5 dispensaries closed in the city within the last 12 months
BIG RAPIDS — Five cannabis dispensaries have closed in the city of Big Rapids over the past year, raising questions about whether the city of nearly 9,000 people is an early example of market oversaturation.
City officials have adopted an open policy for cannabis retailers by avoiding capping the number of cannabis businesses that can operate within the city limits. As a result, the number of dispensaries in the city blossomed to as many as 14 retail storefronts since cannabis sales first started in the city in March 2020.
However, the local market has experienced its share of churn.
The latest to exit was Grand Rapids-based, vertically integrated cannabis company Fluresh LLC, which closed a dispensary at 520 S. Third Ave. in Big Rapids earlier this month, only three months after opening. Other dispensaries to close their doors in the city over the past year include Wellflower, Mother Nurtures, KKind and Alluvium Cannabis Co.
Shoran Reid Williams, general counsel and chief regulatory officer at Fluresh, said the decision to shutter the Big Rapids location so quickly stemmed from the local market saturation and several other contributing factors.
“Five other retail locations opened their doors at the same time we did, and the market could not sustain that much supply — it just could not,” Reid Williams said.
The company, which operates a dispensary in Grand Rapids, found that adding a second retail location in Big Rapids proved to be a “logistical nightmare” and wasn’t profitable, Reid Williams said.
Fluresh purchased the Big Rapids building from Mother Nurtures, a dispensary that operated in the location before closing in January 2022. According to a statement at the time, Mother Nurtures closed the business because of the effects of inflation and COVID-19, the competitive nature of the local cannabis industry and high cost of owning a dispensary.
For Fluresh, the short-lived foray into the Big Rapids retail market helped the company adjust its market strategy, Reid Williams said.
“At the end of the day, what we decided is that we are a wholesale flower company. In order to effectively do that, we didn’t really want to compete with our customers,” Reid Williams said. “We decided to have just one retail location. We were going to open another one in Adrian by our grow operation, but instead we are focusing on our singular (Grand Rapids) location to better decide what customers want.”
Building a brand was not as important when recreational cannabis was first legalized, but it has become an essential factor for companies to remain in business, said Ben Wrigley, partner at Cascade Township-based CannaLex Law.
As well, many of the early entrants in the industry likely did not understand all the risks, which led to a string of dispensaries closing across the state, Wrigley said.
“Many of the early operators overpaid for the location they’re at, and maybe they weren’t top business people,” Wrigley added. “Everyone complains there aren’t enough communities opted in, but if you’re open right now, the last thing you want is those surrounding places to opt in.”
Wrigley contends that if more neighboring states start legalizing recreational cannabis, the rate of Michigan dispensaries closing will only increase.
Despite the market challenges in Big Rapids, the city has experienced a steady stream of interest from people wanting to open up new cannabis businesses, said Paula Priebe, the city’s former community development director. Before taking a position at the city of Walker at the end of 2022, Priebe worked for Big Rapids for five years and oversaw much of the cannabis licensing process during her tenure.
“We see some of the businesses close, and usually a new business will come in those spaces. That has happened a few times,” Priebe said. “These are primarily vacant storefronts to start with and they have been renovated very nicely. They’re in most cases phenomenal renovations that are activating buildings in disrepair. That makes it more likely that a new business could come, even in another industry.”
Aside from one instance, Priebe said all of the cannabis businesses in Big Rapids renovated older buildings to open in the city.
She thinks Big Rapids’ uncapped market for cannabis businesses still makes sense, despite the current uncertainty.
“Ultimately, it’s not the city’s role to decide what businesses do and don’t move forward,” Priebe said. “The city doesn’t limit the number of hair salons you can open. It’s up to you or people in the industry to decide whether it’s a good option to take. That held true my whole time there.”