Cultivators before the Nevada Tax Commission on Tuesday lamented the number of dispensaries that have begun growing their own marijuana, saying that they had for years kept the medical marijuana market supplied with Nevada-grown weed.
Many of Reno’s dispensaries, for instance, are vertically integrated, growing product in a warehouse facility separate from the storefront or they are soon to go online with their own cultivation.
Marijuana plant clones are seen at the Sparks-based cultivation center where Tahoe Reno Botanicals grow operation and Tahoe Reno Extractions lab is based on Feb. 24, 2017. (Photo: JASON BEAN/RGJ, RENO GAZETTE-JOURNAL-USA TODAY NETWORK) Buy Photo
But the new regulations could shut cultivators out of the industry, they argued. Cultivators traditionally grow marijuana to be sold to dispensaries, which in turn sell the product to the public.
She added that ultimately the department awarded all licenses based on a set of criteria outlined in the regulations, which set industry standards for things like testing, labeling, delivery and security for the recreational marijuana industry. The department favored establishments that had the best histories of compliance, taxation and overall experience.
Nevada Department of Taxation Director Deonne Contine said that there was little that her department, which oversees the burgeoning industry, could do. The original ballot measure, Question 2, that legalized adult-use marijuana a year ago outlined strict rules for the license application process during the first 18 months of legalization. Those rules include a set of guidelines on how to rank applicants, and those guidelines tend to reward those who previously have operated a similar business.
“A lot of dispensaries are going online with their own cultivation, and we go to them and they ask, ‘Why should we pay $2,500 a pound when we can grow our own for $700,'” said Mark Bradley, also a Las Vegas-based cultivator who applied for a retail dispensary license. “I’m worried that our business isn’t going to last another 18 months. These were mini-monopolies that were created.”
Only medical marijuana establishments, for instance, are allowed to apply for recreational marijuana dispensary, cultivation and production licenses, Contine said.
While many medical marijuana cultivators applied for both a recreational marijuana cultivation license and a recreational marijuana dispensary license, there are far fewer of the latter licenses available. Because there is no cap, however, on the number of cultivation licenses allowed, many dispensaries were able to get cultivation licenses.
Nevada's marijuana cultivators say that they are being squeezed out of their own industry.