Just over a month ago, the state of Nevada opened up its recreational cannabis market, leaving newly open dispensaries flush with both customers and cash. The market seemed to have gotten off to a strong start, but issues with product distribution have created immense obstacles for local pot shops.
According a report released by the Nevada Department of Taxation, sales have dropped 20 to 30 percent over the one month period. The slump stems from the inability for dispensaries to keep up with customer demand, as they've been unable to stock their shelves due to distribution conflicts with alcohol wholesalers.
The voter-approved recreational cannabis legislation that passed last November deemed that liquor distributors should get first dibs on delivering product to dispensaries (for the first 18 months), but this glaring caveat has created a major shortage in supply, and the tax department has moved to open up distribution to other candidates. However, Judge James Todd Russell recently ruled in favor of alcohol wholesalers, claiming that the state must first provide evidence that these distributors are inadequate at the job.
Meanwhile, Nevada’s dispensaries and eager customers are the ones suffering from lack of cannabis stock. The report from the Department of Taxation claims that product selection has been reduced by more than half since legalization took effect.
“Cultivators and producers have product sitting for days waiting to be delivered to stores while the quality of the product degrades. Retailers do not have the products their customers desire, products that are legal and should be available to them," said Deonne Contine, the director of the Nevada Department of Taxation.
The study was based off surveys that were filled out by more than 60 marijuana establishments and over a dozen alcohol distributors. Local dispensaries are insisting that they need at least 9 to 11 deliveries per week with between 12 hours and five days notice. At the moment, the waiting period for product is closer to two weeks.
For now, the alcohol wholesaler Crooked Wine is the only fully operational cannabis distributor, thanks primarily to their partnership with the medical marijuana distributor Blackbird. According to the report, Blackbird is currently servicing 99 wholesalers, making anywhere from 100 to 150 deliveries a day across the entire state.
The state submitted their report as evidence to Judge Russell, hoping to convince him that more distribution channels need to be opened beyond the alcohol industry to stop the market from sinking.