Michigan, the first Midwestern state with legal marijuana, offers lessons for Minnesota

DETROIT — In an old garage once dedicated to restoring classic Thunderbirds, the unmistakable scent of cannabis hangs in the air.

Hot Box Social, which today looks more like a cozy living room than an auto shop, is a co-working space for stoners. Or a game night destination. Or a pop-up dining hall.

And it's a matter of when, not if, someone hosts a wedding here, said Hot Box manager Samantha Baker.

"We're going to keep seeing it de-stigmatized," she said.

Legal weed is moving from novelty to normal in Michigan, the first Midwestern state to legalize the recreational use of marijuana after a ballot initiative passed in 2018.

Since the first joint was sold in December 2019, more than $4.5 billion worth of legal cannabis has been sold in Michigan. With a combined 10% excise tax and 6% sales tax, that has generated more than $700 million in revenue for the state.

It's now common to see highway billboards for dispensaries across the state, for those shops to have a sleek and professional vibe, and, just recently, to pay less than black market prices for a quality crop of weed.

To get there, Michigan had to go through some growing pains. As Minnesota inches closer to legalizing recreational marijuana, the advice from advocates and professionals in Michigan is: Learn from our mistakes.

"Don't start from scratch; look at what other states are doing," said Josh Hovey, who played a leading role advocating for Michigan's successful ballot initiative. "It's a highly professionalized business with complex moving parts."

Even as prices normalize and sales continue to grow, social equity goals are being missed, faith in lab testing has been shaken and the state's black market persists.

Michigan's legalization experiment has otherwise largely met expectations, based on the thousands of jobs it has created and the hundreds of millions in tax revenue generated, Hovey said. The state's law allows communities to restrict the number of marijuana businesses or opt out completely. Yet most Michiganders live within a short drive of a marijuana retailer.

Any legal marijuana scene works best when paired with consumer education, Baker said.

"If you've only smoked once and it was in the 1970s, it's important to know it's a lot more potent now," Baker said as a group of smokers walked into Hot Box on a rainy Monday evening. But once it's demystified, "It's not this super scary thing."

For states legalizing pot and getting the market up and running, she said: "Buckle up. It's a wild ride."

In November 2018, 56% of Michigan voters approved legalizing recreational marijuana. It took more than a year before the first retail sales were allowed.

During that first month of sales, the average price of an ounce of flower (buds) was an eye-popping $500 — or more than $60 for a typical one-eighth-ounce bag — according to the state's Cannabis Regulatory Agency.

Now the price of an ounce of flower is averaging $86, with higher-quality strains selling for $200 an ounce or more. That's much more cost-competitive with street dealers, but it took several years to get there.

That has been typical in many states that open a legal adult-use cannabis market. The first few years are often marred by high demand and low supply, pushing up prices. As more growers, processors and retailers come online, an ample supply helps bring prices down.

"There was no capping of license numbers in Michigan, which has led to a significant drop in product prices," said Ryan Cook, marketing manager for Arbor Holdings, which runs a grow operation, a processor and four retail shops.

In Illinois, which legalized recreational marijuana just after Michigan, strict license caps on the number of cannabis businesses have contributed to significantly higher prices.

Herein lies the tension: Lower prices are great for consumers and for combating the black market. But businesses can suffer, with prices dropping too low to offset costs. That's due in part to federal banking and tax regulations that make it hard to access affordable loans, write off normal business expenses or accept credit cards in any legal marijuana state.

Some of Michigan's largest marijuana businesses have gone into receivership as a result.

"That all has to do with an inability to get access to traditional financial systems," Cook said.

Those restrictions are also reflected in the demographic makeup of people opening these businesses. The most recent state survey of adult-use cannabis licensees in Michigan shows business owners are disproportionately white, male, well-educated and relatively wealthy.

"No state has really figured out the social equity part," Hovey said. "Access to capital is the biggest hurdle."

Streams of customers filed into a historic house in downtown Ann Arbor to pick up their pot on a recent Saturday afternoon. Counter-mounted iPads offered a dessert menu of strains like Georgia Pie and Garlic Cookies.

Budtenders, also called consultants, helped folks find the high they were looking for as a few customers were let into the shop at a time.

Arbors Wellness, the first dispensary in Michigan, is now one of two dozen in this college town of about 120,000 people.

In the larger city of Sterling Heights, outside Detroit: Zero marijuana businesses.

Giving communities control over marijuana licenses is credited with helping get adult-use cannabis legalized in Michigan.

"It was a major selling point," said Hovey, who was communications director for the Coalition to Regulate Marijuana Like Alcohol.

Sterling Heights residents narrowly voted to approve marijuana legalization in 2018; last summer the city surveyed residents and found 60% were opposed to allowing facilities in the city.

Sterling Heights may still decide to allow dispensaries or other marijuana businesses someday. Michigan's fourth-largest city commissioned a study published last fall that looked at impacts on communities that have allowed marijuana businesses.

"There does not appear to be any adverse impact on the communities in general, including criminal activity," the study found. "Facility investments improved the aesthetics of the area, business owners were positive influences on the community and communities realized net new revenue and potential new job creation."

It's a different story on the highways, where billboards for dispensaries are occasionally interrupted by public service campaigns reminding drivers that "A little high is still too high to drive."

Drug-involved crashes and fatalities both increased 20% between 2019 and 2021, according to Michigan State Police statistics, which do not specify the type of drug involved.

Just how much of that is attributable to legal pot is unknown. Minnesota saw drug-related traffic deaths more than triple in that time, while drug-involved crashes rose 55%.

"It's kind of hard to judge, because everything is being blamed on COVID," said Sgt. Jim Janes, who coordinates the Michigan State Police drug recognition expert program. "We are struggling with the data part of it."

Unlike alcohol, THC impairment cannot be readily measured with a breath or even blood test, though an oral fluid test has shown promise. THC is the main psychoactive component in marijuana that causes a high.

"Alcohol impairs you while it's in the blood," Janes said. "Marijuana impairs you when it leaves the blood and attaches to fatty tissue in the brain."

A state task force declined to set a precise limit on how much THC can be in a driver's blood since research shows "there is a poor correlation between THC bodily content and driving impairment."

As a result, prevention messaging, better data collection and robust drug recognition training for law enforcement — easier said than done, Janes said — are key tools for keeping impaired drivers off the road.

For more than 50 years, marijuana activists have gathered every April at the University of Michigan for Hash Bash, a political rally and celebration of all things pot.

With the dream of legalization now a reality, this year's event honored the trailblazing "old-timers" who paved the way.

"How do you like what us old-timers brought you?" longtime activist Steven Thompson said to applause from the hundreds in attendance. "It's up to you now to keep your freedoms."

Removing marijuana from the federal government's list of controlled substances or outright legalizing it remains a high priority for activists.

"Marijuana is a minor vice," said Mike Whitty, an activist and university professor also known as "Dr. Detroit." "We should be more worried about sugar."

Even as attendees did their best to smoke out the lingering stigma of marijuana, cannabis users weren't always comfortable sharing their names.

As Hash Bash got underway on a rain-soaked April Fool's Day, a man named Laurence stood in a circle of friends, passing a joint under umbrellas.

Asked what Michigan should have done differently when legalizing marijuana, Laurence took the joint out of his mouth and exhaled: "It should have happened sooner."