Nascent marijuana sector gets its own association

The businesses operating Nevada’s new medical marijuana industry have yet to be determined, but they already have a homegrown trade group advocating for them.

The Nevada Medical Marijuana Association was founded by longtime state lobbyist Peter Krueger, a principal in Reno’s Capitol Partners, which represents a wide variety of clients every legislative session.

NVMMA, based in Reno, already boasts 46 members, each hoping to become one of four types of medical marijuana establishments: cultivator, producer, dispensary or laboratory.

The state oversees the industry and next month will start taking applications from businesses looking to operate one of a limited number of MMEs allowed by law. In November, the industry should come into focus when the state is expected to unveil the names of the certified businesses and the people behind them.

“We expect the membership to shake out when we know who’s in the business and who isn’t,” says Krueger.

Krueger expects more operators to be weeded out even after they’re selected because there may not be enough demand to support them.

“Some will get certificates and not open. We’ve only got 6,000 card holders,” says Krueger, referring to current number of individuals with state medical marijuana cards who will be customers of the 67 dispensaries allowed by state law.

But Krueger also expects some operators to keep their doors open if only to get a leg up in case the state approves recreational marijuana, which would significantly boost demand.

He says NVMMA has no plans to get involved in the issue of recreational marijuana, which is expected to come up during the 2015 legislative session.

The first slew of bill draft requests for the session were submitted in late June and already there are three requests for bills to be drafted pertaining to the medical marijuana industry, including one to establish “marijuana financial services cooperatives.”

“This idea of a co-op, I’ll have to do some research on it, but that could be the vehicle,” says Krueger. “That is the biggest stumbling block and that may give us some idea and some resolution at least at the state level.”

The issue of banking is one of several industry conundrums that arise out of the discrepancy between state law and federal law.

Banks are still reluctant to work with marijuana businesses even after the U.S. Department of Treasury and Department of Justice in February released guidelines allowing banks to take deposits from and make loans to them.

Krueger also expects there will be bills in the legislative session to fill in some holes of the 2013 legislation, including allowing the state tax department to conduct audits of pot businesses and for such businesses to get bonding.

In the meantime, Krueger is busy lobbying in counties and cities, which have a lot of say in the operation and operating costs of medical marijuana businesses.

“I did an Excel spreadsheet of business license fees for the membership. There are a lot of different approaches,” says Krueger. “You need a special use permit in Henderson costing $100,000. So instead of prohibiting it the city is saying you can open something if you’re willing to pay for it. The city of Reno is looking at a $5,000 business license fee and $20,000 special use permit renewable annually. The idea is there will be some enforcement involved.”

The Reno City Council last week passed a medical marijuana ordinance that, among other things, sets medical marijuana business license fees at $5,000 per quarter or $20,000 annually and an application fee of $40,000.

NVMMA also plans to educate as well as advocate on the subject of medical marijuana, says Krueger.

“In the long run, we hope to educate the public,” says Krueger. “We haven’t done that yet, and it’s still just in the formation stage.”