Grown Rogue has set its sights on the Michigan Cannabis market as part of its growth strategy. The expansion is part of an effort of strengthening multi-state operations the firm has already set foot in Oregon and California with strategic investments.
Michigan Cannabis Opportunity
The company is setting its sights on the Michigan cannabis market does not come as a surprise. The State’s cannabis industry is ranked as one of the fastest growing markets, with medical sales having hit highs of $56 million as of May after starting mid-October of last year.
The fact that the Michigan cannabis market is in the early stages of growth means there is room for everyone to jostle for market share, given the lack of a clear leader. The state also boasts of the second largest market for medical cannabis.
The high per capita patient registrations in the State presents a unique market opportunity for Grown Rogue, which is increasingly looking to diversify its revenue streams. Business opportunities could soon increase in the state following the release of new emergency regulations.
In a bid to crack down on black market sales, the State has reduced capital requirement for recreational marijuana. The state has also approved the sale of both medical and recreational cannabis on the same store. With the new regulations, the likes of Grown Rogue will now be able to target both recreational and medical cannabis market concurrently and with ease.
Ramping Up Cannabis Production
In pursuit of growth opportunities in the state, the Company has since entered into a strategic partnership and acquisition with operators in Muskegon. A partnership with Inferno Gardens marks an important step in Grown Rogue bid to ramp up cannabis production in the state.
This also opens the door for the company to gain access to a 24,000 sq. Ft. indoor facility that is to act as a cannabis manufacturing hub. The facility, which is still under construction, will play host to cultivations and processing operations once it is up and running before the end of the year.
“Given that the current Michigan market rates for quality cannabis flower fetches around $3000/lb., this new revenue source bodes well for our company’s revenue targets. We are excited to partner with Jesse and the rest of his team at Inferno Gardens and bring our proven business model and brand to the Michigan market,” explained Obie Strickler, Grown Rogue CEO.
The strategic location of the manufacturing facility should go a long way in benefiting the company. Millions of locals, as well as visitors, pass through the popular corridor on their way to Lake Michigan. In addition, Grown Rogue is planning to launch a cannabis dispensary and processing facility, early next year to strengthen operations in Michigan.
According to the Chief Strategy Officer Jacques Habra, the Michigan manufacturing facility will have the potential to produce up to 1,814 Kgs of premium cannabis annually. Operations in Michigan could generate between $13-14 million in yearly revenue for the company starting next year.
Sales Growth Boost
Expansion into Michigan comes at a time when Grown Rogue is firing on all angles when it comes to operational efficiency. For starters, the company is fresh from reporting two consecutive quarters of robust revenue growth.
A 125% quarter-over-quarter sales growth in the second quarter underscores brand strength as well as distribution reach in Oregon. In the first quarter, the company reported a 388% increase in revenues that came in at $834,309. The company has also seen its cannabis licenses grow from just three to 22 in three states expected to strengthen sales growth.
“To have gained this brand recognition and sales traction, in what is arguably the world’s most competitive legalized cannabis market, bodes very well for our expansion into California and particularly the newly legalized market in Michigan,” said Obie Strickler, President, and CEO of Grown Rogue.
The future looks bright for Grown Rogue as it continues to expand its footprint into some of the biggest cannabis markets. The under-performance in the stock market in the first half of the year presents an opportunity to take a look at a stock trading at a discount relative to the company’s growth metrics.