July 1, 2021 marked four years since Nevada started its first adult cannabis sales, and the market has certainly seen its share of rapid growth and regulatory changes during that time, not to mention the unprecedented COVID-19 pandemic.
From July 2017 to June 2018, the state recorded $ 529,851,245 in taxable medical and adult cannabis sales, a number that has steadily increased in the current fiscal year to $ 719,216,651, which Nevada said was July sales data 2020 to March 2021 includes tax department.
According to Layke Martin, executive director of the Nevada Dispensary Association (NDA), flexibility is essential for cannabis operators looking to capitalize on this rapidly growing market.
“I think this industry is constantly changing, and our owners know that and are prepared for it,” Martin told Cannabis Business Times and Cannabis Dispensary. “They are flexible and ready to swivel.”
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The NDA was founded about five years ago as an advocacy and trade association for the retail segment of the market, but has recently expanded to include cannabis growers and dealers.
Nevada currently has 86 pharmacies in operation and the industry employs approximately 10,000 people, Martin said.
Thinking about what you have learned
The Source quickly switched to the adult market, launching its first leisure sale at its Sahara location on July 1, 2017. The company’s Henderson store began serving the adult market much later, in October 2017, due to delays in its launch. local regulations, according to Brandon Wiegand, The Source’s chief commercial officer.
“We saw an immediate impact,” said Wiegand. “From the medical to the leisure business, the business has increased roughly fivefold. Then it’s ebb and flow. “
When the first adult store started in 2017, The Source employed around 50 people and now has more than 260. The company also won three new retail licenses when the state opened another licensing round in 2018, and has opened three new stores in Las Vegas, North Las Vegas and Reno.
Over the past four years, The Source has been adapting its business to reflect its strong customer growth, and part of those adaptations include more solid consumer education.
“There is a much larger knowledge gap in leisure activities,” said Wiegand. “There are customers who have either not used cannabis for many, many years or perhaps have never used cannabis, and that’s why we focus on education, knowledge, [and] Creating an environment that promotes awareness and understanding of the product and the various methods of consumption [and] the effects of this consumption. … Our big focus as a team is how we dispel the myths and stereotypes surrounding the product and how we help people to find the experience they are looking for? “
Wiegand said The Source has a “fairly liberal model policy” encouraging pharmacy staff to try the products to aid in their discussions with customers.
“We encourage them to try and experience the product for themselves so they can talk about it from a first-person perspective,” he said.
The COVID-19 pandemic created new challenges for the company, Wiegand said, and The Source needed to move quickly in the e-commerce space to offer roadside pick-up and delivery services.
“E-commerce has probably been one of the most important changes in business in the last four years – getting our product online [and] Developing a platform and experience and a way for our customers to shop, ”he said. “This is an area that we will continue to focus on and that we are retrofitting. I think we’re still working today to make this process cleaner and leaner [and] more efficient. We have seen a tremendous shift in customers devoted to e-commerce. After COVID, many people changed their shopping habits. You are looking for comfort. “
Overcoming regulatory hurdles
There are some onerous regulations that weigh on all cannabis operators like restricted access to banking services and tax number 280E, and then there are country-specific regulatory hurdles that businesses face in any legal market. In Nevada, the main regulatory hurdle to introducing adult sales in 2017 may have been the language of law requiring companies to have distribution licenses in order to deliver products.
“That wasn’t clear when we started recreational sales, and our biggest challenge in selling recreational items was storing products,” said Wiegand. “We didn’t know when we would receive supplies for recreational products. The state and regulatory agency – then the Department of Taxation – once allowed us to turn our inventory over. So whatever we had on July 1st at 12:01 p.m. we were allowed to use it as recreational inventory. So all of us, all of the pharmacies in the state, in stock without knowing when we would be able to get supplies. “
Another significant regulatory change was the creation of the Cannabis Compliance Board (CCB) to oversee the industry, previously regulated by the Nevada Department of Taxation.
Modeled after the state’s Gaming Control Board, the CCB launched in July 2020, and Martin said she and many of the members of the NDA were happy with the way the board worked over the past year.
“It’s been great working with them and it’s great to have our own regulator for the industry,” she said. “That makes compliance easier. … you are transparent. … For example, when they were working on regulations, they did [sought] Guidance to industry so that stakeholders could provide guidance on what the regulations should be. “
The CCB recently created a cannabis advisory committee, Martin added, made up of industry stakeholders, lawmakers and government agencies who will ultimately make recommendations to the full board.
“There is a subcommittee on social justice, one on public health, one on public safety, and one on the cannabis industry and market stability,” said Martin. “Each of these sub-committees will research, analyze and make recommendations to the board. … They met for the first time this week, so we’re really excited to see where this leads. “
Planning for the future
During the 2021 legislature, the Nevada legislature passed a bill creating a new lounge license for consumption, the first new type of license since adult use was legalized. The CCB is currently going through the rulemaking process to draft regulations for these new businesses, and Martin expects to see the first operational lounges in early 2022.
Existing pharmacies can each apply for a license to open a lounge, which must be connected to or adjacent to their existing facilities.
“Some of ours [dispensary members] … are located near the tourist corridor, [and they] are very excited about the possibility of setting up lounges, for example to offer tourists a place where they can legally try cannabis products, ”said Martin.
The Source will seek a license to create a consumer lounge, Wiegand said, adding, “There is a whole world of experiences that can be created with the product and I’m really excited to see what comes out of it and I’m very proud of the fact that Nevada has taken a stand and will be part of what will be the next evolution in the industry. “
The NDA will evolve with the industry, Martin said, and the organization is already planning its priorities for the next legislative term, which will take place in 2023.
One of those priorities is likely to be reform of government packaging and labeling regulations, Martin said.
“A lot of our packaging and labeling regulations and laws have evolved, and it has become … a little duplicate, a little tedious, and we are following some of the other states that have gone back and reformed their packaging and labeling regulations,” She said, “How can we … streamline our packaging and labeling requirements to be more consumer friendly? [and] provide the information, but maybe in a different way? “
The source’s upcoming goals are focused on running a more efficient pharmacy, Wiegand said.
“One area that we’ve been focusing on quite heavily over the past few years is understanding the customer – understanding buying behavior, understanding products, and properly scheduling and allocating goods,” he said. “How do we get the right products in the right quantities at the right time so that we don’t have too much in stock for some SKUs and not too little for others? How do we ensure that the product our customers are looking for is in stock? “
Customer preferences are starting to evolve, he added, and consumers are starting to buy products that are based on terpenes rather than potency.
“We spent a lot of time and effort educating customers about the entourage effect and terpenes and really understanding that the experience of the product is beyond just the THC percentage,” said Wiegand. “When talking to customers there is definitely a different level of knowledge and customers are looking for terpenes that they know and like and that will bring them the desired benefits and effects.”
The Source has continued to scale to meet consumer demand, moving to vertical extension to double its square footage without increasing the size of the building.
“We also bought a new distribution center where we will merge our manufacturing facility,” said Wiegand, adding that this will support The Source dispensaries as well as other retailers that The. buy product wholesale from the source.
“We scale the business, we stabilize and stabilize, and then we develop new products, … we see demand rise and we have to retool the business again,” said Wiegand. “I joke that it was a sprint from day one, even back to medicine. I don’t know we had a year of stability. It was always something that changed, something new, and that’s part of what I love about the business – it’s dynamic and exciting. “