Las Vegas Sun

September 23, 2014

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5-MINUTE EXPERT:

How businesses break into Southern Nevada’s budding pot industry

Image

Steve Marcus

Medical marijuana is shown in a home in this 2010 file photo.

Medical marijuana has been legal in Nevada for more than a decade, but it wasn’t until last year that state leaders made the drug accessible to patients.

Clandestine growing operations now are transitioning into a new, highly regulated industry of dispensaries and large-scale growing facilities. Who gets a place in the emerging sector — expected to be worth tens of millions of dollars — will be up to bureaucrats in the state health department.

But local politicians haven’t been content to let the state call all the shots. They have set up their own processes for approving medical marijuana businesses.

The way each city has handled the rush reflects their political character.

Clark County, Nevada’s most powerful local government, raced ahead of the state and cities to approve licenses for 18 dispensaries. Las Vegas has been close behind. North Las Vegas, which has flirted with insolvency, embraced the industry as an economic boon and offered looser restrictions than other cities. Henderson, the quiet suburb, has reluctantly approved the industry. And Boulder City banned dispensaries, making it the only municipality in Clark County to do so.

Where they’re at

• Clark County: Commissioners approved zoning regulations in March. In June, they approved 18 dispensary applications and 101 cultivation, production and laboratory applications. A group that includes Las Vegas Sun CEO Brian Greenspun, who owns The Sunday, received a cultivation and a production license. Business licensing regulations haven’t been written yet but are expected to be ready in early fall.

• Henderson: City councilors approved zoning and business license rules July 1. The city plans to wait until the state’s approval process is finished in the fall before completing its own review process.

• Las Vegas: City officials approved zoning regulations in May and business license regulations in June. The city will accept applications through July 17 and begin its approval process afterward.

• North Las Vegas: City leaders approved zoning regulations June 18 and business license rules July 2. The city is accepting applications and will begin approving cultivation and production facilities on a rolling basis. It will wait to award its four dispensary licenses until the state has completed its review.

Clark County vs. the state

The state law setting up the medical marijuana industry envisioned the state ranking applicants and forwarding that information to local governments, which then would decide where businesses could locate.

But Clark County turned the process on its head by racing ahead and approving its preferred 18 dispensary operators. If the state rejects the county’s picks, it could lead to a political tug of war that lawmakers never envisioned.

Keeping felons out

Felons are banned from taking part in the pot business. Even for nonfelons, there’s more to prove than a standard background check.

Investors must turn in a resume, narrative statement about their interest in the industry and financial documents outlining bankruptcies, net worth and monthly income.

Paper and more paper

Prospective businesses must file business plans, training manuals, security guidelines, inventory control practices and zoning reports.

It’s the state that really matters

Local rules really don’t mean anything yet. Until a business gets a state license, it can’t operate, even with local approval. The state will have a separate application process beginning in August.

It will be very different from the local process. Rather than politicians choosing applicants, the state will score and rank applications based on specific criteria.

The state will accept applications during a two-week period starting Aug. 5 and have 90 days to review and score the applications.

Startup costs

Starting a medical marijuana business isn’t cheap. There’s the normal cost of doing business: buying supplies, renting or buying a building, and hiring staff. But there’s also big bucks medical marijuana businesses must pay local and state governments to get a license.

• Las Vegas: $5,000 nonrefundable application fee plus annual fee, if approved:

Cultivation: $20,000+

Production: $25,000

Dispensary: $75,000 plus 5 to 7 percent of gross revenue

Testing laboratory: $10,000

• Clark County: $5,000 nonrefundable application fee. No business licensing fees approved yet.

• North Las Vegas: $10,000 nonrefundable application fee. No business licensing fees approved yet.

• Henderson: Henderson is taking a unique approach to licensing by encouraging businesses to combine growing, processing and retail operations in a single location. Doing so will keep the footprint of the city’s medical marijuana industry confined to fewer areas.

$10,000 nonrefundable application fee

Dispensary and cultivation or production facility on a single site: $60,000 origination fee, plus 6 percent of annual gross revenue

Dispensary, cultivation and production facility on a single site: $80,000 origination fee, plus 6 percent of annual gross revenue

Dispensary and cultivation or production facility at separate sites: $100,000 origination fee, plus 6 percent of annual gross revenue

Independent testing laboratory: $15,000 origination fee

• State: $5,000 application fee, in addition to local fees

Where pot businesses can lay roots

• Clark County

— Must have 1,000-foot separation from schools; 300-foot separation from churches, parks and community centers; 660-foot separation from residential neighborhoods for cultivation and production facilities.

— No medical marijuana businesses allowed in the resort corridor.

— No restrictions on hours of operation.

• Las Vegas

— Must have 1,000-foot separation from schools; 300-foot separation from churches, parks and community centers.

— No marijuana businesses allowed on Fremont Street west of 8th Street.

— Hours restricted to 6 a.m. to 10 p.m.

• Henderson

— Must have 1,000-foot separation from schools and public parks; 300-foot separation from churches and community centers.

— Must have one-mile separation between dispensaries.

— Hours restricted to 8 a.m. to 8 p.m.

• North Las Vegas

— Must have 1,000-foot separation from schools; 300-foot separation from churches, parks and community centers; 300-foot separation from residential neighborhoods for cultivation and production facilities.

— Dispensaries cannot be located within 1,000 feet of one another.

— No restriction on hours of operation.

Who can buy

Getting medical marijuana from a dispensary will be as easy as picking up medicine from a pharmacy, as long as patients have proper identification. Nevada residents who suffer from one of eight conditions ­— cancer, glaucoma, AIDS, cachexia, persistent muscle spasms, seizures, severe nausea or severe pain — can receive state-issued medical marijuana cards. Nevada dispensaries also will honor out-of-state cards, meaning medical marijuana patients from California (which has looser guidelines) or Arizona can buy medical pot while in Las Vegas.

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