Experts gauge hurdles of medical marijuana business

Joining the green rush is going to take a lot of green.

“You need money, you need a great team, and you need a great location,” said attorney and medical marijuana advocate Bruce Gale. “Let me rephrase that. You need a location.”

Every day for the past year, Gale has dedicated at least a little bit of time to studying Nevada’s medical marijuana regulation. He expects the first medical marijuana business to open by the third quarter of this year.

But he predicted that operators will need at least a million dollars to open a medical marijuana dispensary just to compete for a license.

There are application deadlines, zoning restrictions and moratoriums that stand in the way, not to mention that banks are avoiding the medical marijuana business altogether.

Last year, the Nevada Legislature overwhelmingly approved a bill that would allow for 66 medical marijuana business licenses, with 40 in Clark County. As many as 425 applications for services from growing facilities to dispensaries are expected.

Because of the tourist draw, an ideal location might be near the Strip. But the Clark County Commission prohibited any dispensaries in the gaming corridor. That stretches from St. Louis Avenue to St. Rose Parkway along Las Vegas Boulevard and 1,500 feet east or west of the median, as well as property around Wynn and Encore.

So how, exactly, does one enter Nevada’s medical marijuana market?

Under the law, four types of medical marijuana establishments are allowed: cultivation facilities, dispensaries, production facilities and independent testing labs.

Clark County’s intense application process looks like this: Preliminary review forms are due Tuesday. The deadline to submit an application for a special-use permit is May 2, and the deadline to submit a copy of a deed or lease, along with a a copy of an FBI background check, is May 9. The commission set hearings for special-use applications on June 5.

From that point, applicants must submit documentation to the state. A state registration certificate is provisional. That means, the applicant must return to the Clark County and apply for a business license. Once issued, then you can open up for business.

The Las Vegas City Council has agreed to move forward with allowing cannabis operations. But in January, Henderson passed a six-month moratorium on medical marijuana applications.

“For people who have significant funds available, it’s not a problem,” Gale said. “But it is potentially harder for people who don’t have a lot of money. This is a very capital-intensive investment.”

Because marijuana is still illegal under federal law, financial institutions are turning away marijuana companies.

In February, the Treasury and Justice departments set guidelines for financial institutions taking on medical marijuana clients in states where the business is legal. Banks must review state license applications and look for red flags that could reveal illicit business, as well as file “suspicious activity reports” for questionable transactions from marijuana clients.

“If I misreport, I’m liable as a bank,” said Bill Uffelman, president of the Nevada Bankers Association. “So I’m putting my license to do business on the line so that you can do business. That’s a hard mouthful for bankers to swallow.”

Gale expects financing to come from equity investors.

Marc Terbeek, an attorney who specializes in medical marijuana regulation, has been vocal throughout regulatory processes in Nevada and California, and he is working on ideas that could ease the flow of money into financial institutions.

“The first one that does it is going to be on the ground floor of a green rush,” Terbeek said. “That’s going to be the financial insitution that will be at the forefront of the industry.”

One idea is proposing legislation that asks states to set up separate cannabis banks.

Another prospect would establish a labor association for businesses in the cannabis industry. The labor association would set up sub-accounts for dispensaries and those businesses would pay dues to the association, which would do business with a state-chartered credit union.

“There’s only so far that institutions are going to go to scrutinize their deposits,” Terbeek said.

Even if medical marijuana funding is available, there’s the issue of finding property for the business.

A medical marijuana facility cannot be located within 1,000 feet of a school or within 300 feet of a community facility. In unincorporated Clark County, a production or cultivation facility cannot be within 660 feet of a residential property line.

Under state law, the business must be located within a commercial, industrial or overlay zoning area. The owner of the medical marijuana establishment must own the real estate or have written consent from the landlord.

“Many landlords don’t want medical marijuana establishments,” Gale said. “If they do, they could potentially increase the rent significantly because of the demand.”

Melissa Waite, an attorney who handles medical marijuana establishment licensing cases for the firm Jolley Urga Woodbury &Little, said landlords may be worried about how a medical marijuana business reflects on other establishments and whether it affects property value.

“They’re looking to extract a premium from these operators because it is deemed to be a little bit more high-risk than a typical tenant would be,” Waite said.

The disparity between federal and state law could also spell trouble for medical marijuana business owners shopping for insurance.

“The legal gray area may be the main issue of categorizing it,” said Eric Springall, president of the Insurance Agency Orgill Springer.

Last month, Jeremy Aguero, a principal with Applied Analysis, pointed to medical marijuana dispensaries as a significant source of revenue for Southern Nevada when he released the 2014 Las Vegas Perspective.

“It’s like a gold rush out there to get those licenses,” Aguero said. “We have a lot of people interested in opening an operation here, and they’re talking about investing millions of dollars into those facilities.

Though he has not directly studied medical marijuana’s potential impact, his company’s comprehensive report gauges the economic direction of Clark County.

“There’s a lot of cash chasing this particular opportunity.”

Contact reporter David Ferrara at or 702-387-5290. Follow @randompoker on Twitter.

President Trump’s tariffs could raise costs for real estate developers, analysts say
President Donald Trump made his fortune in real estate, but by slapping tariffs on imports from close allies, developers in Las Vegas and other cities could get hit hard.
Las Vegas business and tariffs
Barry Yost, co-owner of Precision Tube Laser, LLC, places a metal pipe into the TruLaser Tube 5000 laser cutting machine on Wednesday, June 20, 2018, in Las Vegas. Bizuayehu Tesfaye/Las Vegas Review-Journal @bizutesfaye
Nevada Film Office Connects Businesses To Producers
The director of the Nevada Film Office discusses its revamped locations database and how it will affect local businesses. (Bailey Schulz/Las Vegas Review-Journal)
Opendoor isn't the typical house flipping company
Unlike most house flippers, the company aims to make money from transaction costs rather than from selling homes for more than their purchase price.
The Venetian gondoliers sing Italian songs
Gondolier Marciano sings a the classic Italian song "Volare" as he leads guests through the canals of The Venetian in Las Vegas. (K.M. Cannon/Las Vegas Review-Journal)
Building In Logandale
Texas homebuilder D.R. Horton bought 43 lots in rural Logandale. (Eli Segall/Las Vegas Review-Journal)
Indoor farming in Southern Nevada
Experts discuss Nevada's indoor farming industry. (Bailey Schulz/Las Vegas Review-Journal)
Former Fontainebleau could have become a Waldorf Astoria
Months after developer Steve Witkoff bought the Fontainebleau last summer, he unveiled plans to turn the mothballed hotel into a Marriott-managed resort called The Drew. But if Richard “Boz” Bosworth’s plans didn’t fall through, the north Las Vegas Strip tower could have become a Waldorf Astoria with several floors of timeshare units. (Eli Segall/Las Vegas Review-Journal)
LVCVA CEO Rossi Ralenkotter announces plans to retire
Rossi Ralenkotter, CEO of the LVCVA, on Tuesday confirmed a Las Vegas Review-Journal report that he is preparing to retire. Richard N. Velotta/ Las Vegas Review-Journal
Cousins Maine Lobster to open inside 2 Las Vegas Smith’s stores
Cousins Maine Lobster food truck company will open inside Las Vegas’ two newest Smith’s at Skye Canyon Park Drive and U.S. Highway 95, and at Warm Springs Road and Durango Drive. Cousins currently sells outside some Las Vegas Smith’s stores and at Fremont Street and Las Vegas Boulevard. (K.M. Cannon/Las Vegas Review-Journal)
Las Vegas home prices to continue to rise, expert says
Lawrence Yun, chief economist at the National Association of Realtors, gives homebuyers a pulse on the Las Vegas housing market. (Eli Segall/Las Vegas Review-Journal)
NV Energy announces clean energy investment
The company is planning to add six solar projects in Nevada, along with the state's first major battery energy storage capacity. Bailey Schulz/Las Vegas Review-Journal
3 Mario Batali restaurants on Las Vegas Strip to close
Days after new sexual misconduct allegations were made against celebrity chef Mario Batali, his company announced Friday that it will close its three Las Vegas restaurants July 27. Employees of Carnevino Italian Steakhouse, B&B Ristorante and Otto Enoteca e Pizzeria, all located in The Venetian and Palazzo resorts, were informed of the decision Friday morning. Bastianich is scheduled to visit the restaurants Friday to speak to employees about the next two months of operation as well as how the company plans to help them transition to new positions.
Nevada has its first cybersecurity apprenticeship program
The Learning Center education company in Las Vegas has launched the first apprenticeship program for cybersecurity in Nevada. It was approved by the State Apprenticeship Council on May 15. (K.M. Cannon/Las Vegas Review-Journal)
Las Vegas union members voting to authorize the right to strike
Thousands of Las Vegas union members voting Tuesday morning to authorize the right to strike. A “yes” vote would give the union negotiating committee the power to call a strike anytime after June 1 at the resorts that fail to reach an agreement. (Todd Prince/Las Vegas Review-Journal)
Small businesses struggle to find qualified candidates
A 2018 survey found that over two-thirds of small businesses in Nevada find it somewhat to very difficult to recruit qualified candidates. Bailey Schulz/Las Vegas Review-Journal
Nevada secretary of state website offers little protection against fraudulent business filings
Property developer Andy Pham tells how control of his business was easily seized by another person using the secretary of state website.
Caesars may be going solo in its marijuana policy
Several Southern Nevada casino companies aren’t following Caesars Entertainment’s lead on marijuana testing.
How much is the Lucky Dragon worth?
Less than a year-and-a-half after it opened, the Lucky Dragon was in bankruptcy.
Gyms and discount stores take over empty retail spaces
Grocery stores used to draw people to shopping centers. But many large retail spaces have been vacant since 2008. Discount stores like goodwill and gyms like EOS Fitness are filling those empty spaces, and helping to draw shoppers back in. K.M. Cannon/Las Vegas Review-Journal
Funding source of Las Vegas stadium for the Raiders is sound, expert says
The stadium is funded in part by $750 million of room taxes, the biggest such tax subsidy ever for a professional sports stadium. Robert Lang, executive director of Brookings Mountain West and The Lincy Institute at UNLV, says that is a good use of public funds. (Richard Velotta/Las Vegas Review-Journal)
Las Vegas needs light rail, expert says
Robert Lang, executive director of Brookings Mountain West and the Lincy Institute said he is afraid of a "congestion mobility crisis." Las Vegas needs a light rail system, he said, to accommodate the city's growing number of attractions. (Richard Velotta/Las Vegas Review-Journal)
Three takeaways from Wynn Resorts' Earnings Call
Matt Maddox came out swinging in his first earnings conference call as Wynn Resorts chief executive officer, boasting of record Las Vegas quarterly revenues and applicants lining up for work.
Star Wars VR Comes to Las Vegas
Sneak peak at the new "Star Wars: Secrets of the Empire" VR experience at the Grand Canal Shoppes.
Elaine Wynn continues her fight to change Wynn Resorts board
Elaine Wynn, the largest shareholder of Wynn Resorts Ltd., is seeking to kick a friend of her ex-husband Steve Wynn off the company’s board of directors. (Todd Prince/Las Vegas Review-Journal)
Zillow is getting into house flipping in Las Vegas
Las Vegas Review-Journal real estate reporter Eli Segall says flipping houses has waned in popularity after the housing bubble burst.
Ellis Island Buys Mt. Charleston Lodge
Ellis Island, which operates a casino, brewery and hotel just off the Strip, purchased the Mt. Charleston Lodge in early April.
Casinos to be penalized for allowing drug-impaired customers to gamble
Nevada Gaming Commission Chairman Tony Alamo talks about an amendment making casinos subject to the same disciplinary standards of preventing people to gamble if impaired by drugs as they are for letting them play while intoxicated by alcohol.
Terrible Herbst to open large travel center in Southern Nevada
The 50,000-square-foot commercial travel center will include 96 fuel pumps and the third White Castle restaurant in Southern Nevada. Wade Tyler Millward reports.
Art Bell’s Top 10 Shows
A selection of radio host Art Bell’s most popular shows.
News Headlines
Home Front Page Footer Listing
You May Like

You May Like