![]() Its investors - who include Bob and Don Barnes, co-owners of Belle Tire, and Dave Morrow, founder of Warrior Sports - continue to fund the expansion. Instead, it will focus on organic growth. "Rather than just going out of business, companies unable to handle tightening margins may be acquired by more efficient or more well capitalized operators."īut Lume isn't interested in acquiring smaller, unprofitable operations, Kuethe said. "As the market continues to expand companies have two main options for growth - either they apply for and build new licenses organically or they acquire existing assets in the form of purchasing their competitors," Livingston said. Livingston said dropping prices will force consolidation in the industry. Kuethe said many small growers, those under 10,000-square-feet of grow space, have been in contact with Lume in hopes of a buyout. states have legalized recreation use and another 13 states have decriminalized marijuana. But federal legalization appears to be gaining momentum in recent years as 18 U.S. House of Representatives last week passed a bill to decriminalize marijuana federally, but it's unlikely to gain much traction in the U.S. Cannabis companies that thrive within the crucible of intense competition will be much better equipped to win once the walls of state markets fall and American cannabis becomes a truly national market." "Michigan entrepreneurs are forced to be more efficient and resilient. ![]() ![]() "While Michigan is facing price compression faster than its neighbors in Illinois, it is important to consider the benefits and not just the drawbacks of this competitive pressure," Livingston said in an email to Crain's. "We invested heavy in the grow op up front so we could make the best product at the cheapest cost possible."Īndrew Livingston, director of economics and research for cannabis law firm Vicente Sederberg LLP in Denver, said falling marijuana prices will shake out companies with smaller margins, creating stronger companies when federal legalization occurs and opens up interstate trade. "We were prepared for prices to drop," Kevin Kuethe, Lume's chief cultivation officer, said last month while working in one of the Evart operation's 20 flower rooms filled with a strain known as Uncle Bruce. It will also complete a more than 150,000-square-foot expansion in 2024 of its already 250,000-square-foot grow operation in Evart - which currently houses 28,000 plants worth a market value of about $40 million. Lume opened its 31st retail outlet in Michigan last month with plans to open 13 more this year alone. But Troy-based Lume Cannabis Co., the largest single-state operator in the U.S., continues to grow rapidly. The long-predicted price drop, thanks to increased supply as more and more growers come on line, is likely smashing the margins of many in the industry. Marijuana prices have collapsed across the state - down 40 percent year-over-year to $160.12 per ounce of recreational cannabis.
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