68°F
weather icon Partly Cloudy

California may not be biggest threat to Nevada marijuana market

California is set to join the legal weed party Jan. 1 when recreational sales become official in the Golden State.

The state was one of four, including Nevada, that voted in 2016 to legalize the recreational use of marijuana. With sales projected to top $5 billion once the market gets up and running, California’s cannabis corner is expected to be by far the nation’s largest.

Nevada’s fledgling market got off to such a hot start this summer by selling more than $85 million in recreational marijuana during the first three months of legal sales.

But having a big competitor nearby shouldn’t be a problem.

“I have not been concerned about that at all,” said Ben Sillitoe, CEO of Oasis Cannabis in Las Vegas.

California’s rollout won’t be like Nevada’s all-out blitz, when 44 stores across the state began selling recreational marijuana when the clock hit midnight July 1.

Only a handful of stores across California are expected to be selling adult-use cannabis Jan. 1, as many local governments there are still working out the regulatory details.

As 2018 rolls along, more stores in California are sure to get into the mix, but Sillitoe said he doesn’t see them as competitors but rather as a way to help eliminate his staunchest competition: the California black market.

California’s unregulated illegal market sold an estimated $5.7 billion in pot, according to a study by the University of California Agriculture Issues Center. Sillitoe and other dispensary owners in town say a chunk of that makes its way to Las Vegas.

Street dealers and illegal online delivery services peddle many of the same products that Sillitoe sells in his shop on Industrial Road near the Statosphere. But unlike Sillitoe, they aren’t licensed and don’t have to pay any taxes to the state, so they can sell their products at a fraction of the price, he said.

But as California implements its regulated market and more stores come online, they’re betting it will start to choke off that illegal supply chain.

“My hope is that the regulated California market will curb the flow of illegal products coming in and reducing the supply of my competition,” Sillitoe said.

The Northwest ‘border effect’

So far, there is just a single case study in examining the impact, or lack thereof, on a state’s marijuana market when a neighboring state launches its own legal sales.

Washington was one of the first two states to start selling legal adult-use cannabis back in 2014. Its neighbor to the south, Oregon, rolled out recreational sales in October 2015.

At first, Oregon’s cheaper marijuana market did cut into sales in Washington, specifically in the counties on the border between the two states, where monthly sales dropped by as much as 47 percent in the three months after Oregon’s market opened.

But outside of those counties, state sales and tax revenue from marijuana soared in Washington, a trend that has continued. Since October 2015, Washington has seen its monthly excise tax receipts double from $14 million per month to $28 million in October of this year.

“I wouldn’t say it had much of an effect,” said Mikhail Carpenter with the Washington Cannabis and Liquor Board.

Oregon and Washington also presented a unique dynamic not shared by Nevada and California. Mainly, Oregon’s major population hub, Portland, sits right on the state’s northern border.

The closest comparison here would be the Lake Tahoe area, which has three marijuana dispensaries: one recreational dispensary in Incline Village and two medical dispensaries in Stateline.

Its a smaller sample than the case in Oregon and Washington, but examining what kind of impact those border communities have on the marijuana market is something the state will monitor, said Stephanie Klapstein, spokeswoman for the Nevada Department of Taxation.

Klapstein said the Tax Department, which regulates cannabis in Nevada, has not done formal research on the potential impact of California’s legalization but plans to look at a variety of impact areas once its market opens and data becomes available.

“We will watch the market closely and start planning where we want to focus our research,” she said. “Once the market opens in California, we will have a better sense of other issues we will need to examine.”

The bigger threat

While California’s cannabis market might not infringe upon the Silver State’s, another looming threat could cause problems for all eight states that have legalized recreational marijuana: the federal government.

Marijuana remains illegal at the federal level, and last week U.S. Attorney General Jeff Sessions hinted at a possible crackown on recreational pot.

“It’s my view that the use of marijuana is detrimental, and we should not give encouragement in any way to it, and it represents a federal violation, which is in the law and is subject to being enforced,” Sessions told reporters Wednesday in Washington, D.C. “We are working our way through to a rational policy, but I don’t want to suggest in any way that this department believes that marijuana is harmless and people should not avoid it.”

Meanwhile, one law preventing the U.S. Department of Justice from going after state-regulated medical marijuana markets is set to expire in a matter of days.

That law, called the Rohrabacher-Blumenhauer amendment, prevents the Justice Department from using federal funds to interfere with state medical marijuana programs or prosecute businesses that comply with state laws.

That law is set to expire Dec. 8, but a bipartisan group of more than 60 members of Congress, including Nevada Democrat Reps. Dina Titus and Jacky Rosen, sent a letter Tuesday asking party leaders in the House and the Senate to keep those protections in place.

Contact Colton Lochhead at clochhead@reviewjournal.com or 702-383-4638. Follow @ColtonLochhead on Twitter.

Don't miss the big stories. Like us on Facebook.
Politics Videos
Bernie Sanders Unveils Affordable Housing Plan - Video
Bernie Sanders sits down with the Las Vegas Review-Journal to talk about his new affordable housing plan he unveiled at Plumbers & Pipefitters.
Jim Marchant talks gun control and Dreamers - Video
Republican Candidate for District 4 Jim Marchant talks about gun control and immigration policies. (Las Vegas Review-Journal)
Hurricanes, Gender, and Science in the Press
Imagine if the mainstream media’s current hurricane-sized obsession with scientific accuracy applied to gender.
Cory Booker on college tuition and minimum wage
Cory Booker talks on the RJ Politics podcast about college debt, informing workers about their rights and livable wages.
Nevada Politics Today: Teacher raises - VIDEO
Jason Goudie, the chief financial officer for the Clark County School District, talks about teacher pay and raises. (Las Vegas Review-Journal)
Media's Double Standard On Incitement And Trump - Video
Over the weekend, an Elizabeth Warren-supporting socialist who opposed gun violence used a rifle to commit a mass murder in Dayton, Ohio. The media has downplayed that aspect of the tragedy.
Project Our Care Tour Kicks Off In Las Vegas
U.S. Rep. Dina Titus joined health care advocates and local residents as part of Protect Our Care’s nationwide bus tour kick off in Las Vegas on Monday, August 5, 2019. (Mat Luschek / Review-Journal)
Bernie Sanders talks about guns, response to El Paso shooting
Sen. Bernie Sanders spoke about his response and continued policy ideas about guns and gun control to the Review-Journal after a panel of other topics. (Rachel Aston/Las Vegas Review-Journal)
Pete Buttigieg On Gun Control And Climate Change - Video
Pete Buttigieg talks about his campaign for the 2020 election and how Nevada is a vision of what the future can be.
Beto O'Rourke speaks in Las Vegas
Presidential candidate Beto O'Rourke spoke to supporters at the East Las Vegas Community Center in Las Vegas, Thursday, Aug. 2, 2019. (Las Vegas Review-Journal)
Former Nevada Senate leader Kelvin Atkinson sentenced to prison
Former Nevada Senate Majority Leader Kelvin Atkinson, who pleaded guilty to misusing campaign funds, was sentenced to 27 months in prison on Thursday, July 18, 2019. (Mat Luschek/Las Vegas Review-Journal)
Trumps Strength is also a Weakness - Video
One of Donald Trump’s greatest strengths — his ability to shape national narratives — is also a great weakness.
Tax the Rich Bus Tour makes a stop in Las Vegas - Video
The Tax the Rich Bus has stopped in Las Vegas as part of its summer tour. (Las Vegas Review-Journal)
Assemblywoman Daniele Monroe-Moreno hosts BBQ - Video
Assembly Woman Daniele Monroe-Moreno hosts BBQ to bring the community together to hear about the candidates up for election and for people to gather and have fun.
Democrat Virtual Caucus - Video
Elizabeth Warren visits Las Vegas
Senator Elizabeth Warren made a campaign stop at the East Las Vegas Community Center on Tuesday July 2, 2019. (Mat Luschek / Review-Journal)
Aaron Ford Speaks About Bill AB431
AB431 is a bill sponsored by Nevada Assembly Speaker Jason Frierson to restore the right to vote for formerly incarcerated individuals. Attorney General Aaron Ford spoke at the AM&E Church in North Las Vegas about the bill, on Monday, July 1, 2019. (Mat Luschek/Las Vegas Review-Journal)
THE LATEST
More tainted marijuana found in Las Vegas

The Nevada Department of Taxation on Monday issued a health notice after batches of marijuana sold from four Las Vegas dispensaries were found to have fungus, bacteria and high levels of mold and yeast.

Nevada marijuana official placed on leave

A top Nevada marijuana official who has faced criticism over his conduct during the state’s cannabis licensing process was placed on administrative leave last week.

Nevada marijuana license ruling could come next week

A Nevada judge said Friday she expects next week to finish hearing a case involving dozens of companies that lost bids to open new retail pot stores asking her to stop the state from licensing more marijuana businesses.

California to increase enforcement against illegal pot shops

California is planning to intensify its enforcement against the state’s thriving illegal marijuana market, including launching an ad campaign Friday that urges consumers to seek out licensed shops with safe products.

Officials raid 247 Colorado homes growing black market pot

Authorities said Friday they raided hundreds of black market marijuana operations in Colorado that flouted the state’s cannabis law by growing tens of thousands of plants in Denver-area homes and selling the drugs out of state.