A banner start as Nevada launches recreational marijuana sales

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By Bart Schaneman

Nevada recreational marijuana sales began with a bang this past weekend, with store owners reporting that purchases far outpaced those of medical cannabis as the state became the fifth in the nation to offer adult-use products.

After the doors opened at 12:01 am Saturday, dispensary owners reported, hundreds of customers flooded their stores each of the first two days of sales, with shoppers snapping up edibles, flower and vape pens.

Residents, tourists and even shoppers from neighboring Utah participated in the buying spree, taking advantage of an early start to Nevada’s adult-use cannabis program. One dispensary operator said adult-use purchases were about 10 times more than those of MMJ on a typical day.

Such consumer enthusiasm is expected to generate tens of millions of dollars in new sales for Nevada retail marijuana businesses through the second half of 2017.

Dispensary operators in Nevada’s largest city were especially busy. Larry Doyle, owner of Euphoria Wellness in Las Vegas, said his store averaged about 675 rec customers Saturday and Sunday. Euphoria was forced to turn away about 200 people at 3 a.m. Saturday, which was a six-figure day in sales, according to Doyle.

“It was so overwhelming I don’t think the staff had a great time,” he added.

Looking ahead, store owners said they believe they have enough product on hand to meet demand in the coming weeks. But after that, it’s an open question, owing to a simmering legal dispute with alcohol wholesalers.

In particular, Nevada’s rec industry could grind to a halt if the state can’t soon come to terms with alcohol wholesalers over who can distribute recreational cannabis. Without a resolution to the distribution issue, adult-use sales can continue only as long as the dispensaries’ medical cannabis supplies last.

Early start to sales

Nevada’s voter-approved adult-use sales weren’t expected to begin until 2018. But state regulators gave the rec industry a jump-start by allowing medical marijuana dispensaries to apply for licenses to sell adult-use cannabis from July 1 until rules for a full-fledged market are finalized in January 2018.

As of Friday, the state had licensed 44 dispensaries to sell recreational marijuana, including 39 in the Las Vegas area.

The state’s financial opportunities from rec marijuana are vast, with Las Vegas receiving over 40 million visitors alone each year and an estimated 290,000-320,000 in-state customers.

Rec marijuana sales are projected to range from $75 million to $150 million and overall marijuana sales are expected to generate $120 million-$205 million for the year, according to the 2017 Marijuana Business Daily Factbook,

So it wasn’t surprising when licensed retailers opened their doors last weekend that recreational cannabis sales quickly outpaced MMJ sales at dispensaries with adult-use permits.

A big day

“It was a festive, celebration atmosphere,” said Andrew Jolley, owner of The Source dispensary and retail shop in Las Vegas. “It was just a great experience overall.”

Jolley said his store had over 1,000 customers on Saturday and more than half that on Sunday. His workers operated seven cash registers and were able to keep the line manageable all weekend, Jolley said. He declined to disclose sale figures.

Claudio Iturriaga, chief of staff at Reno-based Sierra Wellness Connection, said the store made over 800 transactions on opening day, but he also declined to give sales totals.

At Oasis Cannabis in Las Vegas, CEO and co-founder Ben Sillitoe said his shop made about 600 transactions, with 800-1000 people coming through the store. Many customers came in groups, he said. Though Sillitoe wouldn’t disclose sales figures, he said rec purchases were about 10 times more than a normal medical marijuana day.

Blend of locals, tourists

Nevada’s opening weekend saw a mix of local and out-of-state customers, especially in Las Vegas.

“We’re down by the Strip, so we’ve seen a lot of tourists,” Sillitoe said. He estimated about half his customers were tourists, with a mixture of foreign and domestic visitors.

Jolley said the bulk of The Source’s customers were locals. He attributed the turnout by locals to a strong patient network and positive word-of-mouth. “We had a really strong medical base of people,” he added.

Doyle’s customers were about 75% local, which he credits to his location in a mostly residential area.

In Reno, Iturriaga’s customers were 90-95% local.

And in southeast Nevada, residents from nearby Utah were among those who crossed the state line, reportedly accounting for about half of those lining up Saturday morning at a dispensary in the town of Mesquite.

Standout products

Sillitoe, with the shop near the Strip, said most Oasis Cannabis customers were buying edibles, which he attributed to the difficulty of consuming smokable marijuana products in casinos and hotels.

It remains illegal in Nevada to consume marijuana in public, including the Strip and hotels and casinos. Violators face a $600 fine.

“Edibles seem to be little more popular than they were under medical,” he said. “It’s a lot easier to consume that in a public place without anyone knowing or offending anyone.”

Jolley’s customers might have followed suit: The Source’s sales included a lot of disposable vape pens. He said he thought consumers purchased vape pens because they are more discrete and convenient than smoking flower.

Reno consumers seemed to buck the trend.

Iturriaga’s Sierra Wellness Connection sold more flower than anything, particularly the Pineapple Express strain. Iturriaga also saw strong sales of Dixie products, including the elixirs.

Doyle’s customers didn’t seem to be trending one way or another.

“They were buying everything,” he said.

Supply staying strong

It’s been only a few days, but Nevada retailers aren’t yet worried about running out of adult-use cannabis products before the distribution issue is worked out.

Sillitoe said his supply of rec cannabis products should remain strong for the foreseeable future.

“We’ll possibly run out of a few items,” he said, “but we’ll remain well-stocked for at least a month.”

Jolley’s store is fine for now.

“If this goes on for months,” he said, “we’re obviously troubled.”

Doyle concurred.

“It’s fine right now,” but it’s not going to last, he said. “I’m worried, but I believe a compromise will be reached.”

Indeed, a tax department spokeswoman expects some distributors to be “licensed within the next three weeks or so.”

Reno’s Sierra Wellness Connection is vertically integrated, and having its own cultivation facility is providing some peace of mind.

“We think we are going to be able to make it,” Iturriaga said. “We did a lot of preplanning for this, so we’re in pretty good shape.”

Bart Schaneman can be reached at barts@mjbizdaily.com