by April Corbin Girnus, Nevada Current
August 19, 2021
Nevada expects its first cannabis consumption lounges — and a wide array of weed-adjacent businesses — to open in “the first half” of 2022.
When that happens, it will end a cannabis catch-22 that has existed since Nevada voters legalized recreational marijuana in 2016. Purchasing marijuana is legal in the state but consumption is currently legal only on private properties where it is not prohibited by the owner. That has presented a problem, particularly for the millions of tourists who stay at hotels where smoking weed is prohibited.
Earlier this year, the Nevada Legislature passed Assembly Bill 341 to legalize cannabis consumption lounges and set some initial parameters for the new industry, which will actually encompass far more than just a “pot bar.”
Cannabis Compliance Board Executive Director Tyler Klimas on Wednesday told lawmakers the agency expects to draft and approve public consumption regulations over the next six months, with the hope of accepting applications and approving businesses by “the first quarter, or the first half” of 2022.
According to Klimas, 59 marijuana dispensaries have expressed their intent to apply for a license to open a consumption lounge that is attached or adjacent to their existing business.
But regulators are also preparing for up to 500 applications from standalone businesses that are not currently in the marijuana industry. This could mean a consumption lounge that is simply not attached to a dispensary. But it also would also encompass a restaurant that serves weed-infused dishes, or a yoga studio where smoking is embraced, or an entertainment venue that wants to offer some type of “cannabis experience.”
The CCB believes the majority of businesses applying for cannabis consumption licenses next year will fall under this second group of businesses. Klimas said regulators set the 500 estimate by looking at the number of applications received when the state first legalized medical and recreational marijuana.
“Both of those licensing rounds were severely underestimated,” he added.
That — and the fact that consumption licenses are a new type of business — leaves the state with the very real possibility that the number of applications received winds up being significantly higher.
“(500) may be low,” said Klimas.
In preparation for applications and oversight of the new consumption industry, the Cannabis Compliance Board sought approval from the Interim Finance Committee on Wednesday to hire additional staff and work the attorney general on regulations.
Assemblyman Steve Yeager, who sponsored AB341, acknowledged the state was making an initial investment of almost $11 million to get the industry up and running, but he said he expects a swift return on investment from an industry people have been calling on for years.
Klimas noted that, aside from a slowdown during the peak of pandemic business closures last year, the marijuana industry has seen “30% month over month, year over year” growth since state legalization. The addition of consumption businesses should only further that growth.
“I see it continuing to get larger and larger,” he added.
The anticipated initial rush of applications is expected to bring in $9.2 million to the pupil-centered funding plan during the current fiscal year, which runs through June 2022. Revenue projections for future fiscal years aren’t yet set.
Still, Yeager praised the additional help for the state’s K-12 education system.
Everyday Nevadans have for years associated the booming marijuana industry with education system funding, in large part because the legalization ballot initiative promoted itself as a boon for K-12. According to an analysis by the Kenny Guinn Center for Policy Priorities, marijuana taxes contributed $70 million to education in 2018. While not an insignificant amount of money, that marijuana revenue makes up only a fraction of the state’s total education budget, which relies most heavily on sales tax.
For comparison, the local schools support tax (part of the sales tax) contributed $1.4 billion in 2018. The state general fund, which also relies heavily on sales tax, contributed $1.2 billion. Property tax contributed $677 million, and IP 1 (commonly known as “the room tax”) contributed $180 million.
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