Behind Nevada’s 200% Marijuana Price Increase


Since Nevada began legal recreational marijuana sales on July 1, ongoing distribution issues and record sales have led to a 200-percent increase in marijuana prices. Ben Horner, general manager of Friday Night Inc., a Canadian cultivator whose Alternative Medicine Association (AMA) subsidiary is located in Las Vegas, and Mark Zobrist, managing partner of AMA, point to a shortage of supply to meet the increased demand and high taxes as major factors in the rising prices.

“All the other cultivations in town that I’ve talked to are definitely selling as fast as they can grow it, so it’s a race to expand right now and get that product to shelves,” Horner said in an interview with Cannabis Business Times. “The taxes that the state’s imposed on the flowers, pre-rolls and trim is also keeping the costs high, much higher than normal.”

“It’s available for recreational use now, so you do not have to have a medical card, which creates a much bigger population that can use the product,” Zobrist said. “The demand is … higher, and whenever you have higher demand and lower supply, you’re going to have increasing prices.”

In an interview with Cannabis Business Times, Geoff Doran, co-founder and vice president of business development at Colorado-based online cannabis wholesale platform Tradiv, offers additional insight on the state’s cannabis-related economic issues, providing tips on how both businesses and other states can avoid a similar situation in their markets.

Cannabis Business Times: What factors have led to this extreme marijuana price increase in Nevada’s market?

Geoff Doran: There [are] quite a bit of factors playing into this, and it’s nothing that Nevada, as a state, did. … I have to give them a lot of credit. They really fast-tracked the [adult-use] program in their state, which is something to be applauded. …

[Nevada has] had some issues with figuring out … logistics … or their supply chain, but I don’t think [logistics are] a major factor on why the price probably went soaring all the way up to $2,800 to $3,200 per pound. It’s certainly something to note that without a true distribution model in place right from launch, it’s going to be … hard to get the product from point A to point B. And if it’s not figured out, it’s going to cause some trip-ups. … [But] I see the transportation problem being a small percentage of the problem. Of course, there is a major need for transportation as we know first-hand here in Colorado, but there are other major factors to add into the equation. The first one is the lack of solid data to base very accurate analytical decisions on because we have an industry coming out of the shadows to the light.

Without solid information, the regulators have a tough job deciding on how many cultivation licenses they should hand out. There lies the problem with most states. It’s really hard to decide whether to set a limit on cultivation licenses or … have what I like, which is a true open market and let Mr. Market create the correct amount of inventory for the demand.

I also think that as a country we’re very naive about the amount of true cannabis consumers there really are out there. With that said, I think the regulators and the industry misjudged the plant count/licenses. The other factor is that, you have a lot of the growers who may have moved from a basement grow to scaling to 10,000, 20,000 and more square feet. This major change takes a little bit of time to dial in the yields and processes to bring the proper amount of cannabis to the consumers.

Unfortunately, it’s a perfect storm of distribution issues and probably yield shortages. It’s hard to expect a grower that just moved into a new building … to bring a perfect grow to the world. That’s basically like asking an athlete to get to the competition, put their uniforms on and immediately start playing without zero warm up.

CBT: How have the rising prices been affecting producers and retailers?

GD: For the dispensaries, it’s got to be a big pain because at the end of the day, we all work for the consumer. … Also, the beauty of cannabis is that there’s also the wellness factor. So there are patients out there, and it’s got to hurt the dispensaries when they have to bring up the prices just because [they] may have to pay $2,800 to $3,200 per pound. Most of them are small- to medium-sized businesses, so they probably don’t want to pass that buck on to the consumer or patient, but a lot of times, it’s a matter of survival for some of these businesses because they’re just getting up and going, so they don’t have a lot of reserves to lean on when prices are fluctuating like they do in cannabis. …

On the cultivation side, it’s got to be a pain because … they know that they have the sales there, and they want to get the price … and they know that they could really be helping and fulfilling orders. But they also have to work against getting it there with the distribution problem going on right now.

… It’s just that the supply chain has not been filled out and so that’s got to hurt on both sides, whether you’re a cultivator or a dispensary.

CBT: Can anything be done to alleviate the rising prices?

GD: I think so. … I think it’s just a matter of sitting down at the drawing board again and saying, “OK , let’s look at the gaps that need to be filled. Let’s look at the foot traffic, and really do a true economical study on the dispensaries.”

The state of Nevada has a really unique … tourist season, just like California would have and Colorado has, in the wintertime and in the summertime. What would alleviate the situation would be for the regulators to roll up their sleeves, meet with a lot of these cultivators, meet with the dispensaries, and see how many more plant counts they can add [for] the current cultivators. Maybe it’s opening up 20 to 50 … new cultivation licenses. … But again, it’s not one of those immediate solutions because the cycle for cannabis takes three months for a full grow. …

CBT: What other obstacles, besides the rising price of marijuana, do producers and retailers in Nevada currently face?

GD: I think the one main issue right now is obviously they have a distribution/transportation issue that needs to be solved immediately. …

But the other one that I don’t think a lot of people think about is that different climates are going to affect … some of the cultivators. And to give you an example of what I mean, for instance, there’s been kind of a lull in the medical market in the last few weeks here in Colorado, and just talking to a lot of our cultivators and talking to a lot of people in the industry, … one of the factors that we’re seeing, and I think this is probably what they see in Nevada, is that in the summertime, the cost of HVAC or just airflow is going to go up because it’s hotter on the outside.

And so I imagine with Nevada, we just got out of the summer, and they probably had lesser yields. They’ll probably have a little more coming up in the wintertime, because it’s less cost to cool the entire facility. And if you have a facility at 10,000 square feet and in the middle of the desert, it’s going to cost a lot of money, along with water issues. I think those are some of the issues that Nevada’s probably facing right now, … just the electricity, water and proper airflow. So [if climate isn’t perfectly regulated due to costs], that brings down the yields, … not significantly, but it does bring down yields in the summertime. I think those are a couple of those issues, along with just growing pains . …

CBT: Can you compare this to a situation you have seen in another state and tell me how that state resolved the issues?

GD: … We’re a mature market here in Colorado, but we’re still seeing … a distribution problem here in Colorado. … Not as bad as Nevada, but two weeks ago there was only one courier operating, and … to alleviate that situation, the regulators really jumped on it fast, and they were reviewing as many licenses and applications as they [could]. …

Just like anything in life, communication is everything, and when a law is passed, the regulators really have a tall order to make sure that every participant and applicant knows what needs to be done in order to be an up-and-running business because what happened with the couriers is … they had a whole year to plan, and only one had all the proper paperwork together … that goes with the transportation license, and so you really can’t blame it on the two sides. To alleviate the situation, we really need to make sure that we’re, as an industry, talking with the government as much as possible. At the end of the day, if we’re going to be able to play in this industry … we’ve got to continually learn how we can teach regulators about our industry so they can make very viable and important decisions to help us grow. …

CBT: What steps can licensed producers and states take to avoid a similar scenario in their markets?

GD: One of the things that they can start doing now … is … start looking into the future because what … I’ve seen … happen in Colorado, Washington and Oregon is…—although [the price per pound may start off] really high , and they’re, for the most part, enjoying those profit margins—the glory days will come to a very fast halt, just like anything. I wouldn’t say [cannabis] is a commodity yet, but it’s certainly pretty close. … We saw in 2015, October, in Washington, even in 2014, [that] prices [were] at that $2,800 to $3,200 mark, and right now … it’s down to $1,000, and … [cultivators in Nevada and other states] should … be prepared for the price to drop. And the way they can make sure they’re ahead of the game is looking at technology.

… So if they’re really smart right now, and forward-thinking cultivators, they should start preparing now. And the way to do that is to use agricultural tech. … If [cultivators] don’t have their procedures dialed in and their technology to give small- to medium-sized businesses advantages, they’re not going to be making the profit margins they need to survive.

Editor’s Note: This interview was edited for length and clarity.

Top image: © Marko Bukorovic | Dreamstime.com



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Licenses for medical marijuana see decrease in Colorado, while recreational ones increase


The number of active marijuana business licenses hit an all-time high of 2,971 in Colorado this year, according to the Colorado Marijuana Enforcement Division. But, medical licenses have actually seen a two percent decrease in the last year.

According to the latest Colorado Marijuana Market Report, medical marijuana businesses made up 54.5 percent of the active marijuana business licenses in 2016. That number is now down to 52.5 percent.

Meanwhile, the report shows recreational marijuana businesses have increased by two percent, up to 47.5 percent this year from 45.5 percent last year.

Paul Seaborn, an assistant business professor at the University of Denver, produces the quarterly Market Report. It keeps track of business licenses, the cities with the most licenses, and the companies with the most licenses.

The top five marijuana business license-holding cities in Colorado are Denver, Colorado Springs, Boulder, Pueblo, and Pueblo West. Trinidad and Aurora are in sixth and seventh place, respectively.

The businesses with the most marijuana licenses in Colorado are Native Roots and LivWell. 

Seaborn says the future of the marijuana business in Colorado is still uncertain due to federal illegality and law changes in California and Nevada.

© 2017 KUSA-TV



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Marijuana and the Gaming Industry in Nevada: Just Say No


On August 24, 2017, the Nevada Gaming Commission (“Commission”) engaged in a “Policy Discussion” regarding “Marijuana and the Gaming Industry.” Spurred by what has become a flood of questions from gaming licensees regarding their responsibilities in the recreational marijuana era in Nevada, the Commission hoped to provide some clarity and guidance for gaming licensees regarding the issues of third-party events and business associations.

Commission Chairman Alamo made clear at the outset that this was not a forum in which the Commission would be rule-making, but that it would just be a discussion of current law, as it applies to certain issues that have been raised by licensees.

Before delving into specific issues, however, Chairman Alamo also made a general statement about his view as to what the Commission’s policy regarding marijuana should be, which is that: “On one hand you have the gaming industry and on the other hand you have the marijuana industry and the two shall not meet” because marijuana is still a Schedule 1 drug under federal law and licensees must comply with federal laws. He pointed to Nevada Gaming Commission Regulation 5.011 – which provides grounds for disciplinary action for licensees, including the broad category of actions that “would reflect or tend to reflect discredit upon the State of Nevada or the gaming industry.”

A survey by Chairman Alamo of his fellow Commissioners’ opinions on that statement elicited a general consensus from the Commission that involvement with marijuana was an unsuitable method of operation for Nevada gaming licensees. Along with fears of discrediting Nevada’s gaming industry, the Commissioners voiced concern that the federal government may take a stronger interest in Nevada’s gaming industry if the state appears unconcerned about marijuana use or promotion on gaming properties.

How this sentiment by the Commission will be put into effect in the form of disciplinary actions brought by Nevada’s gaming regulators is yet to be seen. However, the discussion that followed provides some hints.

The discussion focused on three issues:

  1. Events on the premises of a licensed gaming establishment that cater to or promote the use, sale, cultivation or distribution of marijuana.

  2. Contracting with or maintaining a business relationship with an individual or entity engaged in the sale, cultivation or distribution of marijuana, including vendors and landlord/tenant relationship.

  3. Licensees receiving financing from or providing financing to an individual, entity or establishment that sells, cultivates or distributes marijuana.

These three issues are but the tip of the iceberg, and Chairman Alamo recognized that with the statement that there will be future questions the Commission will look at that will require more nuance, and that these three issues seemed to present a good starting point for the discussion.

On the first issue – whether gaming licensees can allow on their premises events or conferences that promote the resale, cultivation or use of marijuana – a few points were made clear. One was that the Commission wants to have a “level playing field” for all licensees, and to not penalize those licensees who err on the side of caution in not allowing such events and lose out on revenue to another licensee down the road who books the marijuana conference. The Commission members, again, made it clear they were not setting policy and did not say that licensees could not host a marijuana-related conference or event. However, it was made clear that to do so would put a licensee at risk of disciplinary action. This risk was made clearer by the sentiment expressed by Chairman Alamo, who stated that the only way to get parity and stability between a licensee that abides by the law and the one down the street that doesn’t do so is to “file a complaint” so that the gaming regulators can act upon it.

Nevada Gaming Control Board (“Board”) Chairman Burnett, seeking to put a finer point on the question, asked the Commission if having a marijuana convention would be seen as an embarrassment for Nevada’s gaming industry. Commission Member Fuetsch responded that she believed that having a marijuana convention would “be the wrong thing to do and have an impact on the gaming industry if it’s held at a casino.” Commission Member Townsend responded: “No, no and no…There is no upside to a handful of dollars over a weekend than there is to the downside of the damage it can do to the integrity of the industry and the State.”

Chairman Alamo condensed the discussion of the second and third questions, which are a licensee contracting with or engaging in business with someone in the marijuana business, including in the landlord/tenant context, and a licensee providing funding for or receiving financing from a marijuana industry company. Both Chairman Alamo and Commission Member Pro were, as Chairman Alamo said, “crystal clear” on the final two issues – saying “no” to both of them and suggesting that licensees should “follow the money” and should not “go there in any way, shape or form.”

It remains less than crystal clear, however, what exactly this all means for licensees in practice. Commission Member Moran, for example, raised questions that cannot be easily answered, including if hotel rooms in casino resorts are private or public, whether children of gaming licensees may be allowed to be in the state-legal marijuana business and if a licensee comes into possession of money they learn came from marijuana business proceeds, should they not accept it?

Board Member Johnson said it best when he made the statement “that marijuana use violates federal law is not the end of the story” and expressed that Nevada’s gaming regulators must balance that concern with the will of the people in Nevada and our state’s legislature in voting for medical and recreational marijuana to be authorized in Nevada. But this, alas, will not be an easy path for Nevada’s gaming regulators to walk. There are many gray areas and countervailing rights and laws (reasonable expectation of privacy for guests in hotel rooms or the freedom of speech when it comes to events on gaming premises, for example) that must be considered. And, of course, there are issues of practicality – such as how much can you expect each gaming licensee to know about every customer and business partner and how far should licensees be expected to go to police marijuana use on their premises – that also must play into the creation of any good policy. For now, however, gaming licensees at least have more information than they did before regarding how Nevada’s gaming regulators may approach these policy issues going forward. If in doubt, “just say no.”



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Nevada Tribes Get Medical Marijuana Compacts


In June, Nevada Gov. Brian Sandoval signed a bill that will pave the way for the state’s 27 tribes to grow and distribute cannabis products. The Ely Shoshone Tribe and the Yerington Paiute Tribe subsequently signed compacts with the state to cultivate, infuse, test and dispense marijuana, as well as issue medical marijuana cards, says Cassandra Dittus, CEO of Tribal Cannabis Consulting. That firm facilitated the legislation and agreements.

The two rural tribes join the Las Vegas Paiute Tribe in becoming medical marijuana providers. The Las Vegas tribe also signed a compact with the state and will open its facility in September.

Nevada tribal communities are particularly challenged in building sustainable economies. Most of the state’s tribes are in remote locations – Ely, for example, is in east-central Nevada along U.S. Highway 50, nicknamed “America’s Loneliest Highway.” The tribe owns only one truck stop, and other economic opportunities are very limited. In fact, the largest employer in the region is a copper, gold and molybdenum mine. Nor can Nevada tribes turn to gaming as Nevada is saturated with casinos, the legacy of once being the only state with legal gambling.

Download our free report, Intergenerational Trauma: Understanding Natives’ Inherited Pain, to understand this fascinating concept.

“This is really going to help us provide economic development to our tribe and services to our small community,” says Ely Shoshone Tribal Council Member Diana Buckner. “The governor has worked with us on the legislation, and we commend him for working with tribes.”

Dittus says that the tribes she partners with are more focused on medical marijuana than recreational, although state voters approved the Nevada Marijuana Legalization Initiative in November 2016 to open the state to both uses. During the three-year process, “The tribes adopted regulatory codes that let them issue marijuana cards,” says Dittus. “Those cards are also accepted for reciprocity with the state of Nevada.”

Bill Brothers is president of Phoenix-based firm Arizona Facilities Supply, the largest consultation firm specializing in medical marijuana cultivation, research, facility management and software development in Arizona and Maryland. Brothers says it’s important that a tribe entering the cannabis industry work within certain strictures. Unlike Nevada, Brothers says that not all states have developed protocols for tribal and state reciprocity in issuing user cards. For example, “Arizona and Maryland allow medical usage,” he says. “But Nevada allows for both medical and adult, or recreational, use and possession by anybody age 21 and over.”

But, he suggests that the Nevada tribes should be in the clear, since Drug Enforcement Administration raids on tribal cannabis growers were in states where the particular tribes were not complying with state law.

However, Brothers also says that “possession is not as much as an issue” since the Cole Memorandum applies to tribes. This document, written by former Deputy Attorney General James M. Cole, states that the federal government will not necessarily pursue cases against well-regulated facilities that are operating within state law, and specifies the criteria that prosecutors will address, such as sales to minors. And tribes received an extra reassurance with the issuance of the Wilkinson Memorandum, issued in October 2014, which affirmed the provisions of the Cole Memorandum would apply to tribal lands.

There are also practical factors to consider when embarking on a medical marijuana operation: “People need to be aware that marijuana growing is not easy,” Brothers says. “Mold, mildew and bacterial pests are prevalent. It takes solid expertise to grow it commercially. There is no guaranteed success.” In fact, he knows of two operations that failed completely to raise viable crops.

But even with regulatory hoops to jump and the technical issues associated with commercial cultivation, more tribal communities are considering entering the market for cannabis products. “We have coalitions [such as the National Indian Cannabis Coalition] with the common goal of economic development,” says Dittus.



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Shango 5K Run to Benefit Veterans Village


Veterans Village Las Vegas keeps raising the bar when it comes to helping homeless U.S. Veterans find housing, jobs, food, clothing and medical and transportation services. The non-profit organization’s unique model, which relies on financial and material support from the private sector rather than government agencies, has drawn praise from state and federal lawmakers, as well as two U.S. Presidents.

(PRWEB) September 01, 2017

Veterans Village Las Vegas keeps raising the bar when it comes to helping homeless U.S. Veterans find housing, jobs, food, clothing and medical and transportation services. The non-profit organization’s unique model, which relies on financial and material support from the private sector rather than government agencies, has drawn praise from state and federal lawmakers, as well as two U.S. Presidents. Now that the model has been proven successful, the organization faces the ongoing challenge of raising money to meet the ever-growing need for these services.

The Veterans Village 5K Run and Fun Walk will take this mission to the streets of Las Vegas in efforts to raise private donations to build more housing for the city’s homeless veterans. This event, presented by Shango Las Vegas, will take place on Saturday November 4, at Smith Center Park, starting at 8:30 a.m. Tickets are $30 and available online at http://www.itsyourrace.com or view our sponsorship opportunities available.

“Veterans Village Las Vegas is dedicated to creating an environment that is home to United States Veterans,” says Dr. Arnold Stalk, founder of Veterans Village. “We provide a continuum of care of housing and supportive services operating emergency housing, transitional housing, permanent housing and assisted living.”

Stalk’s innovative approach combines housing with holistic, comprehensive and intensive supportive services. This system branded by Stalk is known as “service enriched housing” combining the Veterans Village Las Vegas network of public and private partnerships resulting in 24/7/365 services for our U.S. Veterans.

With government resources stretched thin, Stalk seeks financial support from philanthropic businesses and individuals who share his commitment to serving veterans.

Stalk has established solid and active private sector partnerships with prominent hotel-casino operators, corporate businesses and small businesses throughout Southern Nevada as well as thousands of volunteers from various trade unions to help build, renovate and furnish housing units. Local supermarkets, restaurants, stores and Three Square Regional Food Bank provides daily food and nutrition. The UNLV School of Medicine and the Southern Nevada VA Healthcare system along with local hospitals are planning to work with Veterans Village Las Vegas along with Touro Medical University to provide free health screenings.

The Las Vegas Golden Knights will hold a fundraiser on Veterans Day. These and other organizations, including The Wynn Las Vegas, The Venetian, Caesars Entertainment and MGM Resorts International, are helping Stalk realize his vision.

“Veterans Village 1 opened in 2012,” Stalk says. “It’s the first privately-run facility of its kind in the United States. With our 5K Run and Fun Walk, we hope to raise funds to complete Veterans Village 2. We’re asking all Las Vegas businesses and residents to participate and donate.”

Shango Las Vegas, the presenting sponsor of this inaugural event, understands the challenges facing veterans. Many of the company’s medical cannabis patients are veterans dealing with PTSD, CTE and other serious conditions related to their military service. Cannabis products are gaining widespread recognition and acceptance as effective treatments for these conditions.

“Shango has an ongoing commitment to help the men and women who fought for our country transition back into civilian life,” says David Thomas, Shango’s Policy Communications Director. “For many veterans, this is a very difficult process. Veterans Village is at the forefront of this effort and their success rate is impressive. We are privileged to partner with them.”

Brandon Rexroad, Shango Founder and CEO, says the company is committed to helping Veterans Village raise the goal of $500,000 for Veterans Village in 2018.

“This is a cause we truly believe in and will make every effort to help procure more housing for our vets,” Rexroad says.

Other event sponsors currently include Vela Promos, Zappos, Port of Subs, Royal Links Golf Club, Findlay KIA, Beckwith Printing and Brand Ltd. Additional sponsors are being sought.

“The Veterans Village 5K Run and Fun Walk is an important first step in a long journey to solving this problem,” Stalk says. “Our ultimate goal is to replicate our model in other urban and rural areas across the USA and make sure that no United States Veteran lives in crisis on the street.”

Veterans Village also receives support from Lutheran Social Services of Nevada, Las Vegas Urban League, HELP of Southern Nevada, U.S. Veterans’ Affairs, U.S. Department of Housing and Urban Development, East Valley Family Services, Three Square Regional Food Bank, Clark County, SHARE, The Medical Reserve Corps of Southern Nevada, and Repurpose America.

For more information contact: Arnold Stalk, Ph.D., (702) 624-5792 or email arnoldstalk(at)gmail.com.

About Shango Premium Cannabis:

Based in Portland, Oregon, Shango has five recreational and medical marijuana dispensaries in Oregon and a recreational and medical marijuana dispensary in Las Vegas. Shango has cultivation, extraction and production facilities in Oregon, Nevada and Washington. Shango is a premium cannabis brand offering a full range of award-winning cannabis products including flower, concentrates and cannabis-infused specialties. Performing as an industry leader, Shango upholds the utmost levels of product quality and consistency, and business practices. Shango is a committed advocate for education on the safe and responsible use of cannabis products.

About Veterans Village Las Vegas

Veterans Village Las Vegas is dedicated to the creation of an environment that is home to United States Veterans. This is a unique and innovative approach to holistic and comprehensive housing with 24/7/365 crisis intervention intensive support services. Public and private collaborative partnerships have been created to provide supplies and services to residents including housing, medical, mental health and dental services, employment training, referrals and placements, food pantry/nutrition programs and transportation to the VA Hospital and VA primary care clinics.

For the original version on PRWeb visit: http://www.prweb.com/releases/2017/09/prweb14654698.htm

 



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