Nevada's Retail Marijuana Kickoff Shows How Far Colorado Has Come

Toni Fox makes the first legal recreational marijuana sale in Colorado at 3D Cannabis at 8 a.m. January 1, 2014.
Toni Fox makes the first legal recreational marijuana sale in Colorado at 3D Cannabis at 8 a.m. January 1, 2014.
Photo by Brandon Marshall
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On July 1, Nevada became the fourth state with open recreational marijuana dispensaries, following in the footsteps of Colorado, Washington, Oregon and Alaska. As newly liberated cannabis consumers flock to dispensaries for some of Nevada's first legal herb, media reports are already showing the state is experiencing growing pains that Colorado's cannabis industry can relate to.

Nevada's retail pot shops, like Colorado's, had lines out the door during the first weekend of sales. Las Vegas dispensary owners report waits of over an hour and even had to turn customers away. The Nevada Dispensary Association, an organization that represents over 80 percent of the state's dispensaries, estimated that Nevada pot shops sold $3 million to $5 million in products on July 1 and July 2. And it wasn't because of low prices: Some stores are charging as much as $69 for an eighth of an ounce of flower...before tax.

To be fair, it's sort of like looking back in time. Dispensaries in Colorado were also charging upwards of $60 for an eighth in 2014, when recreational sales began. Those high prices didn't stop the enthusiasm here, either, with dispensary owners reporting lines at 2 a.m. on January 1, 2014, the day sales would start at 8 a.m. Colorado dispensaries went on to sell over $14 million in their first month, according to the Colorado Department of Revenue.

A July 5 screenshot of the menu at Pisos, a Las Vegas dispensary.
A July 5 screenshot of the menu at Pisos, a Las Vegas dispensary.
Weedmaps.com screenshot

Colorado had the advantage of an established medical marijuana program before it jumped into retail, whereas Nevada was able to take notes on successes and failures of earlier legalization efforts. But that state moved quickly after voters approved legalization in November 2016, and there have been some growing pains.

The regulatory framework for commercial marijuana wasn't approved by Nevada officials until a little more than two weeks ago, leaving the industry to scramble to get ready as eager consumers lined up outside the state's 44 recreational stores. The approved framework apparently isn't a done deal, either: A Nevada judge recently ruled that only wholesale alcohol distributors are legally allowed to distribute and transport retail marijuana. Because none of the liquor distributors have been licensed to transport marijuana yet, Nevada could wind up with no legal way to transport recreational marijuana for months.

Colorado didn't experience a shortage of product during its first weekend of sales, but there have been plenty of bad business estimates during the industry's short lifetime here. Overall marijuana taxes and fees exceeded expectations so much in 2014 that the state had to choose between giving the extra money back to Colorado taxpayers or suspending sales taxes at marijuana businesses for a day in September 2015. It chose the latter.

The state has also faced national scrutiny on such issues as edibles packaging and safety, growing and pesticide regulations, public consumption and diversion out of state — all issues that Nevada's regulators could study before they had to deal with similar controversies.

Although Colorado earned battle scars as the first state to take the legalization leap, it's currently reaping the rewards of a more mature industry. A report by the Reno Gazette-Journal listed the average wholesale price for a pound of flower at $2,600 in Nevada during that state's first week of sales, because of the uncertainty surrounding distribution. The same product would sell for $1,000 less in Colorado, according to Derrick Levy, regional store coordinator for B*Good dispensaries in Denver.

Levy remembers a less regulated time not too long ago that was much more "Wild West" than what Nevada is experiencing now. "When it first started, you could come off the street and sell it to us.Then we had to implement a seed-to-sale program that monitors and taxes each product, and now the state's implemented this average market rate program that tracks what we're sending to each shop," he says. "We've learned quickly."

Sometimes it's good to be first.

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