This Saturday, July 1st, will mark the first day of sales for adult-use cannabis in Nevada. In order to swiftly launch the state’s program, generate immediate tax revenues, and edge out other states that approved recreational markets last November, namely California, Governor Brian Sandoval signed off on a plan to fast track a market in Nevada before permanent regulations go in place at the start of 2018. That means that residents, and, perhaps more importantly, visitors, will be able to legally purchase cannabis starting this Saturday. In order for Nevada to move from November’s Election Day legalization to adult-use cannabis sales in less than eight months, the state relied on currently licensed medical marijuana dispensaries to open their doors to adult-use customers. For the 60 currently licensed businesses state-wide, who have, until Saturday, relied upon a relatively sparse market of about 30,000 Nevada resident medical patients, (and visitors with medical cards from other states, a reciprocity program unique to Nevada), the opening of adult-use sales marks an exciting market expansion. Last year’s Independence Day tourism boon is estimated to have totaled over 300,000 visitors, carrying a spending bill of more than 200 million dollars, and if the state sees similar tourism spikes this year, dispensaries will likely be celebrating record sales by weekend’s end.
The kickoff has not gone without early legal drama. With the July 1st deadline fast approaching, state regulators sought to approve distribution licenses for medical cannabis providers, but liquor wholesalers balked at what they argued was an illegal abdication of their exclusive statutory right to distribution in the adult-use market. On May 30th, a group of liquor wholesalers, the Independent Alcohol Distributors of Nevada, successfully argued for a restraining order in the Nevada District Court in Carson City, convincing Judge James Wilson that the ballot measures approved last November granted them exclusive rights for the distribution of cannabis during the first 18 months of the legal-use market. That ruling dropped the number of recreational distribution applicants from 93 to 5, only a month before Saturday’s big opening day. On June 20th, that initial ruling was reaffirmed, with Judge Wilson rejecting the state’s motion to dismiss the suit. The majority of those distribution applicants who have been pushed out by the ruling are from the medical cannabis community —who as the existing logistical base for cannabis in the state stand to serve as the most natural transition team for the debut of adult-use sales. With the state’s cannabis cultivation facilities already operating at a surplus, supply should not be a problem, but how it will successfully make it to retailers remains a major issue.
These distribution questions have created doubt as to whether the July 1st debut would come to fruition, but dispensary owners are doing everything in their power to be prepared for a successful opening day. At this point it seems likely that Nevada will see its first weekend of legally sold adult-use cannabis, adding to an already grand mix of fireworks and Independence Day celebrations in a town made famous for its excesses. What is still unclear is how shops will continue to provide for customers, both recreational and medical, as supplies run down. Opening days in other legal states have seen long lines and major opening day sales totals, but it’s tough to predict exactly what an opening day on July 4th weekend in Las Vegas, Nevada will look like.
This weekend will certainly provide cause for celebration, but these distribution questions are not going away, and could result in shortages and impacts on Nevada customers, patients, businesses, and tax revenues sooner rather than later. It all depends on how grand the celebration is, but judging by the location, bets are on the former. This means the state will need to correct any distribution woes before supplies dry up.