Week in Review: More Marijuana Licenses in WA, Huge Sales Spike in CO & Supply Issues in NV

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By John Schroyer

Washington State signals it could grant licenses to hundreds of medical marijuana businesses, Colorado cannabis retailers get a huge boost from an MJ tax holiday, and the first Las Vegas dispensary reopens after experiencing inventory issues.

Here’s a closer look at several notable developments in the marijuana industry over the past week.

Washington Rec Shop Boom?

How many Washington State dispensaries will successfully make the transition to a regulated market?

Potentially hundreds.

Brian Smith, spokesman for the state’s Liquor and Cannabis Board, told a radio station this week that the agency doesn’t have a cap on the number of business licenses it can dole out. He added that roughly 400 unlicensed, unregulated dispensaries currently operating in the state could be eligible for licenses under the state’s rec program.

Dispensaries are still in a holding pattern while waiting for the state to come out with new guidelines for businesses that want to focus on the medical side of the cannabis market, but those that want to remain operational will eventually have to obtain licenses.

All these businesses will have to choose whether they want to comply with possibly burdensome new rules to retain their medical standing, transition to selling recreational cannabis or shut down entirely if neither option is feasible.

“I think a lot of people will make the conversion to straight recreational,” said Brian Caldwell, chair of the Northwest Producers, Processors and Retailers Association. “I think people will take the path of least resistance… It’s going to be hard for people to conform to the regulated market, but then you have the complexity of medical guidelines.”

Given that there’s no real indication yet from the state on what will be required of MMJ-focused businesses, everything is still up in the air, said Seattle cannabis attorney Ryan Agnew. He suggested that unless the agency decides to go with rules that are “really burdensome,” many dispensaries will try to obtain medicinal certifications to sell MMJ as well as recreational cannabis.

One factor that could come into play: Municipalities will likely try to limit the number of both rec stores and dispensaries permitted within their borders. That could lower the number of dispensaries that will be able to get licenses.

“If we talk about Tacoma, it has within city limits eight rec stores, and about 60 medical dispensaries. They’ve said they’re going to allow for up to eight medical stores to stay,” Caldwell said, meaning dozens would have to close.

Holiday Huge for Colorado Companies

Thanks to a complex tax law that led to a duty-free day of recreational marijuana sales in Colorado, retailers saw a big boost in traffic and sales on Sept. 16.

“It was a home-run day,” crowed Bruce Nassau, the CEO of Tru Cannabis, which operates five shops in the Denver metro area.

Nassau said that his shops on average saw around double the business that they usually get on a given day and were also able to save big on not having to pay a standard excise tax that’s levied when cannabis is transferred from grows to shops.

“That was what you call icing on the birthday cake,” Nassau said.

He estimated that Tru Cannabis locations sold $40,000 on Wednesday in cannabis flower alone, not including sales of edibles, concentrates or other products.

Andy Williams, the owner of Medicine Man, said his two shops also had a banner day, netting about $100,000 in total sales. The average purchase, he added, was up by around 25%.

“It was great,” Williams said. “I don’t think it was as busy as 4/20, but it was still very busy. It’ll be in the top three (sales days of the year), probably.”

Depending on whether or not state legislators figure out a way around tax law requirements for coming years, the tax holiday may even become an annual event.

“I think it’ll be every year for a while,” Williams said.

Nevada Supply Questions

Strict testing requirements in Nevada could lead to either big issues down the road for dispensaries or some of the cleanest, highest-quality MMJ on the market.

That’s probably the biggest takeaway from the temporary closure of the first dispensary to open in Las Vegas.

Euphoria Wellness, which opened on Aug. 24, was forced to temporarily close due to a lack of inventory. Much of the cannabis Euphoria purchased from a licensed grower reportedly failed to pass muster at a local cannabis testing lab.

The state has a “zero-tolerance rule” when it comes to contaminants, according to the Las Vegas Review-Journal. Growers therefore will have to adjust their cultivation practices, stop using pesticides, or take even more laborious steps to ensure that their operations are both profitable and legal.

The consequence of this could be that Nevada patients – and other MMJ customers who visit Las Vegas – can expect the cannabis they purchase to be either at or even beyond organic standards. But it also could mean supply shortages for at least the near future, as Euphoria’s temporary closure demonstrates.

The real question is, will there be enough product approved by testing labs to supply more dispensaries that are planning on opening in coming months? And how long will it be before the Nevada market adapts and stabilizes?

John Schroyer can be reached at johns@mjbizmedia.com