Marijuana industry prepares for release of new dispensary licenses

Dozens of new state licenses for recreational marijuana facilities will be issued during the next few months to a limited number of applicants, reshaping the landscape of Nevada’s marijuana industry.

Per the voter-approved Nevada Marijuana Legalization Initiative, also known as Question 2 on the November 2016 ballot, only current state pot license holders—including cultivators and production facility owners—can obtain the additional 42 recreational dispensary licenses this fall. The Nevada Department of Taxation is accepting applications from September 7-20 and will issue the licenses as soon as December, said Stephanie Klapstein, spokeswoman for the department. The new marijuana stores could open by December, depending on how fast the new facilities are processed and licensed by local authorities.

“We have 90 days to process applications and issue decisions,” Klapstein said. “We’re working to do this carefully yet efficiently.”

Nevada has 63 open dispensaries, only two of which don’t sell recreational marijuana. All operating dispensaries once applied for state medicinal marijuana licenses before receiving a license to sell recreational cannabis at the same stores. The new licenses will be recreational only, however, a change from the pre-ballot question structure that required dispensaries to first obtain a medical license.

Since recreational pot sales began July 1, 2017, the number of state medical marijuana cardholders has dropped by more than 40 percent.

Ballot Question 2 dictates that Nevada counties with greater than 700,000 residents can have up to 80 recreational marijuana store licenses. Counties with 100,000-700,000 residents can have up to 20. Counties with 55,000-100,000 can have up to four, and counties with fewer than 55,000 residents can have up to two. Only Carson City and four of Nevada’s 16 counties allow recreational marijuana dispensaries. The other 12 counties voted to allow only medical marijuana sales, or to ban sales of the plant completely.

The 2019 Nevada Legislature, which begins in February, will determine if and how the general public will be able to stake their claim as business owners in the booming weed industry.

In addition to state approval, all licensed marijuana facilities in Nevada must also have local licenses. But while the state’s guidelines for the new licenses are clear, local officials said they’re taking a more conservative, wait-and-see approach to issuing local permits for additional cannabis dispensaries. While the new, recreational-only licenses won’t require a special permit, Las Vegas Valley officials have expressed interest in adding a mandatory medical component to the new pot stores.

Las Vegas City Councilman Bob Coffin is leading the charge to require owners of the new recreational-only dispensaries to carry specific cannabis products, such as tinctures and lozenges, at quantities and prices that best serve medical marijuana patients. Coffin, a proponent of legal cannabis, said medical marijuana patients shouldn’t be “left out” in the industry’s expansion.

“We’re trying to thread the needle because we really don’t want to have a moratorium on new dispensaries,” Coffin said. “There has to be a middle ground, and we’re working on developing that.

“Medical led the way in this state, and we want to keep the industry as medical as possible,” he added.

Likewise, in Clark County, Commissioners Steve Sisolak and Susan Brager pushed for a discussion item during the commission’s September 4 meeting in hopes of hashing out a potential medical requirement for the new dispensaries in advance of the state’s approval of new license applications. Commissioner Chris Giunchigliani said the county hopes to allow the new dispensaries to launch “pretty quickly” after the stores receive their state licenses.

David Goldwater, co-owner of Inyo Fine Cannabis Dispensary, is one of dozens of industry license holders competing for 10 new dispensary licenses in unincorporated Clark County. Goldwater, whose dispensary at 2520 S. Maryland Parkway near East Sahara Avenue opened in October 2015, said the opportunity to increase the number of legal stores across the state is not only good for business, but should help reduce a thriving illegal market.

“Nevada still has a very robust black market,” Goldwater said. “Adding more dispensaries will not only address illegal market demand, but give legal marijuana access to even more people.”

Notably missing from the upcoming batch of new marijuana licenses are additional licenses to add to the more than 120 cultivation and 85 production facilities statewide. They will not be available anytime soon, Klapstein said.

Andrew Jolley, president of the Nevada Dispensary Association, said the relatively large number of legal cultivation facilities in legal pot states Oregon and Colorado has driven up those states' supply of legal pot, pushing wholesale prices of marijuana as low as $300 per pound. In Nevada, as the state collects a 15 percent tax on wholesale purchases by dispensaries from cultivation and production facilities, the taxation department would collect less revenue if wholesale prices dropped too low here, he said.

“If there’s one thing regulators know how to do, it’s not lose taxes,” Jolley said. “The state is going to tread lightly on future cultivation and production facilities to see where equilibrium is.”

Klapstein agreed, adding that the taxation department is looking to avoid a surplus in weed production seen in other legal marijuana states, such as Oregon and Colorado. Licensing new dispensaries in Nevada will provide added outlets for the extra marijuana being produced and hopefully result in more purchases from consumers, she said.

“Once the dispensary licenses are issued, we’ll do an analysis before deciding whether to add more production facilities,” she explained. “That step is still several months away.”