A couple of years ago, the medical marijuana industry in nevada looked like the wild west. Patients were theoretically permitted to buy and use cannabis products for a variety of ailments, but there wasn’t a clear legal avenue to acquire the medicine from legitimate dealers. Those patients relied on a sort of gray market that included dozens of dealers who would deliver their product direct to the patients – mostly avoiding law enforcement along the way.
That legal chaos was supposed to end with legislation that was passed and signed into law in 20ı3 when SB 374, which created the framework for the state’s medical marijuana industry, was signed into law.
Highly regulated brick-and-mortar cultivation and production sites with storefront dispensaries were authorized. Stringent licensing and testing requirements meant that those owning the new facilities would sell standardized product, similar to what medical patients would get when buying other kinds of pharmaceuticals. And other requirements, such as a hefty $250,000 proof-of-financial viability rule, would keep fly-by-night dealers out of the business.
The rules appear to have worked as licensed dispensaries and regulated cultivation and production sites started appearing all over Nevada’s Clark and Washoe counties in 20ı5. But there is a flaw in this cannabis ointment.
Those unlicensed, unregulated and fundamentally illegal delivery dealers didn’t go away. In fact, a couple of years ago you could go online and find about two-dozen delivery services, most of them apparently careful to deliver only to people with medical marijuana cards. Today, despite the new laws authorizing licensed and legal dispensaries, the number of delivery dealers on the popular Weedmaps website stands at more than 50.
Those distributors not only avoid the onerous licensing requirements, including the financial viability and ongoing laboratory testing rules, but they can get product outside Nevada’s legal supply chain, undercutting the legal prices while making fatter profits. In short, the legal and licensed business owners fear that the illegal distributors threaten the very survival of Nevada’s nascent but growing medical cannabis industry.
“They are out-competing other dispensaries, but they are completely violating every part of the law,” says Will Adler, executive director of the Nevada Medical Marijuana Association, a trade group representing the licensed dispensaries. His voice reflects his frustration with the unlicensed competition. “It is not just petty drug dealing. It is violating every part of the law and pretending to have a legal product. That is why it is so destructive.”
While competition in most areas is a good thing, unregulated commerce, in what is fundamentally intended as medicine, is not, Adler emphasizes.
Nevada’s regulated system of cultivation, production and dispensaries is designed to give patients confidence in the strength, quality and characteristics of the product that they use.
“Every step of the chain, every gram,” is accounted for in that process, Adler says. The point was to avoid the chaos that developed in other parts of the country, where cannabis products are sold without quality control and seemingly to everyone. “The Nevada system was to be the gold standard of the country, and still is.”
Three years ago, before the new laws were passed and the old laws were mired in contradiction over what was and wasn’t legal, defense attorneys told a reporter for the now-defunct CityLife magazine that the delivery services were largely getting a pass from law enforcement. Juries were reluctant to convict dealers who were providing medical marijuana patients with a legal product.
Now Metro Police and the Clark County District Attorney not only have the laws standardizing the industry, but the legal, licensed dispensaries have significant political and financial resources, assets that can be helpful in motivating law enforcement to go after the delivery services. Regardless of motivation, that is exactly what is happening.
“Year to date,” said officer Michael Rodriquez, a Metro spokesman, of 20ı5, “Metro has investigated ı9 illegal delivery services. Of those investigations, nine have resulted in search warrants and arrests.”
In 20ı4, Metro investigated just two illegal marijuana delivery services (both of which resulted in felony convictions).
The 850 percent increase in investigations isn’t accidental.
“In 20ı4, the Southern Nevada Cannabis Operations and Regional Enforcement (SCORE) focus was more on indoor marijuana grows,” Rodriquez said in an email, referring to the illegal cultivation facilities sometimes tucked into residential neighborhoods. “In 20ı5, the focus has changed to illegal marijuana delivery services.”
Those who operate the unlicensed deliveries, unsurprisingly, are less than enthusiastic about the shift in focus. Elevate talked to one young entrepreneur who, in 20ı5, relocated from California to Nevada to run a business in Las Vegas.
His product comes from California. The businessman, who asked that his name and the name of his Weedmaps-advertised business not be disclosed for fear that Metro would scrutinize his activities, said that just like the legally authorized dispensaries in Nevada, he is concerned about providing a high-quality product to medical marijuana patients.
He says he ensures that his customers have valid medical marijuana cards. He also says that although his extensive selection of products – which includes dozens of varieties of sativa, indica, and many edible products, with suggested medical applications – says online that it has not been tested for the quantity and potency of active ingredients, he has in fact had those products tested.
“I want the best product possible,” he says. “We do lab test every one of our products. I’m not here just to make money,” he says. “I’m trying to do the right thing. I’m trying to start a large business. But you have to start somewhere.”
He refers to the rules that require extensive financial resources and the limited number of licenses for production sites and dispensaries: “It’s almost impossible to do it the right way.”
And he argues that in addition to providing products that are as potent as the licensed dispensaries, his access to the California wholesale market, his suppliers, means he can sell products for less than the licensed competition in the brick-and-mortar dispensaries.
“The prices here – they are unheard of in California,” he says. His prices are perhaps $5 to $ı0 less than similar products at Nevada’s dispensaries. Dispensaries in California sell similar products at $ı0 to $20 less.
Adler and the licensed operators in Nevada say sure, the illegal delivery services can sell a less-expensive product, but without the state oversight, how do patients know what they are getting?
“They’ll undercut the price, go online, they’ll drop it lower and say, ‘Hey, we’ll deliver it to you too’,” Adler says. “They can get it in California far cheaper than in Nevada, but in Nevada you pay for getting a medically safe product. In California, it could be grown in somebody’s basement.
“They’re advertising it as if it were the same, but it’s something far worse,” he says. Adler says he hopes to see the laws and the law-enforcement response adapt to the new reality and put what he calls “street drug dealers” out of business.
The licensed operators insist that it’s not about competition or profits, but the well-being of patients that they are concerned about.
“Let’s talk about patients,” says Aesha Goins, with the licensed Nevada Wellness Center, a dispensary in Las Vegas. “We are tested, under scrutiny, our products are clean versus whatever they are selling.
“Nevada has done an excellent job. There are no pesticides, no fake growing material. You’re getting a good, true product. Number one, we’re concerned about the patient. That is our whole mindset.”