Recreational marijuana sales start July 1 in Nevada
Deep Roots Medical: July 1st "is still the reality"
On July 1, Mesquite residents who so choose can casually jot down “weed” on their shopping lists as they head out the door.
That’s the start for Nevada's "early start program" for recreational marijuana sales.
As the Silver State enacts the will of its voters — Nevadans approved recreational marijuana with 54 percent of the vote on Question 2 last November — it will initially be done in limited fashion allowing only existing medical marijuana establishments who are found to be in good standing and operational to sell recreational marijuana on July 1.
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By early 2018, the Nevada Department of Taxation, the state’s recreational marijuana governing entity, will reopen the application process as regulations become more permanent.
“We’re kind of rolling out the known players who have a track record of following the rules and they’re in compliance, kind of opening in that limited way and then kind of expanding from there,” said Stephanie Klapstein, public information officer for the department of taxation.
That includes Deep Roots Medical, Mesquite’s medical marijuana dispensary, which has applied for a retail license with the department of taxation. Dispensary manager Scott Bowles told the Desert Valley Times that Deep Roots is prepared to begin selling recreational marijuana next month.
“I don’t foresee any hang-ups at this point,” Bowles said. “We’ve done everything we could to be ready for July 1st, and we’re anticipating July 1.”
Establishments applying for retail licenses were required to submit applications by the end of May. Klapstein said the department has 90 days to decide on an application upon receiving it, but added she doesn’t foresee approving licenses as a hurdle for the July 1 rollout.
“Essentially, anyone who meets the requirements that we’ve laid out in the regulations, we’ve defined ‘in good standing’ and ‘operational,’ if they meet those requirements they will be issued a license,” Klapstein said.
So far, the department has received a total of 324 applications for five different recreational marijuana licenses: marijuana distributors (those who transport marijuana to and from retail facilities), cultivation facilities (growers), product manufacturers (edibles, marijuana extracts), testing labs (THC-levels, pesticides), and retail stores.
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The only potential hurdle for the July 1 target date is a restraining order filed by the Independent Alcohol Distributors of Nevada. The restraining order was filed because original language in Question 2 specified that alcohol distributors would have the first opportunity to acquire distribution licenses unless the department determined there wouldn’t be enough applicants to serve the market. The department determined that to be the case, and opened up distribution applications to include existing medical marijuana establishments and those who have transported marijuana for the medical industry, Klapstein said.
However, the restraining order only applies to distribution licensing and does not have any bearing on retail applications.
“I don’t know that it’s going to affect us as a dispensary and a vertically integrated company. We can certainly move product from one part of the building to the next,” Bowles said of the restraining order.
As the state and its existing medical marijuana establishments gear up to sell marijuana legally, municipalities are left to sort out the details. Mesquite’s location as a border town with Utah has made the discussion especially polarizing among some city officials, who don’t want to see the town become a marijuana gateway.
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Mesquite’s lobbyist Warren Hardy said the 2017 legislative session didn’t change how municipalities might be able to control recreational marijuana within their borders.
“The only thing that came out of the session that we don’t have regulatory control over is stuff we wouldn’t want to have regulatory control over anyway, or need to, stuff like packaging,” Hardy said.
How that regulatory control will be utilized in Mesquite is yet to be determined.
Nevada isn’t going to be shy about generating revenue from the state’s newest industry. A 15 percent tax will apply to all wholesales from a cultivation facility. In addition to existing state and county sales tax (8.15 percent in Clark County) a 10 percent excise tax will apply to all retail purchases.
Per Senate Bill 487, business licensing fees paid to local municipalities has been capped at three percent of a business’ gross revenue. Hardy said the city was hoping that number would be capped at five percent, but said there are other possible revenue streams, including state taxes, that the city could realize.
“I understand they’re trying to make a buck out of it, but they can overdo it and I think they’re right on the edge of overdoing it if they’re not already,” Bowles said. “But we’ll see, the whole idea behind that is obviously you want the state to make money out of this. We want everybody to win.”
Bowles is concerned that ensuring all interested parties are whole financially might yield unimagined consequences for an industry still in its infancy.
“The main thing I feel, and I think this is a feeling even from what I’ve read from the state guys, is let’s don’t leave room for the black market to flourish from a pricing standpoint,” he said. “Because all of a sudden we’ve just had to go up on everything 25 percent just to stay level. That doesn’t even consider a commodity that maybe in higher demand here soon.”
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Mesquite Mayor Al Litman has expressed similar concerns that tax figures might actually price the industry out.
City liaison officer Aaron Baker was asked if the city has any plans to address recreational marijuana through city council before recreational sales are permitted on July 1.
“We may be fine with everything or we may need to amend our ordinances. We are reviewing the bills and will charter a course of action after the review,” Baker wrote in a text message. He added that the city is not prepared to say what course of action, if any, will entail following the review.
Follow Lucas Thomas on Twitter, @LucasThomas14, or call him at 702-232-0603.