Two truths that have emerged regarding cannabis sales in Nevada: 1) The sale of recreational marijuana is bringing hundreds of millions of dollars into the state each year; and, 2) Unless a court does something to unwind the 2018 application process for new licenses, Nevadans will lose a significant share of the economic benefits from marijuana sales moving forward.
First, the good news. The first full year of recreational cannabis sales in Nevada generated more than $500 million in gross revenues. Those sales yielded $70 million in taxes for a wide range of needs for Nevadans.
Economists tell us that, in the Las Vegas Valley, each new dollar multiplies 3.5 times before it leaves the local economy. Therefore, the $500 million mushrooms to $1.75 billion — and that is each year before any anticipated growth.
But now a good portion of that future revenue growth may be lost.
When voters passed the 2016 initiative on recreational cannabis sales, then-Gov. Brian Sandoval made a decision to speed up implementation. It was called the “Early Start” program, which quickly awarded about half of the newly available recreational dispensary licenses. The process was simple. The medical marijuana license holders who were in good standing received the Early Start recreational licenses. Because the application process for medical marijuana put emphasis on applicants who were Nevada residents, the resulting pool of recreational owners was comprised largely of Nevadans.
But licensees, like our company, that run by-the-book operations were turned down for the next round of the recreational dispensary licenses in 2018 in favor of out-of-state and foreign interests.
This new 2018 round of licenses granted by the Department of Taxation were graded by temp workers from Manpower with no experience overseeing either the medical or recreational marijuana programs. In a completely opaque process that neither you nor I is allowed to review, those temporary workers granted licenses and a big piece of Nevada’s economic future cannabis tax revenue to large public companies from Chicago and Canada.
You don’t have to have a crystal ball to know that all of the profits from Nevada recreational sales from these companies will go straight to Canada and Chicago.
Here’s the biggest issue. We don’t know why we were denied licenses in favor of foreign interests. The only guidance for evaluating applications in the initiative and statute is “qualifications for licensure that are directly and demonstrably related to the operation of a marijuana establishment.”
This new process created a number of “instant monopolies.” Of the roughly 60 licenses, seven companies, including the companies described above, received about 50 licenses. One of the Chicago companies by itself received 11 licenses.
There are rays of hope. On March 26, Gov. Steve Sisolak and Department of Taxation Executive Director Melanie Young called for increased transparency in the state’s marijuana licensing program. Good. It is only through transparency that Nevada’s cannabis industry can shine as the finest in the world.
Unless the courts act, the Legislature acts or the governor steps in, Nevada citizens will miss out on the cash windfall we deserve.
John Ritter is a member of the Nevada Dispensary Association.