Nevada cannabis industry, amid record sales, poised for massive growth in 2018
January 15, 2018
The legalization of recreational adult cannabis use in the Silver State has been a real coup thus far for the few marijuana dispensaries scattered around Northern Nevada.
As 2018 rolls in, dispensaries remain bullish on growth prospects for the business in the new year — although not at the frenzied pace it saw after July 1, 2017, when the law took effect.
"I would say demand would continue to grow, although at a slightly slower pace than before," said Eli Scislowicz, director of operations for NuLeaf Tahoe, a cannabis dispensary that opened last August at 877 Tahoe Blvd., in Incline Village. "Cannabis is one of the fastest-growing industries in the nation right now, and I think it will continue to remain at a steady pace in our region."
Scislowicz said NuLeaf is positioned well in the Lake Tahoe region, because at the moment there are few retail outlets even in the Reno-Sparks area, and the nearest competition in California is 30 miles away.
But, as is always the case in the Sierra Nevada, weather can play a factor.
"It depends seasonally with the weather usually between fall and spring, but we like our location," he said.
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MILLIONS IN REVENUE
In its first month, roughly $27 million in legal marijuana was sold across Nevada, which generated $3.68 million in tax revenue, according to the state Department of Taxation.
Overall August sales topped $33 million, according to the state, while roughly $27.7 million in recreational marijuana was purchased in September.
Sales exploded in October, hitting a record $37.9 million, according to the most recent figures released in December. Reports for November should be released later in January.
"(The state) is looking healthy for marijuana sales, and the demand for medical and recreational use remains steady," said Stephanie Klapstein, public information officer for the department of taxation.
Revenue is generated from two different taxes: a 15 percent wholesale tax levied to medical and recreational use cultivators; and a 10 percent retail tax applied to retail locations that distribute recreational and/or medical cannabis.
The 15 percent wholesale tax is projected to bring in $23.8 million in the fiscal year from July 1, 2017, to June 30, 2018, with the retail tax bringing in $26.5 million. Further, the state projects that in the first two years of recreational sales, the wholesale tax will pass $56.2 million, while the 10 percent retail tax is anticipated to generate $63.5 million.
RISE, a cannabis dispensary with locations in Spanish Springs and Carson City, previously only offered medical marijuana, but started selling recreational marijuana for the first time on Jan. 1.
The company also operates a cultivation center in Carson City, along with retail cannabis and cultivation facilities in the Midwest and Northeast regions of United States.
"We don't know quite what to expect," Anthony Georgiadis, a partner with RISE's parent company Green Thumb Industries, said. "I would say we're excited to service customers we've seen on the medical side and anticipate they will come to us on the recreational side moving forward."
DEALING WITH DEMAND
At least at the outset, the high demand for recreational cannabis did create supply concerns among dispensary owners, as cannabis producer's vendors rushed to keep up.
But those worries should be quelled a bit, business officials said, as plans for more cannabis facilities are starting to come to fruition.
For example, MedMen, a cannabis management and capital firm based out of Los Angeles, is opening a $15 million 45,000-square-foot cultivation compound in McCarran, Nev. (in Washoe County, about 11.5 miles east of Reno), that's expected to produce 10,000 pounds of cannabis annually. The new facility includes a greenhouse, an extraction facility, and product test lab.
Blüm, a cannabis dispensary located in Midtown Reno, meanwhile, has invested in developing its own cannabis producing capabilities.
"We will be able to increase our product line and allow us to not rely on third-party vendors," said Travis Burroughs, store manager for Blüm's Reno storefront.
Burroughs added that being able to cultivate product in-house should add more jobs for the company and boost revenue in 2018. Currently, the company employs 38, but that number should increase above 40 later this year.
Burroughs said Blüm will start a commission-based pay scale and will expand its employee benefits package, including added medical coverage.
GRAND EXPANSION POSSIBLE
The Nevada Department of Taxation reported since the inception of legalized recreational marijuana use, 250 marijuana-related licenses have been issued, including those for retail stores, cultivation compounds, product manufacturing facilities, testing labs, and distributors.
Of those 250, roughly 25 percent were issued through Washoe County and Carson City.
The 2017 Nevada State Legislature transferred the state's recreational marijuana administration solely to the taxation department, for licensing, regulating, and taxing the industry.
Early on, the state adopted temporary regulations for recreational use patterned after medical marijuana laws, but the state has been drafting permanent regulations for recreational cannabis.
The taxation department is hosting workshops on recreational cannabis and set up a website, marijuana.nv.gov, to provide further information.
"The state has done an excellent job of creating rules and regulations for the recreational marijuana industry that is new to this state," Georgiadis said.
When recreational marijuana was legalized, the state mandated only existing medical marijuana establishments could apply for a retail cannabis license.
However, beginning in November 2018, under Nevada's Regulation and Taxation of Marijuana Act, non-medical marijuana licensees may apply for a retail license.
Klapstein indicated that this could turn out to be a game-changer by greatly expanding the marketplace in Northern Nevada.
"It will open it up to just about anyone to get a license," Klapstein said. "The average Joe Smith down the street could then be able to get a license."