Cannabis businesses find fertile ground in Michigan

After setting up a successful business selling water-soluble cannabis powders and gummies in Colorado, two Michigan natives decided to bring the company to their home state.

Justin Singer and Missy Bradley, co-founders of Ripple of Colorado, recently opened an 8,000-square-foot manufacturing and processing facility in Dimondale, a Lansing suburb that has proved to be receptive to their nontraditional enterprise.

“They were willing to look at us as a normal business,” Singer said. “There was a lot of education around how to even think about this business. And Dimondale was very open … so we had a very positive experience.”

Ripple of Colorado is among the growing number of adult-use marijuana businesses opening shop in Michigan since the state legalized recreational marijuana in 2018.

There’s also Jeeter, a California-based pre-roll cannabis brand that opened a 17,000-square-foot facility in Hazel Park last month.

Other businesses are expanding within the state, including Ypsilanti-based Sticky, a recreational and medical marijuana dispensary. 

Michigan is a draw for large companies as it’s an unlimited license state for manufacturing, as long as the local municipality opts in to license marijuana businesses, said Shelly Edgerton, board chair of the Michigan Cannabis Manufacturers Association.

“Viewing that from a marketplace standpoint is anyone can come in and, obviously as long as they’re qualified and have the resources to kick off a business, have the ability to start someplace,” she said.

“And so I think that what’s appealing in a lot of ways for a number of large companies, large businesses that may be successful in other states is to look at how they bring their brand and their market share to Michigan.”

Michigan’s nearly $2 billion cannabis industry is ranked as the country’s third-largest for total employment, behind California and Colorado, according to cannabis industry site Leafly. The state’s industry produced $163 million adult-use sales and $23 million in medical cannabis sales in May 2022, according to the latest data available from the Michigan Marijuana Regulatory Agency.

There was an uptick in municipalities opting in to marijuana businesses in 2020 followed by a slowdown in 2021, said Edgerton. This year, the number is up again.

As of May, 162 communities had opted in, up from 156 communities in May 2021, according to the state.

“I think you have people focusing on everything, especially coming out of the pandemic and COVID, and trying to get back to normal business,” Edgerton said. “I’m hopeful that we will start to see an uptick in municipalities opening their doors again soon, hopefully by the end of 2022.”

Michigan has allowed medicinal marijuana since voters approved a measure legalizing it in November 2008. In November 2018, state voters approved legalizing recreational marijuana.

According to the Michigan Marijuana Regulatory Agency, the number of marijuana licenses in the state has grown from 326 in October 2019 to 987 in May 2021 to 1,315 in May 2022, the latest data available. The categories include growers, processors, provisioning centers, safety compliance and secure transporter.

Rocky Mountain start

Singer and Bradley, friends from West Bloomfield Township, started Ripple in Colorado in 2014 when the state legalized cannabis sales for recreational use. Bradley was living in Colorado at the time, while Singer was in New York. 

“In 2014, If you wanted to work in cannabis in a place where you weren’t scared of the DEA coming in and handcuffing you, options were Washington or Colorado,” Singer said.

The pair saw opportunity in creating consumable cannabis products for the everyday individual in Colorado and legalization has given them the opportunity to invest in innovating the “functional food angle.” They sell water-soluble cannabis powders and cannabis-infused gummies in flavors including blood orange, peach cherry and kiwi apple.

“If you got legalization, you have the opportunity to invest in innovation: to figure out how to make this something more than smoking a dried herb, and so we got very interested early on in the functional food angle in this industry,” Singer said.

Bradley said she sees the marijuana industry growing as more people become receptive to it.

“I do see a bit of a stigma wearing off,” she said. “It is taken much longer than I anticipated. I think that when we started, we thought we’d see a lot of barriers removed within the first couple of years. So we recognize that it’s very much a long game.”

Bradley said one way their company promotes normalization is by providing a dependable product. The company conducts product testing that looks at the absorption rate of THC — the psychoactive ingredient that produces a user’s high — and those results are reflected on product packaging.

“So everything that we are promoting from a messaging standpoint, we’re doing so because we have the science to back it up,” Bradley said. “And we don’t have to do that. There is nothing saying that we can’t slap whatever label we want on our packaging. We want to be a brand that consumers rely on, so we know that we have to do the work to be able to earn that trust.”

A ‘mature’ market

After running a music festival events business for 15 years, a group of friends in 2019 launched Jeeter in California. It’s a company that specializes in joints using premium indoor flower infused with cannabis oil and coated in kief — resin glands sifted from marijuana flowers.

In June, the brand expanded into Michigan, selling its products at more than 45 dispensaries throughout the state. The company employs 250 people at its 17,000-square-foot manufacturing facility on Eight Mile in Hazel Park.

Lukasz Tracz said he and his co-founder, Sebastian Solano, were drawn to Michigan because he considers it a mature state for the marijuana industry.

“I know it’s one of the top generating revenue states in the whole entire United States,” he said. “And honestly, the quality of cannabis that’s being grown in Michigan, I don’t want to say it’s better than California because, you know, California grows some of the best. It’s known, but I would say the second-best state that I’ve seen as far as growing cannabis is Michigan. … So it is mature as far as revenue, and it is mature as far as the quality of the product.”

Tracz said the company plans to expand its manufacturing facility and then open its own cultivation plant.

“It’s kind of like a model that we did in California,” he said. “We first started with the manufacturing… and now in California, we’re growing a 40,000-square-foot cultivation. So that’s something that we’re going to want to do in Michigan as well.

“And honestly, like we just love Michigan. How it’s kind of in the center of everything and at some point like if it becomes federally legal, we’ve always even talked about making Michigan the central hub of all of our (Midwest) states., because at some point they’re going to federally legalize it and they’ll let the borders down. You’ll be able to deliver cannabis from Michigan to Illinois, Michigan to just all the states around it.”

Hazel Park City Councilman Luke Londo said his city is welcoming of marijuana businesses and was among the first to open its doors to the industry. Londo said he’s thrilled to see the arrival of Jeeter in the city.

“What Lukasz and Sebastian have done with Jeeter nationwide is extremely impressive in terms of the partnerships that they have and their cannabis lines with huge influencers and celebrities,” he said. “I think they’ve done a remarkable job, sort of mixing celebrity pop culture and a great cannabis product and they market it extremely well.”

In addition to Jeeter, the city saw the addition earlier this year of Rush Cannabis, a dispensary on John R, and Hot Box Social Lounge, an event space also on John R, where customers can smoke marijuana and eat edibles.

Londo said the industry brought in $338,720.64 in tax revenue for Hazel Park in fiscal year 2021, and with the new dispensaries and grow facilities, the city expects closer to $450,000 for fiscal year 2022.

Londo said he sees numerous larger companies moving into communities, versus smaller mom-and-pop operations.

“That’s not necessarily a bad thing,” he said. “But I think in a few years, we’re going to see sort of this consolidation of the marijuana industry and businesses in communities across the state, and that’s actually going to be beneficial to some of the larger chains and larger entities. So I think communities have to be very deliberate in setting up these regulations and encouraging local investment, or it’s just going to be just run over by a lot of these larger entities.”

Jerry Millen, owner of Greenhouse, a cannabis store in downtown Walled Lake, said he already has received purchase offers from larger businesses.

“I’ve been approached by some pretty big companies, pretty staggering numbers to buy me, and so far, I refused it,” he said.

Millen, who lives in Livingston County, said he hopes to open a store in Brighton next, though the city does not allow marijuana businesses; city council voted May 12 to continue to opt out, according to meeting minutes.

Other Michigan marijuana companies are also looking to grow.

Sticky, an Ypsilanti-based cannabis business that employs more than 100 people across Michigan, expanded to Muskegon last month and expects to open a River Rouge location within three months.

Owner Jake Abraham said the company generated $20 million in revenue last year and served an average of more than 600 customers per day in Ypsilanti. 

However, he expressed frustration with the tax and licensing obstacles he has to go through and said he looks forward to getting “to a place where we can operate as a normal business and we do become normal and not treated like criminals because we sell a federally illegal drug.” 

Marijuana business regulations have proven to be contentious in some communities. In Detroit, for example, there has been ongoing disagreement among leaders and residents over how many opportunities for recreational marijuana businesses should be reserved for Detroiters.

Last year, a federal judge ruled the city’s first ordinance allowing recreational marijuana, approved in 2020, was “likely unconstitutional” and gave too much preference to longtime Detroit residents. After the city council revised the ordinance in April, a chain of medical marijuana dispensaries sued in Wayne County Circuit Court, alleging the city was violating state law by preventing such businesses from obtaining recreational licenses until 2027. 

Greenhouse’s Millen said he became one of the board directors of the Michigan Cannabis Industry Association in hopes of reducing marijuana regulations for businesses.

“I’m trying to do this for the right reasons. And I feel as long as I keep doing that, I keep spreading the word and I teach people … I think it’s gonna it’s gonna break off more and more,” he said.

“I feel it’s important because I’ve seen this plant help people, from cancer patients to kids with seizures … the average age at our store is 44 years old … you’ll see 89-year-olds in line, and it warms my heart.”

cwilliams@detroitnews.com

Twitter: @CWilliams_DN

mjohnson@detroitnews.com

Twitter: @_myeshajohnson