Pot sales start in July in Nevada; lagging behind in California

Local municipalities in California are still determining how they’ll approach the sale of recreational marijuana once it becomes legal in 2018, but in Nevada existing medical dispensaries can begin sales in July.

Voters in the Silver State, like those in California, OK’d the consumption and sale of recreational marijuana by adults last November. Policymakers in California have until January 2018 to detemine things like where it’ll be sold and how it’ll be regulated, but on May 8 the Nevada tax board voted to allow existing medical dispensaries to begin selling as early as July 1.

“There are still some questions to be answered about how we’re going to do it, but ultimately, if you’re an adult on July 1, we should be able to help you get marijuana,” said NuLeaf Dispensaries General Manager Eli Scislowicz.

The state of Nevada currently has temporary regulations and permanent regulations for recreational marijuana, and the goal is for the temporary regulations to go into effect July 1, Scislowicz said. The reason, he said, is that when voters approved Question 2 in November, that made it legal for adults to possess recreational marijuana but there were no dispensaries that could legally sell it immediately.

“The idea is to get sales going because basically we’ve created a situation where we’re essentially bolstering the black market currently,” Scilowicz said. “You know, if you tell all adults this is legal for you to possess, but there’s nowhere for you to buy it except at the black market, then basically you’re giving the black market a free ride.”

He also said that it seemed likely that the temporary regulations were put in place to help the government address its budget deficit.

“I believe they (Washoe County) had about a $30 million budget shortfall for their schools alone this year, so I think the governor really wanted to get these sales going so that they could get some of that tax money,” Scilowicz said.

Under the temporary regulations, medical marijuana dispensaries in good standing can legally sell recreational marijuana July 1, but a lot of details still need to be determined, including whether recreational customers will be able to purchase the same products as medical patients.

“One of the big questions in our industry is whether we’re going to be two stream or one stream in terms of inventory,” Scilowicz said. “In Oregon, they’re a single stream inventory which means that if you’re a medical patient or a regular adult use customer, when you walk in the shop, it’s the same menu. The only difference is the tax rate you’re going to be paying.

“In Colorado, manufacturers have to designate a plant at the beginning of its life whether or not it’ll be destined for the recreational market or the medical market.”

Scilowicz said that the potential two-stream system would create challenges for dispensaries because it could complicate their operations, since rather than just estimating the needs of one market collectively they would need to estimate the needs of two separate ones and how they interact with each other.

“Most dispensaries, pretty much everyone in the marijuana industry here is pushing for a single stream inventory,” he said. “The big question is the tax rates.”

In Nevada, medical marijuana is taxed at a rate of 2 percent at each stop in the lifecycle of the product.

“So if you buy something from a cultivation facility it’s 2 percent, whether you’re buying it to produce other finished goods like cartridges or edibles, or you’re a dispensary buying it for the retail market,” he said. “Then, if you buy something from a production facility you’re paying another 2 percent, then so on and so forth down the line.”

Question 2 included a 15 percent excise tax on recreational marijuana sales, so currently state industry leaders are waiting to see if any changes are approved for the taxation of medical products.

“Basically the proposal is let’s just raise the wholesale rate for medical marijuana from 2 to 15 percent so we can blend these inventories and just have the customers pay different tax rates at the point of purchase, and the only way that’s going to happen is if the legislature passes a bill before July 1 to do that, so we’re all kind of waiting to see what happens there,” Scilowicz said.

How the tax structure will be sorted out is only one of many facets of recreational marijuana being considered.

“There are a number of bills tied up in the legislature,” he said. “They’re also looking at consumption lounges, which would be interesting.”

Scilowicz said that he doesn’t believe NuLeaf, which also operates a dispensary in Las Vegas, would be interested in opening such a facility in Incline Village, but he said he understands why it’s being talked about by people.

“I think that was actually asked for by the casino industry in Las Vegas,” he said. “You know, they have a number of tourists that are going to be going there, and they don’t want them smoking in the hotels but they do realize they’re going to do it somewhere so they want to give them a place to do it.”

NuLeaf’s Incline Village dispensary is already bracing for an increase in sales beginning July 1, since they’re the only legal dispensary on the North Shore of Lake Tahoe and already get a large amount of business from the nearby communities in California.

“If you just look at the demographics of the area, it makes a lot of sense. Truckee and Kings Beach have far higher population than Incline Village and Crystal Bay put together, so it makes a lot of sense to me that, that’s where the majority of our customers come from,” he said. “And if you live in Truckee, we’re still the closest location. “

Even if nearby communities in California decide to allow dispensaries for recreational sales, the state doesn’t plan on issuing licenses until January 2018. There are currently no legal medical dispensary stores in North Lake Tahoe.

But Scilowicz said there’s another reason he thinks customers have to visit the Incline dispensary.

“In California, there are no current regulations that force people to test their medicine … Here, our medicine is tested for potency so we get a full THC, CBD, CBN, CBG, a host of other cannabinoids, THCV, and the acidic forms of all those cannabinoids as well as terpene data, which can help you make a decision for what illness you’re trying to treat,” he said.

“That could help isolate what you’re looking for, but also we test for microbiological contamination, we test for pesticides, heavy metals … We know what we’re giving people and we feel very strongly that it is safe. We are the most regulated state in the nation in terms of medical marijuana.”

Amanda Rhoades is a news, environment and business reporter for the Sierra Sun. She can be reached at arhoades@sierrasun.com or 530-550-2653. Follow her on Twitter, Facebook and Instagram @akrhoades.