Business Brokers: The Future of Medical Marijuana Businesses in Nevada

With the legalization of recreational marijuana in Nevada on July 1st, 2017, business brokers have been kept busy with advising the influx of business owners looking to cash in on the latest hot-button trend. The sudden drive to own and operate a recreational marijuana dispensary left a question unanswered: What does this mean for the already established medical marijuana dispensaries in Nevada? We here at Schwartz Strategy and Valuation aim to consistently be able to provide the best information, so we decided to look further into the topic and report back to you.

Many factors go into predicting the fate of medical marijuana in Nevada, but one seems to loom high above the rest: sales for recreational marijuana have already far surpassed medicinal for the 2017 calendar year (and medical had a 7-month head-start). Las Vegas had 60 medical marijuana facilities prior to July 1st and now currently only have five. What happened to have such a drastic decrease in such a short time period? Businesses consulted with their brokers and decided together that switching to recreational marijuana or selling their business would be more lucrative in a tourist town than requiring costly medical cards to even browse.

Medical marijuana cards can cost upwards of $400, making them an investment. Unless they are routinely buying, many patients are unable to justify spending such a hefty amount on a weekly or bi-weekly habit. The process to acquire a medical marijuana card can also be a deterrent for several patients, as it tends to take at least a few weeks and multiple doctor visits before you can be granted the green light to purchase. With recreational marijuana being introduced to the Vegas economy, clients no longer have to show anything more than an ID to walk out the door with some greenery.

Limitations on purchasing are a heavy factor in the steady decline of medical marijuana businesses. Unlike recreational marijuana, where you can purchase up to one ounce of flower per day, medical marijuana laws place strict limits on how much a client can purchase within a 14-day period. Purchasing recreational marijuana, at the max amount allowed, will give each client almost six times the quantity of grass than if they were to purchase the max allowed of medical.

Despite dwindling brick-and-mortar store counts and damaged sales, there are still lobbyists fighting for medicinal marijuana. Assemblyman Nelson Araujo of Las Vegas aims to make getting a medical card less troublesome and more cost-effective for both frequent and non-frequent medical marijuana buyers. The bill he plans on introducing would cut costs down from $400 per year to only $50, and would increase the quantity allowed per purchase so more frequent users feel satisfied. It has some hurdles (such as dispensary licensing and enforcement of violations), but if passed would be crucial in increasing customer’s comfort in purchasing medicinal rather than recreational.

Overall, the future looks a little grim for medicinal-only marijuana stores in Las Vegas. With the rise of recreational marijuana storefronts, medical marijuana stores struggle to keep up amongst the competition. Higher up-front costs mixed with a lengthy purchasing process create a strong preference towards the one-stop-shop model of the recreational stores. Although medical marijuana dispensaries offer trained employees that focus on treating symptoms rather than creating a new mental state, patients are regularly choosing the more convenient option.

If you are the owner of a medical marijuana dispensary and are wondering how to handle what the future has in store for you, let us help. We offer full evaluations of your business and will help you make the decision that will most benefit you, whether it be selling, evolving, or creating something new.



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