Internal Emails Show the Root of Nevada’s New Weed Business: Money

Christina Hempfling / EyeEm

Nevada’s new marijuana program caught the state by surprise in its first weekend with an unforeseen influx of customers, according to internal state emails obtained by TYT through a records request. The emails show just how lucrative those first two days were for a number of dispensaries.

Among seven dispensary companies discussed in the emails, approximately $1,166,547 in revenue came in during the first two days that marijuana was legal, July 1 and 2.

“Demand has been so strong that we are currently out of some of our most sort [sic] after items. It will only be a matter of days before we have to turn away patients,” read one email to Deonne Contine, executive director of the tax department. The sender’s name and email address were redacted by the state on that email and the others obtained by TYT.

The potential for lost revenue was raised as early as the third day of legal sales. Two emails noted that sales “demonstrate how much the state will be losing if this doesn’t get resolved.”

Thirteen dispensaries would be sold out within the first week of legal sales and two more within the first 10 days, according to records provided to TYT. Nevada has 47 dispensaries cleared to sell recreational marijuana and about 100 licensed growers.

“Right now, only companies that are also licensed to distribute liquor in Nevada are able to bring marijuana to dispensaries,” Nevada Public Radio’s Casey Morell reported. “The dispensaries say that’s why they’re running out of the drug.”

One dispensary, according to an email provided to TYT, made $130,000 the first two days from 1,100 customers, or about $118 per customer. These amounts were unanticipated.

“I will be out of several products and specific strains by end of day Friday. Some strains have already sold out, and at least 50% of the strains on hand will be sold out after or by Friday July 7th,” another person wrote.

The Nevada Dispensary Association estimates that between July 1 and 4 the state did $3 million in sales, bringing in $500,000 in state tax revenue.

But there’s still the issue of supply. “The capacity of only liquor wholesalers to serve the market seems lacking,” Contine said last week. “I think the evidence is fairly clear today that this market needs to be opened up,” she said.

A state judge, however, recently ruled that the Independent Alcohol Distributors of Nevada will be the only legal distributors of recreational marijuana for 18 months.

Gov. Brian Sandoval issued an emergency regulation last month to address the shortage: He adjusted state rules to let dispensaries sell from their own supplies. Previously, dispensaries could only sell marijuana from licensed distributors of alcohol.

Terra Tech, a cannabis agriculture company, reported in an earnings call that they made $2.2 million in Nevada in July at four dispensaries.

“State and local governments have been great,” said Derek Peterson, chairman and CEO of the company. “They have been working with us to find out what works well on the regulatory process, what’s cumbersome in the regulatory process and the industry associations and groups that we put together have suggested changes to the laws and the regulations.”

Terra Tech avoided the shortages that other dispensaries faced: “My management team in Nevada [was] smart enough to build up inventories significantly prior to the implementation of this. So we never had any type of a sales glut because of low inventories or no access to products, so we built up some significant reserves,” Peterson said.

“Naturally, it will drop off because the first day was a novelty,” Nevada Dispensary Association Executive Director Riana Durrett told USA Today. “I think [sales] will stay healthy because this market exists now, and I think people will be relieved to come out of the shadows.”