LAS VEGAS (KLAS) – A non-refundable $10,000 application fee to run an independent pot parlor is like everything else in Las Vegas – a gamble.
With the window about to open for applications in Nevada – October 14-27 – 20 players will enter the ground floor of a business that promises to see high tourist traffic and many locals. Applications from independent pot parlors will go through a lottery to be considered, and only 20 will be approved. And half of those will go to applicants who meet “social equity” goals that were established after the state came under fire for the low number of minority-owned cannabis businesses that were licensed. Eligible Social Equity applicants receive a 75% discount on the Freelance Salon Application Fee, reducing it to $2,500.
It’s a big gamble for existing dispensaries who want to have a pot lounge on-site: will it be worth the cost of applying?
“The hardest part for people is the stress of feeling like you’re betting $10,000 on the application fee,” according to Las Vegas-based Leafsheets co-founder Juliana Whitney. “Or for dispensaries, their application fee is $100,000.”
A lot of money
On Sept. 1, the state estimated there would be as many as 40 to 45 retailers shelling out more than $100,000 each for on-site pot shows. A spokesperson said this week that the estimate had not changed.
While retail salons won’t face the angst of a lottery just to get in the game, there are questions about return on investment. Is it exorbitant? An industry source said the cost of doing business is “astronomical” – high taxes and a host of hurdles that make every step harder.
Whitney thinks the rest of the country will watch Las Vegas pot parlors become a reality. Leafsheets is a do-it-yourself web-based solution for navigating the application process, providing potential companies with plans and guidance. Whitney, 33, has worked in the industry since 2015, with clients including Deep Roots Harvest, Euphoria Wellness, Nature’s Chemistry, Planet 13 and Rove.
It’s high stakes — and high rewards — as the next stage of marijuana legalization prepares to roll out in a state where the consumption of cannabis products is actually illegal outside of the country. home. Pot parlors will provide legal relief to this problem, and they are expected to start opening as early as spring 2023 – possibly earlier for retail parlors.
What will a lounge pot look like?
David Farris, vice president of sales and marketing for Planet 13, sees the application process from a different perspective.
Planet 13 is a leader in the Las Vegas market, and many other dispensaries tend to lean on their leadership. “We get asked a lot of questions and we get asked about updates…but we’re like every other retailer going through this process for the first time,” he said.
The dispensary, one of the most visible in the Las Vegas Valley with a location just off Interstate 15 at Desert Inn, is already a tourist attraction. Farris says the traffic in the store is a big plus as the pot lounges get closer to the real thing.
Planet 13 is still working on concepts and considering what the living rooms will eventually look like. Cafes, hookah bars and other “wilder” ideas exist, Farris said. “I think a lot of people in the industry are incredibly creative,” Farris said, adding that shows aimed at the tourist market might be completely overkill.
For Planet 13, nothing is finalized as we approach the application window. “It takes a lot of work,” Farris said.
Whatever model exists, Las Vegas is likely to break it. With 41 million tourists providing a large pool of demand, Vegas’ solution might be unlike any other. And then there is the question of the inhabitants. Will locals even go to potty parlors?
Whitney said that was one of the big questions. This uncertainty — and the state’s ban on serving alcohol in a pot parlor — has fueled much speculation about what pot parlors in Las Vegas will be like.
“I think the industry is better here than elsewhere. Stores look nicer, that stuff,” Whitney said.
The business side of marijuana is a learning experience for those who might see it as an opportunity to make a quick buck. It took a long time to move forward with pot shows as Nevada put the regulatory structure in place. Clark County and the City of Las Vegas have adopted state procedures — Henderson and North Las Vegas do not plan to have pot lounges anytime soon. Local governments won’t work with anyone until the state approves a request. At that point, the county and city will regulate the locations and business licenses of those who hold the “golden ticket” – a state-approved application.
And then, they have to move fast.
“Operators who are approved will have 12 months to open up,” Whitney said. “It will really depend on their ability to meet that schedule, which can be affected by construction and all sorts of things.”
A new problem on the roads?
Another aspect of kettle lounges: When customers exit kettle lounges, will impaired drivers be a bigger problem?
The nature of impairment by cannabis is different from that of alcohol, as the effects are not always immediate. When we enter the world of “budtenders” serving customers, will they know when to cut them off?
Farris said Planet 13 has dedicated resources to training staff to recognize signs of impairment. “We are unique in that we have a full training team.” Another big factor for trade shows that cater to tourists is that they tend to rely on carpools or taxis to get to businesses. Or they walk.
Farris said Planet 13 also offers shuttle service.
But will all potty parlors be proactive in preventing customers from getting behind the wheel?
Whitney noted that training is part of a larger concern — employee turnover in the marijuana industry. She said employees need a high level of training, but they don’t stay.
The steep discount to give an edge to “social equity” applicants is intended to level the playing field for minorities to enter the business. But the realities of the marijuana industry are stacked heavily against minorities.
Judah Zakalik is the Nevada co-director of M4MM — Minorities for Medical Marijuana. He is also an equal partner in Zion Gardens, a cannabis growing business north of Las Vegas, as well as several other businesses.
MJBizDaily.com quoted Zakalik’s partner, Aaron McCrary, in a 2020 article about minority involvement in Nevada’s cannabis community. McCrary has been hailed as the first “master cultivator” of black cannabis in Nevada, according to the article.
“The ability to access large sums of legitimate capital is the single greatest barrier to success for any small business,” McCrary said.
It takes money to make money, and Zakalik said while social equity is a good place to start, there’s still a long way to go if minorities are ever more than employees or suppliers to the world. serving large established companies. He said meaningful participation and ownership will only come when minorities control the companies that grow and sell at the wholesale level – and a pot parlor won’t fight an uphill battle for profit.
A license for an independent salon without “vertical integration” of cultivation and a dispensary means that an owner will have to pay the wholesaler markup – a big impediment to profitability.
Still, Zakalik applauds Nevada for taking a step.
Application Nuts and Bolts
The Cannabis Compliance Board has all the information posted online, and companies are preparing as the application period approaches.
For some companies, the advice of a consultant will be essential to meet this deadline. Fact sheets have emerged as an alternative to hiring a consultant, and they work with people in a variety of situations.
“We have growers who don’t have dispensaries who have reached out and applied for independent salons. We have dispensaries applying for the dispensary side of the shows. And we have brand new people all over the industry applying and so they will only own a salon if they are chosen. There are all kinds of people trying to get in,” Whitney said.