Detroit's not so red-hot cannabis real estate market

The once-fiery real estate market for cannabis businesses in Detroit now appears to be stagnating.

Why it matters: The local market's challenges with low product prices and narrow margins for profitability have also been shown via major financial failures like pot company Skymint, which went into court-appointed receivership to resolve deep debt, per Crain's Detroit Business.

• That's resulted in falling real estate prices, stakeholders tell Axios, though it's hard to estimate current prices with so few buildings changing hands.

State of play: The average wholesale price of an ounce of flower was $99 in July, up from $86 earlier this year but still an epic fall from 2020's $400-$500, per Michigan regulatory agency reports.

Context: After Michigan's rec industry was legalized in 2018, "buildings were all of a sudden being offered way over market prices, but that has gone," George Mugianis, Luxury Loud grow and retail operator in Southwest Detroit, tells Axios.

• Not as many people are opening grow facilities with product prices falling, and many did so in the suburbs as Detroit's process of opening up its recreational industry faced delays.

Plus, local cannabis attorney Scott Roberts tells Axios new grow development here is "pretty much dead," despite the city's suitable empty warehouses.

• Roberts pointed to a longer land-use approval process in Detroit than elsewhere.

Yes, but: A real estate slowdown doesn't necessarily mean there's a dearth of pot business activity — the city took a second round of applications last month for coveted retail shop licenses.

Zoom in: Mugianis says he's looking to lease out a 15,000-square-foot building approved for cannabis use next to his other property at Michigan and 22nd.

• "Nobody's knocking on my door trying to lease it from me or buy it from me, in terms of cannabis," he says. "Three years ago people would have been beating down the door to get that location."
• The building is near former NBA star Chris Webber's huge planned pot development that's been paused and scaled back, per Crain's.