Michigan Supply & Demand.
We have been writing about price destruction for some time now in the cannabis space. It is a natural pattern of when cannabis is legalized there is not enough supply to service demand so everyone pushes into the state as a growth opportunity and the next thing you know you have overproduction and too many brands on the shelves which leads to price destruction. This is no different in Michigan as cannabis flower prices have been cut down by 44% over the past year and the government is trying to figure out a way of fixing this issue. "The agency has been hearing concerns that the supply of marijuana produced by licensed growers exceeds, or may soon exceed, consumer demand. The concerns include that the wholesale price of flower is lower than the cost of production – or will be when harvests are highest in October," CRA (Cannabis Regulatory Agency) said in a statement. Some believe oversupply is a temporary issue, but until something occurs at the federal level with interstate commerce, we don't expect these issues to be resolved and will eventually see prices normalized but that won't be for some time. We have already seen that occur in some of the mature west coast markets and the price point they are getting for their flower is not enough to run a healthy business or stay in and the reason they are already looking at interstate commerce legislations.
Germany Heads to Canada.
German Chancellor Olaf Scholts visited Canada last week to discuss many topics with Canadian Prime Minister Justin Trudeau. One area that was not discussed was cannabis reform. It has been highly rumored that Germany will pass adult-use cannabis legalization later in the year, but that timeline seems to be further out than what people are expecting. If Germany was close to legalizing adult use, then you would think that the German Chancellor would take a few minutes to speak about what the Prime Minister learned from his journey through taking his country out of the ages of prohibition. On the other side of things, the Canadian Prime Minister also lost an opportunity to support this struggling market by discussing trade opportunities with the German Chancellor. “It didn’t come up? Shocking. It’s shocking,” George Smitherman, CEO of the Cannabis Council of Canada, which represents dozens of businesses, said in an interview with MJBizDaily. “Canada has a chance to align with Germany, and we’re not advancing that? That’s crazy,” added Smitherman, a former deputy premier for Ontario who also was the province’s energy and infrastructure minister.
When will Mexico go green?
The international community is stepping up pressure on Mexico to follow through with its plans to legalize and regulate marijuana, the country’s Senate president says. There hasn't been any movement on this topic for years in Mexico, but with a new session for their government starting today, there could be a mindset shift on this topic. The former cabinet member under President Andrés Manuel López Obrador has long advocated for legalization, and she said “we are falling behind in the world if we do not advance on this issue,” according to a translation of a report from Proceso. “Making the regulation of the entire cannabis market chain more flexible [and] extending its use would improve health and safety, help economic development and facilitate regulatory compliance,” Espino de la Peña said. “If we establish pertinent mechanisms, modalities and restrictions in its cultivation, production and sale, we will be able to have a regulated market that prevents its use by minors and reduces legal costs such as, for example, those of [law enforcement] surveillance for possession for personal consumption, with which resources can be released to attend to other social problems.” Mexico going green would be a huge boost for cannabis markets in North America while also curbing the black market for the entire continent. Would a cannabis trade agreement between Canada and Mexico also lead to more pressure in Washington to end the era of prohibition, we think so. marijuanamoment.net
