe and Petersburg, all Michigan cities near the Ohio border, and in locations that border other states.

In Ohio, he said, prices for medical marijuana are higher compared with prices for recreational marijuana in Michigan. Indiana hasn't legalized marijuana for medical or recreational purposes. Illinois has, but prices are also higher compared with prices in Michigan, Morrow said.

Marijuana prices have declined drastically in Michigan compared with what prices were during the recreational industry's early days in 2020. The average retail price for an ounce of recreational marijuana flower was $100.14 in September, according to data from Michigan's Cannabis Regulatory Agency, compared with $393.66 in September 2020, a 75% decrease.

Lyden said he hears from Ohio medical marijuana patients that prices have dropped so much in Michigan that it doesn't even make sense for them to pay the fees to keep and renew their medical marijuana cards.

What that means though, according to Morrow, is that Michigan is effectively setting the price for the rest of the Midwest.

"If you're in northern Ohio, all your customers are already used to paying the market price," he said. "You're not going to be able to charge them $6,000 a pound. If you go ahead and put it out at that price, everyone's going to say, 'Yeah, right. I'm going to keep driving to Michigan.' "

If Ohio legalizes recreational marijuana, along with other border states like Indiana and Wisconsin, "it will immediately create a massive oversupply issue in Michigan," Morrow said.

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A 'yes' vote for recreational marijuana begins a long process

However, even if Ohio does legalize recreational marijuana and prices are comparable to Michigan's, it will likely be at least a year before dispensaries start to open in Ohio, said Scott Johnson, a member of the law firm Eastman & Smith, which is based out of Toledo.

That's because it needs to go to the Ohio state legislature, where adjustments can be made because it's an initiated statute, not a constitutional amendment. The legislature will have to pass rules and regulations and essentially put them into place, Johnson said.

He anticipates that if the measure passes, the state would handle the recreational marijuana industry similar to what it's done with medical marijuana and liquor, where prospective licensees must first be qualified to receive a license and then are entered into a lottery to receive a capped number of licenses.

The market research firm BDSA predicts that if Ohio voters legalize recreational marijuana, sales will start in 2025 and by 2027, the state will see $1.3 billion in recreational marijuana sales.

Michigan, meanwhile, is forecast to bring in $3.7 billion in recreational marijuana sales in 2027, BDSA said, more than double Ohio's predicted sales. That's up from $2.8 billion in sales expected this year.

Contact Adrienne Roberts: amroberts@freepress.com.

This article originally appeared on Detroit Free Press: Ohio could legalize adult-use cannabis: What that means for Michigan