nevada weed shortage

Nevada Calling for State of Emergency as Weed Runs Out in First Weeks of Sales

nevada weed shortage

(From the 2017 archives)

Recreational marijuana has been legal in Nevada for less than two weeks and the state is already running out of weed. Whether due to oversight or some equally nefarious flaw in the planning process, Nevada has made it legal for businesses to sell marijuana without giving those businesses any legal way to restock their shelves. The problem is so severe the Department of Taxation has called for a state of emergency to allow for more licensed distributors.

The story sounds like something out of The Onion, but the challenges for marijuana business owners, customers, and the state are serious.

Why is the Weed Gone?

Let’s start by giving Nevada cannabis consumers and dispensaries a round of applause for exceeding sales projections. But, strong sales isn’t to blame for dispensaries running out of weed.

When Nevada legalized marijuana, a temporary court order gave exclusive transportation rights to alcohol wholesalers for the first 18 months of sales. If product is going to move from a grower to a recreational dispensary, it will be an alcohol wholesaler carrying it.

The move – unique to Nevada – was made for two reasons. First, the state would like to regulate marijuana in the much the same way it regulates alcohol. Using alcohol’s infrastructure is a simple way to start working toward that goal. Second, the regulations would purportedly help protect liquor stores from losing business.

Unfortunately, as of last Friday, zero licenses had been issued to alcohol wholesalers to transport marijuana. Seven wholesalers had applied, but none have yet met the state’s licensing requirements.

Attempts were made to open up distribution to marijuana businesses and those that had transported medical marijuana, which may have alleviated the current shortage of distributors. But, that option was blocked in court, and here we are. Well, here Nevada is.

How Bad Can a Weed Shortage Really Be?

In addition to disappointed residents, many summer tourists planned at least part of their trip around the idea that they would be able to buy recreational marijuana. But, this may seem like small fries. A few thousand people can’t get high like they wanted – certainly not ideal, but hardly cause for a state of emergency, right?

Sadly, the growing number of frustrated Nevadans and tourists is only the beginning of the problems caused by lack of marijuana.

Business owners have invested hundreds of millions of dollars to build facilities in Nevada. If they can’t restock their inventory soon, many could find themselves out of business no matter how well they planned and through no fault of their own. Marijuana cultivation centers are in a bind, too, unable to move their product before the next grow cycle.

Not only will the state lose the tax revenue those businesses would have generated, but the long-term effects could be significant. With every business that closes, employees are out of a job. And, an environment where receiving inventory is illegal could be considered “unenticing” by many business owners and investors.

With so many states legalizing or considering legalizing recreational marijuana, Nevada isn’t the only game in town. It isn’t a financial backbreaker, but the state could feel the sting of this regulatory miss for years.

Even now you might be thinking, “That’s terrible, but I still don’t see how it justifies calling for a state of emergency.” Here goes.

Nevada built projected marijuana tax revenue into the state’s budget.

Specifically, 15% is earmarked for Nevada schools. If consumers can’t buy marijuana, the state can’t earn any money from a marijuana tax. And, that means Nevada schools will be left with insufficient funding.

marijuana revenue funding school children

Between July 1 through July 4, the state collected an estimated $1 million in tax revenue. Even if that pace slows substantially, every week without pot will cost Nevada schools more than $200,000.

That’s pretty heavy.

How Will a State of Emergency Help Alleviate the Pot Shortage?

The primary benefit would be to allow the Department of Taxation to license other businesses to transport marijuana. This solution – already past due – will take time to work. Businesses will still need to meet state requirements to distribute marijuana. By tapping into the distribution system for medical marijuana, the state may be able to begin resupplying recreational dispensaries much faster.

There’s no avoiding the current shortage. But, the state is taking action to limit the damage. With any luck, the potential months of frustration and hardship can be cut down to just a few weeks.

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