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This article was reprinted with permission from Crain’s Detroit Business.

Michigan marijuana retailer Quality Roots is looking to bloom in the Garden State as local legal market prices continue to wilt.

Birmingham-based Quality Roots opened its Marlton, New Jersey, dispensary earlier this week, looking to capitalize on higher prices and nearby consumers in Philadelphia.

The store is 13 miles from downtown Philadelphia and recreational cannabis sales are not legalized in Pennsylvania.

“We can stay lucrative here because there’s no outdoor grow yet, no crazy biomass coming into the market,” CEO Aric Klar told Crain’s. “Our store is in a densely populated area and is close to Philadelphia. It’s a combo of market coming together.”

Michigan’s marijuana prices are basement-low due to product oversupply, largely from the large amounts of cannabis grown outdoors and typically harvested in October.

For instance, there were 1.84 million pounds of fresh frozen product, largely from outdoor grows, at processors and growers in January — a 296% increase over January last year.

The oversupply has cratered prices to just $66.50 for an ounce of marijuana in the adult-use market in January, down 28.6% year-over-year.

Klar said he can sell three marijuana vape cartridges for $100 at the New Jersey store; where in Michigan deals offer 15 cartridges for $75.

“The spread of profitability per unit is much greater,” Klar said.

Klar said Quality Roots’ eight stores in Michigan are profitable but the margins are much thinner.

Others in the Michigan are also looking to expand in other markets to supplement the low margins.

For instance, Evart-based Lume Cannabis Co. founded a new company, Lume Hemp Co. in Florida, to capture a portion of the massive and growing national market for hemp-derived THC.

Lume, the state’s largest cannabis company, wants access to the larger U.S. market largely to sell its popular THC drink brand Buzzn.

The company launched the seltzer drinks, which contain 7.5 mgs of marijuana THC, in April. But those drinks are regulated by the Michigan Cannabis Regulatory Agency and are prohibited for sale outside of licensed marijuana dispensaries and can’t be exported.

Meanwhile, hemp-derived THC drinks are storming markets all over the country. They are sold at liquor stores, bars and even at grocers. Total Wine & More, for instance, sells hemp-derived THC drinks in Texas, Florida, Minnesota, California and several other states.

Seeking other markets may be a necessity for Michigan operators if prices don’t rebound.

Growers are starting to fold. In February, Bay County marijuana operator Pincanna temporarily shuttered 31,500-square-feet of its grow facility and laid off employees to mitigate losses. Chicago-based PharmaCann shuttered its 207,000-square-foot LivWell Michigan cultivation site in Warren, laying off 222, in January. And in November, Fluresh shuttered its $46 million, 105,000-square-foot grow facility in Adrian.

“It’s not an easy process to open a store in New Jersey,” Klar said. “But we saw the opportunity. So while our stores in Michigan are profitable, and we’re opening more, there is a good financial play for us to expand in Jersey.”

Quality Roots is in the process of opening two more stores in Michigan and plans two more in New Jersey in the coming year.

“We got this boost of energy; no one knows who we are here, so we’re handing out flyers again,” Klar said. “We worked our asses off in Michigan and we’re not a company that’s going to spread ourselves too thin but this is a unique opportunity for us and to focus on two markets.”