Nevada: Adult Use Premiere

As of midnight on July 1, cannabis is officially legal for adult use and sale in Nevada. Those 21 and older have been allowed to be in possession of the product since January 1, and storefronts are now allowed to retail it as well. The city celebrating the most is, unsurprisingly, Las Vegas. Known as a resort city that attracts visitors from across the globe for its gambling, nightlife, fine dining, shopping and entertainment, Vegas now has another major draw. Recreational dispensaries opened their doors from midnight to 3am to allow the first legal sales in the state, including to State Senator Tick Segerblom who made a purchase shortly after midnight at Vegas dispensary Reef, where there was a DJ and fireworks display to celebrate the occasion. Recreational cannabis is expected to become another staple tourism attraction in the city, where 37 recreational dispensaries have received their permits to sell cannabis and infused products.

Adults 21 and older can purchase up to an ounce of flower or an eighth ounce of concentrate at a time. Buyers can look for fan favorites like preloaded vaporizer pens, cookies and candies, and pre-rolled joints on the shelves. The regulations around consumption are similar in Nevada as they are in other adult-use states like Colorado and Washington. Users can partake in a private home (including porches and yards), but it is prohibited in casinos, bars, restaurants, parks, concerts and on U.S. property, including national forests and federally subsidized housing. Those violating public consumption laws would first be given a ticket for $600, but repeat offenses can lead to fines up to $1,000 and a maximum of 6 months in jail. Cannatourism businesses are already springing up, with a cannabis-friendly condo complex opening just outside the Strip, and Cannabus tours that stop at dispensaries and cultivation facilities, and offer party bags with goodies like rolling papers and lighters.

Nevada Governor Brian Sandoval expects to see $69 million in revenue from the industry in the next two years, with several taxes to benefit the state worked into the program. A 15% wholesale excise tax will be paid by cultivators, and it will go toward Nevada’s schools. A 10% retail excise tax will be paid by the consumer at checkout that goes toward the state’s rainy day fund. This is a wise choice on the part of Nevada lawmakers, who recognize that the expected revenue may be quite different than actual revenue collected. States like Colorado and Washington anticipated much higher revenue than they collected in their first year of operation due to a number of circumstances, such as underestimating the size of the black market and having too high of a retail excise tax. Consumers can be dissuaded from purchasing through the legal recreational market if they believe that the high excise tax outweighs the security and convenience of a recreational dispensary. Having Nevada’s retail excise tax feed into the state’s rainy day fund is prudent, since it is better to have instability in that fund versus counting on revenue for a budget of something specific that may not be flexible.

One potential legal challenge ahead is the approval of cannabis distributors. A Nevada judge ruled that liquor distributors have exclusive rights to transport cannabis products from cultivators to dispensaries, but of the five who have applied for permission, none of them are ready. This poses a problem as dispensaries are allowed to sell what they have in stock currently, but at the moment have no way of replenishing their stock. If the matter is not resolved, storefronts could run out of product in a matter of weeks.