Northern Nevada’s fledgling medical marijuana industry is growing with the opening of two new businesses next month.
A Sun Valley dispensary called Kanna is scheduled to open its doors Feb. 8, supplied by Silver State Trading, a new cultivator and manufacturer in Sparks.
Kanna becomes the third dispensary — the retail storefronts selling a variety of medical marijuana products to patients with state-issued cards — to open in northern Nevada.
The industry enabled by state legislation passed in 2013 has been slow to take root.
For one, Nevada’s regulations, described as the toughest in the nation, have made the certification process more arduous than expected.
“Nevada has regulations on everything, from pesticides to lighting to wall reinforcements, to become compliant,” said Will Adler, executive director, Nevada Medical Marijuana Association. “Nevada tried to do it right. California and others before it were the wild west of marijuana. Nevada is the gold standard.”
Medical marijuana establishments, or MMEs, are licensed by the state and routinely need several inspections to receive their final certification, according to Pam Graber, education and information officer with the Division of Public and Behavioral Health, which oversees the industry. The process has ended up being a lot more time-consuming and costly than anyone anticipated.
In addition, MMEs rely on cash because banks won’t loan to the businesses, which technically skirt federal law.
As a result, Adler says about 40 percent of the MMEs that received provisional certificates, the first step in the process, are having trouble getting up and running.
Provisional certificates have been issued by the state to 372 MMEs and by Jan. 12 just 54 had gone on to obtain final certificates.
Adler expects some MMEs to sell their certificates and others, as many as 15 percent, to falter after missing the deadline to be in operations by April 15.
“You should easily double your (cost) projections, if not more. That’s why you’re not seeing a lot of companies opening,” said Michael Bove, chief operating officer, Kanna.
Kanna is opening in a 2,000 square foot, refurbished storefront with wood floors, copper ceiling and brick interior walls on Sun Valley Boulevard, north of Reno.
“We wanted our patients to feel comfortable, a place where they wouldn’t feel intimidated and would want to come back,” said Bove, who manages the family-owned business.
Kanna currently employs about 19 people, including patient services and security personnel.
The shop is starting off selling nine strains of flowers, which can be smoked, and some edibles such as candy bars, and eventually will offer topical creams and lozenges, a speciality of Silver State Trading.
The business is also working on launching two cultivation facilities, in Carson City and Washoe Valley, where they expect to grow about 600 pounds of medical marijuana flowers annually. The facility in Carson City will serve as a production site, too.
Silver State Trading has spent more than 2 years and $6 million to get its 40,000 square foot cultivation and manufacturing site in Sparks up and running, according to John Sutton, who with partner Shane Johnson, M.D., founded the business.
The company, though, is more than a business for Sutton, whose 19 year-old son suffers from a very rare pain disorder called erythromelalgia. Sutton began researching alternative medicines in an effort to get his son off commonly-prescribed opioids. Eventually, the Incline Village family tried medical marijuana acquired in California and it worked.
The day after receiving its certificate to grow in August, Silver State Trading planted 10,000 seeds, which 25 employees are now harvesting.
Once it receives its final certificate for production, Silver State Trading will begin manufacturing a range of products next month.
Those products include a pharmaceutical lozenge, acquired when the company purchased the manufacturer Trokie this month, as well as infused coffee and vaporizers.
The wholesaler’s products are also being sold through Silver State Relief and Sierra Wellness Connection, the other two northern Nevada dispensaries, in addition to Kanna.
Sutton and Johnson are somewhat worried the state’s industry isn’t producing enough dispensaries, but a more troubling issue is the blackmarket for medical marijuana, said Johnson.
“Our bigger concern is around patient numbers and illegal channels like delivery systems,” said Johnson.
Illegal growers are advertising themselves on industry web sites as home delivery operators, often fooling patients into buying illegal products, which are often cheaper than legal medical marijuana.
“That is a much bigger concern to me and there is not enough being done about it,” said Johnson. “There is some talk about doing something in northern Nevada but southern Nevada is sort of shrugging its shoulders.”