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Nevada’s decades long experience with gaming means the state was well-equipped to launch its cannabis industry.
During the first year of legal adult-use cannabis sales in Nevada, the state exceeded its expected sales tax revenues by roughly 140%, filling state coffers with a whopping $70 million. Meanwhile, states from Massachusetts to California have been disappointed by their take.
That doesn’t surprise Armen Yemenidjian, founder of Essence Cannabis Dispensary, one of Las Vegas’ largest marijuana dispensary and cultivation operations, which he sold last year to Green Thumb Industries. Yemenidjian joined Green Thumb’s executive team, where he’s still an active part of the cannabis industry. He believes that Nevada has seen so much success because of its long history with gambling — one of the most regulated industries in America.
“Vegas was a town that was built on regulation and compliance,” he says. Other states have had to build a licensing and permitting process for cannabis from scratch. But that regulated entrepreneurship was already baked into Vegas’ DNA.
“Nevada was able to take that model of understanding how to roll out programs, regulate and enforce them and translate it almost directly to cannabis,” says Yemenidjian.
The state was so good at it that the first adult-use stores opened six months earlier than projected, Yemenidjian says. Vegas now has more than 20 dispensaries.
Nevada’s dexterity with regulations has put it ahead of the rest of the nation when it comes to expanding the industry. The Nevada Legislature recently introduced a bill that would allow for consumption lounges — places where people could gather to use cannabis in public. This has been a thorny issue in many states. Alcohol can be consumed in public, why not cannabis? Yet state legislatures have been skittish about allowing public consumption. Nevada may just end up being the state that changes the game on this.
Another benefit of Nevada’s clean regulations is that business owners and entrepreneurs know what to expect. For instance, anyone looking to get into the cannabis industry in Nevada understands compliance and oversight, which makes the whole process easier. “You know there’s a background check, there’s permitting and licensing fees,” explains Yemenidjian. “There aren’t any surprises.”
It hasn’t been as clear cut elsewhere. Take Massachusetts, for example. The state almost giddily projected revenues of more than $60 million by June 30 last year. Instead, they’d taken in less than $6 million by March 1 this year. The state had just nine stores open as of March, thanks to a glacially slow rollout of regulations.
California has fared better, but not by much. Red tape and high taxes, along with an active push by many cities to prohibit cannabis stores, have stunted growth. Only 161 of California’s 482 municipalities allow sales of cannabis — that’s 33%. While in Los Angeles County, only six of its 88 cities allow recreational marijuana sales.
While much of the U.S. market suffers from legal and financial barriers and regulatory speed bumps, Las Vegas has managed to roll out its industry quickly and efficiently — and been hugely successful doing it. The rest of the country might want to take notes.
April 29, 2019 at 08:08AM
Forbes – Entrepreneurs