Gone to pot
Medical marijuana will be competitive business in Nevada
Just two days before Christmas, early on a Monday morning, dozens of people showed up to video-linked meeting rooms in Carson City and Las Vegas to talk about marijuana. The scene was rather different than the typical marijuana party depicted in movies or TV. The discussions centered on bureaucracy, regulation and taxation, rather than psychedelic music, snowboarding or nachos.
Discussions that focus on business concerns make sense, since marijuana will soon be a legal business in Nevada, within certain parameters.
In 2000, Nevada voters approved the medical use of marijuana. But patients were only allowed to possess a few plants, and the law did not establish legal “dispensaries,” places to purchase medical marijuana. Patients were placed in the unusual position of having to cultivate their own medicine—something that would be inconceivable to the users of other medications, like insulin or penicillin. Finally, last year, after the Nevada Legislature passed a bill sponsored by Sen. Tick Segerblom, the law was amended to accommodate up to 66 legal dispensaries, distributed among the state’s counties based on population, with the bulk allocated to the population centers in Clark and Washoe counties.
The meeting on Dec. 23 was a public workshop hosted by the Nevada Division of Public and Behavioral Health, the agency responsible for establishing the program, to hear public comment and suggestions about the proposed regulations of the new industry. Potential business applicants hoping to open dispensaries—or, more accurately in many cases, the lawyers and lobbyists representing the applicants—commented on regulatory minutia. Some commentators seemed perturbed by the perceived foot-dragging on the part of state and especially local officials in implementing the new medical marijuana program.
“It’s almost as if there’s a piling of red tape on red tape that’s going on here,” Las Vegas attorney Patrick McDonnell said at the hearing. “We’re seeing a lot of almost obstructionist reaction from the local jurisdictions to the will of the people as carried out by the state legislature and as being carried out by the Nevada Division of Health.”
Deputy Administrator Marla McDade Williams says the division is on schedule with establishing the program.
“The legislation that enacted in the 2013 legislative session authorized establishments to be certified in Nevada,” McDade Williams said. “The law is effective April 1, 2014. Contained in that law was a provision requiring us, the Division of Public and Behavioral Health to adopt regulations by April 1, 2014. So that’s the process that’s been ongoing. It’s on target. We’re not going to miss that deadline. Where there’s a difference in expectations, I think, is that people saw April 1, and thought, ’Well, that’s when they have to start certifying establishments.’”
McDade Williams estimates that it will be late summer or early fall before certified dispensaries will actually be open to the public and able to provide patients with medical marijuana. She says that though the budget for the operational staff to oversee the program has been approved, they still need approval for administrative staff. Additionally, they won’t be able to fill the positions already created until March 1.
The Division for Public and Behavioral Health is maintaining a comprehensive online archive of documentation about every regulation and step of development in implementing the program, including video of the public hearings. It can be found at health.nv.gov/medicalmarijuana.htm.
“We want everybody to have the same set of information,” McDade Williams said.Dispense with the formalities
Despite the extensive public record of information, many prospective operators of medical marijuana dispensaries are hesitant about openly identifying themselves to the media.
“What you’ll find is that most people working on this, myself included, are not comfortable putting our clients out in front of media at this point, because this is a game where everybody’s going to be playing their cards close their chest,” said one lobbyist who asked to remain unnamed. “It’s going to be incredibly competitive, and any information shared in the public realm is going to give potential competitors, essentially, information.”
“A lot of law firms are involved, and they’re not going to come out with their client,” said Peter Krueger, founder of the Nevada Medical Marijuana Association (NVMMA), a newly established trade and lobbying group, representing the various business segments of the medical marijuana industry. At this point, according to Krueger, they are primarily working to spread information and prepare clients for the application process.
It’s difficult to speculate on exactly how many people plan to apply for the 10 dispensary licenses available in Washoe County. But with only 66 dispensaries planned statewide, and about twice that many people—many of whom are likely applicants—attending the Carson City and Las Vegas hearings on Dec. 23, it’s going to be very competitive.
One person who wants to open a dispensary is Shane Smith, a Sacramento native who spent a lot of time in Northern Nevada as a kid, visiting family in Fernley and Hawthorne. He has operated medical marijuana dispensaries in California and Arizona.
“A lot of people are being kind of quiet about it,” said Smith. “But there’s huge competition in the market right now. There’s a lot of big names locally that want to get involved. There’s a lot of action backstage. … But you do want to build a rapport with your community. That’s what we’re trying to do—build a rapport with Reno and Northern Nevadans, and letting them know who we are. I don’t think being as quiet as possible is necessarily a good thing when it’s going to come down to merit-based applications—who you are and what you’ve done for the community.”
This month, Smith is opening Elements Cannabis Center, 2005 Sierra Highlands Drive, 378-2894. Though not a dispensary, Elements will offer medical marijuana examinations, as well as the notary and fingerprint process patients need to complete in order to apply for a medical marijuana prescription. It will offer educational classes from lawyers and law enforcement about medical marijuana, as well as other events. It’s grand opening is Jan. 27.
Elements will also sell Cannabidiol (CBD) products. CBD is a cannabis compound that contains many of the medical benefits of marijuana—used to treat seizures, OCD, ADD, Alzheimer’s, insomnia and more—without the psychoactive effects. It’s legally available without a prescription or age limit throughout the United States.
“People can come in and get a dispensary atmosphere and still receive meds without that extreme stigma that’s been attached to it for so many years,” says Smith. “For all our geriatric patients in the Northern Nevada area, most of them belonging to things like the Red Hat Lady clubs and normal things like that, they don’t want to be known as a pot smoker, but they still want to treat their arthritis. This product is actually perfect for that.”
“Shane has a business plan that to me makes sense,” says Krueger of the NVMMA, which represents Smith, among others. “His business plan is to create essentially a community center. It will not at this time, because there’s no provision of law, sell medical marijuana. But he does plan to sell hemp extracts, which are perfectly legal. They’re less than 1 percent THC. These are what are called CBDs and CBGs. These are all the extracts that have less than 1 percent of the THC in them. You can buy them on Amazon. You can buy them at Walmart, or health food stores. His idea is to encourage people who are medical marijuana users to come and learn about products at this point. It will be educational. It will also be educational for the public. That way, I think he hopes he will begin to get a good reputation, knowledge in the community that he’s there as a solid member to do everything within the law.”On its own merit
The dispensary licenses will be awarded on a merit basis, according to McDade Williams.
“The key part of the application process is specified in sections 25, 26 and 27 of the draft regulations that we put forward,” she said. “It somewhat mirrors the enabling legislation and sets up some level of expectation about what we’ll be expecting when we move forward through the application process. The experience of the partners and the owners that are going to seek a certificate—what is their experience with medical marijuana? What is their experience managing a business? That’s one of the key areas that people will have to respond to, and then they’ll have to propose their operational plan. They’ll have to disclose a location when they come and submit their application. They’ll have to have done a lot of work prior to that time to ensure that where they intend to locate is going to be an authorized location for them, because if it’s not, even if we approve their application and the local government doesn’t, then we will deny their application. So they have to make sure they’re doing due diligence at the local government level.”
Other things potential operators will need to address include how they intend to train staff and oversee products—which will be closely regulated in Nevada. Unlike in some other states that have implemented medical marijuana programs, in Nevada, the products will be subject to label testing and standardized labeling. This will help patients be aware of the strength and dosage of their medication.
“Anybody who intends to operate a lab to test marijuana must not be affiliated with any of the other establishments,” said McDade Williams. “That’s specified in the bill and codified now in the Nevada Revised Statutes. We’ll take that very seriously. … We’re learning from other states’ experiences.”
“The real wild card in this whole thing are the local governments,” said Krueger.
The county and city governments have had a wide variety of reactions to the state’s implementation of medical marijuana (see “Taking their time,” News, Jan. 2). Many local governments, including Washoe and Clark counties, are following the state’s lead—albeit somewhat hesitantly.
“Many of the municipalities and counties have taken a wait-and-see attitude,” said Krueger. “They’re waiting to see what the state comes up with.”
But some local governments have been outright hostile to the idea. Lyon County’s Sheriff Allen Veil sought an ordinance banning dispensaries.
“Lyon County says no way in heck, but then you have cities in Lyon County that are really interested—for one, Fernley,” said Krueger.
There are many aspects of the program that might displease either side—those for medical marijuana or those against it. For example, marijuana will be taxed—the only medication taxed in the state. Another problem is banking. Marijuana is still illegal at a federal level—and though the Obama has, somewhat inconsistently, claimed not to prioritize enforcement of marijuana laws, federally insured banks are still very hesitant to work with medical marijuana dispensaries.
“I think there’s going to be lots of attempts to tweak the bill,” said Krueger. “That’s understandable. … There will be attempts by some local municipalities to say, ’We’re not going to do this.’ Currently, under the law, that’s their right. In the long run, though, 10 years ago, the people voted for access to medical marijuana, so whether that will be sustained in legislature, I don’t know. Additionally, there will be an attempt in legislation, and my guess is it will fail, to allow for recreational use, like in Colorado and Washington. I don’t see that passing the Legislature because, as you know, the original bill only passed by one vote. I think legislators in both parties are going to say, ’Well, let’s wait and see what goes on in Colorado.’”
Regardless of what happens in the Rocky Mountain state, though, Nevada medical marijuana patients will no longer be required to manufacturer their own medicine.