USA News Group – A cannabis boom is underway, and perhaps one of the fastest growing markets of all is that of Michigan, which just saw its cannabis sales hit $105 million in February 2021, representing an increase of 160% year-over-year. Just last year, Michigan’s top cannabis regulator predicted the state’s market has $3 billion potential. This week, Bruce Linton, founder and former CEO of the world’s most valued cannabis company Canopy Growth Corporation (NASDAQ: CGC) (TSX: WEED) commenced trading with his new Michigan-based cannabis vehicle Gage Growth Corp. (GAGE). Many more have seen Michigan’s marijuana market potential and are wasting no time in getting established there, including premium plant-based extraction company Pure Extracts Technologies Corp. (OTC: PRXTF) (CSE: PULL) which recently announced its part in a JV that will install a cannabis and hemp extraction system in an existing Michigan facility. Others looking to cash in on the state’s upward trend are Innovative Industrial Properties, Inc. (NYSE: IIPR), Cresco Labs Inc. (OTCQX:C RLBF) (CSE: CL), and Red White & Bloom Brands Inc. (OTCQX: RWBYF) (CSE: RWB).
Through an LOI signed with an Oregon-based multi-state operator (MSO), Pure Extracts Technologies Corp. (CSE: PULL) (OTC Pink: PRXTF) is set to embark on a joint venture to build-out 2,600 sq ft of existing, under-utilized space in the MSO’s central Michigan facility—ideally located withing a 2-hour drive of several major markets.
“We are really excited about launching our first US initiative into the dynamic Michigan market, especially with experienced and entrenched partners,” said Ben Nikolaevsky, Pure Extracts CEO.
“There is strong demand throughout the state for the products we know best: full spectrum oil (FSO) vapes, live resin concentrates, and edibles.”
It’s anticipated that Michigan could follow similar consumer trend patterns experienced in other states such as California and Colorado, where sales of extracts and concentrates eventually overtook dry-flower sales.
By utilizing Pure Extracts’ state-of-the-art extraction techniques and equipment, the publicly traded MSO is set to improve upon its family of products that include sun-grown and indoor premium flower, along with patented nitro-sealed pre-rolls and jars. These products were already grown and packaged in Michigan and sold in over 100+ dispensaries throughout the state.
Now with Pure Extracts’ extraction, vape, live resin and edibles manufacturing skills, the JV can provide a much wider offering of products to the state—a necessary move, given the rising popularity of sales in cannabis 2.0 products seen across multiple states, in particular concentrates and edibles.
Nikolaevsky added, “With immediate access to the MSO affiliate’s 100+ dispensary customers out of Michigan’s nearly 400 licensed dispensaries, we expect our products to be distributed and on-shelves in Q4 of this year.”
In addition to manufacturing Pure Extracts’ proprietary brands of vapes and edibles, the JV partners anticipate an initial white-label order for live-resin concentrates from the MSO affiliate as that company continues to build on the outstanding reputation its dry-flower products have already garnered within the Michigan marketplace.
Already established in the state is Red White & Bloom Brands Inc. (OTC: RWBYF) (CSE: RWB), which saw its own Platinum Vape brand achieve record sales of about US$6.5 million in Michigan alone during the month of February—a feat that represents nearly 28% of the state’s market share according to data from the Michigan Marijuana Regulatory Agency (MRA).
Now the company is set to launch its new High Times product in Michigan, with the aim to accelerate towards a full launch that will include over 50 dispensaries to carry the product. In addition to multiple strains of packaged flower already released, the line will bring pre-rolls, vapes and edibles in a number of varieties.
Long-standing industry publication High Times is also gearing up for the Michigan Cannabis Cup, which has been featured in multiple stories and on air, including through FOX 2 Detroit and Michigan Live.
“Michigan is one of the fastest growing cannabis markets in the US,” said Bruce Linton, Executive Chairman of Gage Growth Corp. in an interview with Forbes. “Gage has worked tirelessly to grow its market share in the state.”
Linton’s Gage are coming off of an oversubscribed Reg A+ financing that raised gross proceeds of $50 million—one of the largest private cannabis financings in the past year, and one of the most successful Reg A+ financings in industry history.
“We are humbled and excited by the significant interest and investor demand we received for our oversubscribed Reg A+ financing,” said Fabian Monaco, President of Gage Growth.
Linton’s former outfit Canopy Growth Corporation (NASDAQ: CGC) (TSX: WEED) doesn’t currently have assets on the ground in Michigan, but it does sell its Martha Stewart brand of CBD products, including gummies to the state. Although Canopy’s Executive VP and CFO Mike Lee earned his MBA from the University of Michigan, the cannabis giant’s connection to Michigan has no official status at this stage.
In fact, there’s more rumor of Canopy’s interest in New York, upon that state’s potential legalization of marijuana in the near future. To enter that market, Canopy has the option to acquire US company Acreage as soon as that’s federally permissible—which is a scenario many more are seeing could come to fruition under the current government.
Back in September of 2020, Innovative Industrial Properties, Inc. (NYSE: IIPR) entered the Michigan market through the acquisition of a property in Madison Heights. The deal came with a long-term, triple-net lease agreement with a subsidiary of Holistic Industries Inc. to operate the property as a regulated cannabis cultivation, processing and dispensing facility, upon completion of development of an approximately 63,000 square foot industrial building.
Now IIP has multiple interests in Michigan, including with Ascend Wellness, Emerald Growth Partners, Green Peak Innovations, LivWell, Holistic Industries, and even a 115,000 sq ft industrial facility rental involving Cresco Labs Inc. (OTC: CRLBF) (CSE: CL) that’s currently under redevelopment.
Cresco’s co-founder and CEO Charlie Bachtell is now leading the way as Chairman of the National Cannabis Roundtable, a trade organization and lobbying group. The group is working behind the scenes on behalf of the Secure and Fair Enforcement (SAFE) Banking Act. The measure aims to give traditional banking access to pot companies, enabling them to offer credit purchases to clients, instead of operating in a cash-only mode.
Despite the unique banking challenges the company continues to have to operate under, Cresco ended the third quarter with $58 million in cash and cash equivalents and no debt. Management signalled its plans to use those funds to expand their cultivation facilities in multiple states, including Michigan, without the need to raise additional capital.
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