One Year of Recreational Cannabis in Traverse City

Government officials, dispensary owners look back at 2023

By Art Bukowski | April 13, 2024

After one year of recreational cannabis sales in Traverse City, those involved say it’s been worth the sometimes-bumpy wait.

Many municipalities throughout the state saw recreational cannabis operations up and running not long after Michigan voters first legalized the practice in 2018. It was a different story in Traverse City, where officials hashed (and re-hashed) the finer points of how to roll out rec cannabis for years before dispensaries finally got the green light to sell it in March 2023.

Northern Express connected with officials at the city and within the cannabis community to see how this first year has been, and what’s on the horizon.

City High

City Manager Liz Vogel says the city recently received a roughly $709,000 payment from the state, amounting to about $59,000 for each of a dozen active dispensaries. This comes from a 10 percent excise tax on all recreational cannabis sales in the state in addition to a six percent sales tax. Such payments will come annually to the city based on the number of active operations.
The city initially issued 16 licenses, but three are still in the buildout phase and one never opened.

It’s not yet clear what the city will do with the payment, Vogel says. There are no restrictions on how it can be spent, making it an especially welcome influx of money that will repeat annually for the foreseeable future.

“It does give us that flexibility to take a look at projects that might be out there on the backburner, maybe something the general fund couldn’t previously support but that we could use this money to support,” she says.

Ultimately, Vogel says, it will be up to the city commission to determine how to spend it. Mayor Amy Shamroe says there were earlier discussions among commissioners about possibly investing more funds in the city police department’s Quick Response Team (QRT), which provides support for people experiencing substance use, mental health troubles, and homelessness in Traverse City.

But an election since those discussions has shaken up the commission, and the current commission has yet to formally discuss what to do with the proceeds.

“Whether we decide as a commission to set a policy to earmark that money for something specific year after year until another commission changes it, or if we’re going to take it year by year and see where the need might be, that’ll be something we’ll have to talk about as we go through the budget process in the next couple months,” Shamroe says.

Rec Saves the Day

From the business perspective, the addition of recreational to medical sales was of massive importance to local dispensaries. Some even temporarily suspended operations while they waited for the city to approve recreational sales.

Justin Elias is president and co-founder of PUFF Cannabis, the first outlet to offer recreational sales in Traverse City last year after a few years of medial only. They never had to shut down while waiting for rec, but Elias says the delay “hurt our pockets like crazy…really hurt our bottom line.”

Recreational sales are booming, Elias says, providing a vital boost to business.

“We’re doing four times the revenue we were doing in medical,” he says. “We were losing money every year [on medical], and now we’re trying to recoup those last three years of losses.”

Recreational sales had previously been approved in surrounding counties, making the situation particularly frustrating, Elias says. He’s glad that northern Michigan’s prime tourist destination finally caught up with the rest of the state.

“I have friends in New York, Los Angeles, all over the world, and I tell everyone that Traverse City is one of the most beautiful cities in the United States, hands down,” he says. “Now we can offer all these tourists that come from all over the world the luxury of just showing their ID and getting their recreational needs.”

Elias also has heard loads of comments from downstate visitors who are glad to finally be able to get recreational in Traverse City.

“We had so many people that were heading up north for the weekend that would stop at our Bay City store or our Oscoda store, and that was going out of the way, causing them an hour or two delay,” he says. “Finally they can stop at their household recreational spot in Traverse City.”

The balance of tourists to locals has been somewhere in the range of 4-1 in the winter and 10-1 in the summer, Elias says. But they still have a loyal local base, including some medical customers. “The feedback from locals we’ve gotten is amazing,” Elias says. “They’re extremely happy about it.”

Local Leaf

Michael Thue is managing partner at Verts Neighborhood Dispensary, located downtown on Union Street. They opened last September and have heard nothing but good from people who walk through the front door, according to Thue.

“The tourists that are coming downtown are excited that there’s finally recreational,” he says.

Despite the happy tourists, locals are also a key segment of Thue’s business, especially since he opened too late to catch the main tourist surge last year. Area residents seem to appreciate his operation’s focus on products that are themselves local, he says.

“We work with local suppliers, local producers, local manufacturers as much as possible,” he says. “We’re a smaller, craft-cannabis type company compared to some of the other big multi-state operators…I know every [producer] that we have on the shelves, and I’ve toured the facilities.”

That said, Thue remains very excited for warmer months to arrive. Like businesses of all stripes Up North, he’s still heavily dependent on solid tourist traffic to make ends meet.

“That’s always been the Traverse City model—make your money in the summer and survive for the rest of the year,” he says.

Oversaturated?

Despite the boon of recreational sales, both Thue and Elias expect the number of Traverse City dispensaries to shrink in the coming years. One major player, Skymint, has already closed, and others are likely to follow.

“They’re not all going to survive,” Thue says. “The people will ultimately decide which ones do.”

Thue feels that much like other industries, the dispensaries that do survive will be those that offer the best customer service and product available. Customers will gravitate towards authenticity and good business practices, he says, and in this day and age, being local goes a long way.

“I think being locally owned will help big time,” he says. “People really seem to value that.”

Elias says the industry attracted a lot of people looking to strike it rich after rec was approved. But not all of them are cut out for the business, which he says is “extremely delicate” with nuances that set it apart from other endeavors.

“What’s going on right now is a lot of the people that came from real estate or other different avenues of work trying to invest in this industry [have found out] that it’s a real hands-on industry, and that’s why you’ve got people going into receivership or closing down,” he says. “We’re hands on, we’re involved, we have long-term views and we’re trying to do better on a daily basis.”