Guest Column: From Certification to Sales, a Look at How and When Nevada’s MMJ Industry Will Emerge

By Amanda N. Connor

In June 2013, the governor of Nevada signed into law a bill allowing for licensed medical marijuana facilities in the state.

Scores of entrepreneurs from both Nevada and existing MMJ markets rushed to get involved, establishing partnerships, writing up business plans and applying for licenses. Yet here we are in 2015, and not one licensed medical cannabis business has opened.

So when will Sin City and the Silver State see their first cultivation facilities and dispensaries? You might have better odds of picking the right number in a spin of the roulette wheel than answering that question, as several aspects of the program are still up in the air.

Here’s an overview of the process and timeline so you can get a better sense of how – and when – the industry will emerge:

Where We’re at Now

Nevada recognizes four distinct facilities – cultivation sites, production plants, labs and dispensaries – and each requires a separate license. Nevada accepted applications for medical marijuana facilities in August 2014 and issued provisional certificates to qualifying applicants in November.

While the state received 519 applications for all four types of facilities, it issued 55 dispensary, 183 cultivation, 118 production and 17 lab provisional certificates.

A provisional certificate does not give the facility the license to open its doors. Rather, it means that the applicant met the merit criteria and ranked high enough to continue in the licensing process.

Applicants who were not granted a provisional certificate will have to apply next year for any available licenses. Those who were granted a provisional certificate still have many steps to complete before they will be granted a local business license to operate.

Local Steps

A group holding a provisional certificate will have to work with both the state and local governments to complete the licensing process.

At the local government level, the applicant will have to ensure that all zoning and business licensing processes are complete. This could include approval for tenant improvements, construction or offsite improvements. Also, the location will have to pass various inspections, including those tied to fire, safety and water.

The end goal for businesses at this level is to obtain a certificate of occupancy and then a local license to operate a medical marijuana establishment.

State Steps

Nevada also requires applicants to complete several key tasks before a state registration certificate (license) is issued.

The applicant is expected to work with the health department throughout the build-out process, and state officials will also inspect the facility.

Also, groups must obtain agent registration cards for all owners, officers, board members, employees and volunteers. Furthermore, they have to obtain an inventory control and tacking system, have it installed and get the state’s seal of approval. Same with a security system, which must meet stringent requirements.

Also, the company’s logo and proposed advertising must be submitted for approval. Only after these, and potentially other, items are completed will a registration certificate be issued to the applicant.

Timeline

So how long will it take for this process to play out? Some people initially predicted that dispensaries would be open by January 2015. That’s not going to happen. Realistically, the earliest the first dispensaries will crop up is late spring.

But even that might be optimistic, as many roadblocks could delay the process.

Lawsuits might present the biggest challenge. The application process was intensive and costly. As a result, many groups that did not receive a provisional certificate have filed suit, claiming that errors occurred during the application review and ranking process.

We’ve seen this play out in other states such as Arizona and Massachusetts, and in some of these markets legal battles held up the licensing process for a significant amount of time.

Also, the build-out and grow times of cultivation facilities factor heavily into the timeline, as a dispensary can only sell products that were grown and manufactured in state-licensed facilities. So it will still take several months for supply to hit the market after the first cultivation sites start planting.

Finally, labs will have to be operating and have their testing procedures approved by the state before any sales can occur.

Given these uncertainties, there’s no way to give a definitive answer as to when the industry will emerge. However, my best guess would be that a Nevada patient will be able to legally purchase medicine in late 2015.

Amanda N. Connor is an attorney in Nevada who provides advice and legal representation to the cannabis industry.

13 comments on “Guest Column: From Certification to Sales, a Look at How and When Nevada’s MMJ Industry Will Emerge
  1. georgia hedrick on

    What I see missing in all this process is documentation concerning which sorts of MM helps which sorts of diseases, pains, problems etc.

    What amazes me is that as Alzheimer’s disease is on the increase, and research as to how cannabis can slow down A.D. and even change it, there is no mention made. Yet, there are over 333,000 hits on the studies being done in this area of slowing down and even stopping its development through the use of cannabis.

    Yet Nevada wants to play games with the brains of the elderly by fearfully fueling the minds of the public with how NV will check into the cannabis (MM) licenses. When will the real WAR ON ALZHEIMER’S BEGIN????? gh

    Reply
  2. Brian on

    Amanada, there is another way that dispensaries can get open, and that is to purchase inventory from current cardholders. Each cardholder is allowed to make ONE sale to a dispensary or cultivator. The purchasing MME must then have the sample lab tested as with any other inventory.

    This means that dispensaries can theoretically open once labs are open without the cultivation delay. It’s a good way to hang an “open” sign on your door, but the cost of lab testing patient-sized purchases will be huge.

    Reply
  3. Van on

    Amanda, you’re wrong about time it takes to grow. A modern site such as in Colorado is producing 120lbs a week. 1 month for a less advanced system and maybe 3 months for an antiquated system.

    Reply
  4. Brian on

    Van, you are correct that an established cultivator can take weekly harvests. But it doesn’t change the fact that between the first clone, the first harvest, the first lab test, drying and curing, the second lab test, then the first retail packaging session, and the first sale, there is a minimum 6-8 week lead time. Minimum. If the clones they start are rooted, vegged, and ready to flower.

    Once the place is operating, and there are plants basically on a conveyor belt, they can stagger their starts and keep a constant harvest going. Day one takes much longer to reach than day 2.

    Reply
  5. M on

    I am a licensed cultivator and producer in Nevada and have to say this is the most well written, most accurate piece I’ve seen yet. Great job Amanda.

    Reply
  6. Amanda Connor on

    Brian,

    You are correct that a patient can sell to a dispensary. However, a patient can only sale 2.5 ounces of marijuana to the dispensary and that batch must be tested. Therefore, as you note, it will be very costly for a dispensary to operate and most likely would not be sustainable for any significant period of time.

    Van, you are correct that harvest times can be staggered. However Nevada cultivation sites are expected to start up with only seeds or plants donated by Nevada patients. Therefore, the ramp up time initially will be more than a few weeks.

    M, congratulations on receiving the provisional certificate and thank you for your kind words.

    Reply
  7. Brian on

    Amanda, you have what’s IN the regs about patient sales, but you left out what the state did. What mechanism is there in place to track each patient’s single sale? Not even punching a hole in the cards. While a patient my sell once, they may DONATE repeatedly. Nothing preventing a dispensary from paying $10000 for 2 1/2 ounces, then having the patient come back and “donate” for a while. The patient may sell to multiple dispensaries – again, no tracking. Patient generated inventory is absolutely an option if your goal is to be “first” to open. It is not a viable way to manage the business long term.

    Reply
  8. Van on

    Thanks for the info Amanda. Unfortunately I live in northern Nevada. I would imagine they’re 6 months to a year behind southern Nevada. My contacts have dried up so it looks as though it’s back on the morphine.

    Reply
  9. M on

    Brian,
    What you are suggesting technically makes sense, but also somewhat falls in the category of diversion, which is something I doubt a dispensary wants to do considering A) They will be operating under a microscope B) They will have spent upwards of a million + to get up and running and will be relying on patients C) There is no way patients will be able to meet the demand.

    Reply
  10. Amanda on

    Zayuh,

    Collectives are not allowed under the Nevada law. Currently patients can grow their own medicine and when these licensed medical marijuana establishments open, patients can purchase product from a dispensary.

    Reply
  11. Amanda on

    Brian,

    It is my understanding that each patient sale and/or donation will have to be tracked by the dispensary (or other MME) based on the patient’s identification number.

    Reply

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