Nevada Medical Marijuana Regulation Priorities...Live from Las Vegas

Cannabis industry leaders and a few of the 6,496 medical marijuana patients in Nevada testified today at the Advisory Commission on the Administration of Justice's Subcommittee on the Medical Use of Marijuana. The agenda included representatives from the Nevada State Gaming Control Board, NORML, Nevada Division of Public & Behavioral Health, and cannabis business owners from other states. Nevada currently allows patients to cultivate up to 12 mature plants and the application process for Cannabis businesses just closed on Monday. The 20 person committee met to hear testimony on how to regulate a brand new legal medical marijuana market before the current patients have their growing rights sunset in 2016.

The Cannabis Business Permitting Process

Chad West, Bureau Chief, Nevada Division of Public and Behavioral Health, testified on the medical marijuana permitting process in Nevada. As of today, Nevada has received 497 applications for dispensaries, cultivation centers, infused product manufacturers and testing labs (a few more may trickle in based on mailed date). This is a merit-based process with three person panels reviewing and scoring each applicant. Each application consists of at least a banker's box worth of materials and a $5,000 or more fee (Senator Segerblom quipped that Nevada probably earned more from the application fees than all online gambling revenue to date). The winners of the permitting process will be annouced by November 3.There are currently only 6,496 medical card holders in Nevada (Mr. West admits that the state is behind in reviewing card applicants) and he is predicting a 32% growth in card holders year over year. If Nevada does go ahead with allowing out-of-state card holders to purchase medical marijuana while visiting Nevada out-of-state patients will obviously overwhelm local patients in Las Vegas and Reno. Mr. West's slides are available for download.

Regulating Ancillary Businesses

Susan Chicovsky employs 60 people for her trimming and harvesting contract labor service, Green Mountain Harvest in Colorado. She serves multiple cultivation and dispensary businesses and is expanding nationwide. Nevada is forming regulation for third-party/ancillary services and Ms. Chicovsky asked the panel to consider the following businesses types in their suggestions:

• Harvesting & Trimming Services
• Information Technology (IT)
• Staffing & HR Services
• Contractors
• Cloning Banks
• Security
• Paraphernalia
• Marketing
• Transportation
• Packaging
• Garbage Services

Cannabis Infused Body Treatments

Jordan Person, owner of Primal Therapeutics, presented her work using cannabis-infused oils for massage therapy in Colorado. Infused bodywork is not currently regulated in Colorado and Ms. Person encouraged the committee to specifically allow it in Nevada. In her work with patients, she's found cannabis-infused oils unsurpassed for pain relief and relaxation. Unlike ingesting cannabis, her treatments have no psychoactive effects but do increase circulation and reduce pain. If the treatment did you get you "high", it would be almost impossible for her to work full days. Senator Segerblom was excited to bring cannabis-infused spa treatments to Nevada but there are a lot of open questions on who would have to hold a medical card for treatment (the therapist, the patient, or both?)

Solving the Cash Loophole

Michael Tuccelli-Margolin represented C4EverSystems Cash Management, which sells a "reverse ATM" to dispensaries. Their machine takes cash payments and locks them into cartridges to be transferred into a bank. This prevents the cash from being used for money laundering, something a town like Las Vegas knows a lot about. The machine is also able to validate individual customers, and if Nevada requires the technology statewide, it would prevent patients from visiting multiple dispensaries and purchasing the maximum allowed multiple times. Mr. Tuccelli-Margolin offered to develop the technology for Nevada (for free of course). The hardware is free to the dispensaries and C4EverSystems takes a 1.75% fee on sales.

Insuring the Medical Marijuana Industry

Patrick McManamom from Cannasure Insurance Services presented on the speciality nature of insuring this new industry. They provide liability insurance for dispensaries, cultivators, infused product manufacturers, and other ancillary businesses. The risk profile of a medicated edible manufacturer turns out to be quite different from a standard bakery. Mr. McManamom claims deep expertise in risk management for the Cannabis industry versus a traditional insurer. Some of his security recommendations include:

• All access to the business, cash, and product is video recorded. Upload all video to remote service so an on-site thief cannot take the footage with them.
• Perform criminal background checks on all employees and drug testing for meth, heroin, and other high-risk drug addiction.
• Train all employees on security measures and keep security "need to know". Limit who knows the timing and procedures for handling large amounts of cash & product.
• Separate cash and product vaults.
• Require labs to retain testing samples for 90 days, in case of a bad reaction the sample can be retested.

Mr. McManamom highlighted the liability insurance requirements for Nevada. The coverage needs here are 2-3X higher than other states. For example, his largest liability policy in Colorado is under $10 million, while he's looking at $42 million policy for a facility in Nevada.More pictures of the hearing are available for download.