Lume's shuttering of rural shops in favor of larger metros may indicate higher volumes are critical for profitability. A pure volume game isn't good for anyone." Everyone has to have a certain profit margin to make it. There's licensing fees, insurance premiums, operating costs and we don't get to write-offs like other businesses.
This industry is very expensive to be in. "There is such thing as too low of prices, even for us. "When "Croptober" comes in (when outdoor grows are harvested in the fall), the price will drop more," Millen said. Jerry Millen, co-owner of dispensary Greenhouse of Walled Lake, told Crain's that the industry is in "chaos." "Annualizing 2022, deposits are off by 25 percent to 50 percent from 2021 for most licensed businesses," Zillgit wrote in an email to Crain's. Ray Zillgit, senior vice president of risk management and general counsel for Brighton-based Lake Trust Credit Union, said deposits from marijuana clients have nosedived in recent months, indicating margins are much smaller as the cost of marijuana continues to erode. The price of recreational marijuana dropped to $130.62 per ounce in May, a more than 40 percent reduction year-over-year. The industry continues to go through a shakeup as marijuana prices have plummeted in recent months due to oversupply.
The impacted employees will receive severance pay and a chance to apply for positions at Lume's other locations, the company said in a release.
"We remain absolutely committed to growing and deepening our retail footprint in communities across Michigan and continuing our efforts to offer high-quality cannabis products for patients and adult-use customers." "This realignment is a key part of our strategy to maintain and strengthen our position as Michigan's leading cannabis retailer," Doug Hellyar, president and COO of Lume, said in the statement. In an emailed statement to Crain's, the marijuana grower and retailer said it is also opening three new shops in the coming months in Ann Arbor, Grand Rapids and Portage. confirmed it is closing its stores in Southfield, Bay City, Cheboygan and Christmas, in the Upper Peninsula. Michigan's largest cannabis company is closing four dispensaries across the state in what it calls a "realignment."
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