Michigan Cannabis Sales Drop Despite Record Volume in 2025

Michigan's cannabis retailers sold more product than ever in 2025 but brought in less revenue, marking the first year-over-year sales decline since the state's recreational market launched in 2019.

Dispensaries moved 260,000 additional pounds of cannabis compared to 2024, yet total sales fell to $3.17 billion—down $113 million from the previous year, according to state data analyzed by MLive. The numbers underscore a growing challenge in mature cannabis markets: oversupply driving prices down faster than volume can compensate.

The revenue drop comes even as Michigan's licensed retailers continue expanding their customer base and product selection. The disconnect between volume and revenue points to significant price compression across flower, concentrates, and edibles as competition intensifies among the state's 400-plus dispensaries.

The Price Squeeze

Michigan's cannabis market has matured rapidly since recreational sales began five years ago. What started as a limited number of licensed operators has grown into one of the most competitive markets in the country, with new dispensaries opening regularly across the state.

That competition has been good for consumers—ounces of flower that commanded premium prices in 2020 now sell for half that amount in many markets. But the price war has squeezed operators, particularly smaller retailers without the economies of scale enjoyed by multi-store operators.

The per-pound sales record suggests retailers are moving product efficiently. Yet the declining revenue total raises questions about sustainability for marginal operators who may struggle to maintain profitability as wholesale and retail prices continue falling.

What It Means for the Industry

Michigan's experience mirrors patterns seen in other mature markets like Colorado and Oregon, where initial scarcity gives way to oversupply within a few years. The state's cultivation capacity has grown significantly faster than demand, creating downward pressure on wholesale prices that filters through to retail.

Several factors contribute to the price decline. Michigan's relatively permissive licensing has allowed more cultivators to enter the market than some other states. Meanwhile, improved growing techniques and economies of scale have driven production costs down, enabling growers to sell at lower prices while maintaining margins.

The revenue decline could prompt calls for market adjustments. Some industry advocates have pushed for reduced licensing fees or temporary cultivation caps to stabilize prices, though such measures face resistance from free-market proponents and regulators wary of restricting access.

Looking Ahead

The 2025 numbers may signal a new phase for Michigan's cannabis market—one where growth comes from market share battles rather than overall expansion. Retailers will likely need to focus on operational efficiency, customer loyalty programs, and differentiated product offerings rather than relying on a rising tide to lift all boats.

State tax revenues from cannabis sales will also feel the impact. Michigan collects a 10% excise tax on recreational cannabis sales, meaning the $113 million revenue decline translates to roughly $11 million less in state tax collections—money earmarked for schools, roads, and municipalities where dispensaries operate.

Industry observers will watch whether 2025 represents a temporary correction or the beginning of a longer-term trend. If prices stabilize and consumer demand continues growing, Michigan's market could return to revenue growth. But if oversupply persists, more consolidation and closures may lie ahead.

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This article is based on original reporting by ganjapreneur.com.