The Future of Marijuana, Medical and Otherwise

Whether for medicinal or recreational purposes, marijuana has become big business across America. Now Nevada is poised to carve out its piece of the pie.

Illustration by Ryan Olbrysh

Illustration by Ryan Olbrysh

It’s a familiar scene: A few hundred businessmen, investors and a few politicians pack a hotel conference room, the requisite white linen covering banquet tables sitting under glittering chandeliers. Some of the attendees swap business cards and hit the coffee urns. Others sit at the tables, their attention divided between the smartphones in their hands and the gray-suited, thirty-something speaker onstage—a speaker who just proclaimed, “When you invest in marijuana, you invest in America!” What?

No, this isn’t Johnny Knoxville in disguise pulling off another prank. This is the new reality. Legalization of medical marijuana is spreading across the country, with recreational legalization picking up speed in its wake. Changing attitudes aren’t just bringing a new tone to our national drug policy, but new ways of treating illnesses and a new multibillion-dollar industry that is being birthed in voting booths, legislatures and grand ballrooms from coast to coast.

It’s also an industry that offers Nevada the rare combination of tourism revenue and the creation of non-tourism jobs. The business of cannabis is beginning to encompass virtually every profession: lawyers, doctors and engineers; graphic designers, IT specialists and chefs; janitors, salesclerks and security guards. And it’s a tax base that no state minds tapping. The Nevada Economic Forum estimates that medical marijuana—which should be available in dispensaries by early 2015, once all the building, inspecting and supplying is completed—will generate $10 million in tax revenue over the next two years alone. And if recreational use becomes legal, that number will rise like smoke in the air at a Phish concert.

Lissa T. Rodgers talks the future of marijuana in Nevada on 97.1 the Point. Listen to the broadcast below.


California became the first state to legalize medical marijuana back in 1996, and more have followed suit at an ever-accelerating rate: Currently, 23 states—as well as Washington, D.C., and Guam—allow it for medicinal use, as people seek more natural remedies than a handful of pills. “Dating back thousands of years, marijuana has been a well-documented medicine throughout the world for numerous ailments,” says Brian Arevalo, executive director of the Las Vegas branch of the National Organization for the Reform of Marijuana Laws (NORML). “Cachexia, AIDS, cancer, glaucoma, muscle spasms, nausea and pain … there are numerous documented instances and patient testimonials in which medical marijuana has proven more effective than pharmaceutical drugs.” There have also been testimonials from some very public figures: CNN’s Dr. Sanjay Gupta has been a strong public proponent of medical marijuana, so much so that he’s produced and hosted a documentary on its use; TV personality Ricki Lake is working on her own film about how marijuana has helped pediatric cancer patients.

Nevada voters legalized medical marijuana use in 2001, but the state didn’t establish a means of acquiring it until 2013, when state Senator Tick Segerblom, D-Las Vegas, finally brought the issue to the Senate floor. What took so long? “[Legislators] didn’t have the courage to address the issue,” he says. “They said ‘There’s no way you’re going to pass it,’ but it turns out there was no opposition. The emperor had no clothes.” To that point, Gallup Polls for the last two years have shown a majority of Americans supporting legalized marijuana for all uses, so it’s not surprising that state legislatures are succumbing to the will of the people.

Segerblom says that the once-controversial issue now enjoys support “from across the political spectrum.” Indeed, marijuana legalization is the rare topic that both social-justice liberals and laissez-faire libertarians can agree on. In Nevada, both camps are well aware that there are plenty of budgetary holes that cannabis could plug up. And that heretofore untapped revenue stream could be flowing sooner rather than later: A Nevada ballot initiative to legalize adult possession and use failed in 2006, but it drew 44 percent of the vote, a number that will surely rise when voters reconsider the issue in 2016.

While we await that vote, entrepreneurs and local jurisdictions have spent the latter half of 2014 cutting through all the procedural red tape to get medical marijuana dispensaries open up and down the state. For instance, the cities of Las Vegas, North Las Vegas and Henderson, as well as unincorporated Clark County, received and approved applications for licensure of medical marijuana services, including cultivation, production and distribution. It was a process that involved thousands of dollars in fees and thousands of pages of paperwork, but the hope of drawing a golden ticket attracted almost 200 businesses; out-of-state players with experience opening facilities elsewhere; and a mix of local businesspeople, including such prominent figures as restaurateurs Jenna and Michael Morton, philanthropist Camille Ruvo, former Assemblyman Chad Christiansen, mayoral spawn Ross Goodman, lawyer/TV personality Ed Bernstein and Reagan/Bush right-hand man Sig Rogich.

Regarding the out-of-state group, many came from California, where the medical marijuana system has been operating since 2010. One business was Terra Tech, whose MediFarm subsidiary has gotten approvals in Las Vegas and Reno. “Vegas has done a good job of looking outside at what others have done well or poorly,” says Derek Peterson, Terra Tech’s president and CEO. One of the main differences between the bordering states is the industry’s profit/nonprofit status. “The for-profit model is the spirit of Vegas,” Peterson says. “It invites entrepreneurs who have capital and will invest heavily in infrastructure.” He adds that a great opportunity exists for Nevada to capture out-of-state revenue through the process of interstate reciprocity: People holding medical marijuana cards in other states could use them for dispensary purchases in Nevada.

Peterson was in finance with Morgan Stanley before jumping into the medical marijuana business. A friend was running a dispensary in California, and Peterson began to inquire about the dispensary’s revenue and growth rates. Needless to say, the answers got Peterson’s financial juices flowing. “One of the ways you analyze retail is [annual] revenue per square foot. Your big-box retailers will do $500-$600 per foot. … But the medical marijuana dispensaries were doing $3,000-$5,000 per square foot.”

“We’re obviously in it for economic reasons,” Peterson continues. “But we are also trying to build a socially conscious company while making a profit.” He’s also got the unique perspective of someone who operates dispensaries and knows firsthand the benefits of the product he’s peddling: “I broke my neck several years ago and used it for that purpose, so I get it from a relief standpoint.”

Peterson says Terra Tech’s California dispensaries serve about 1,000 people daily, and the customer demographic is not unlike what you’d see in a random restaurant. “You’ve got hippies, doctors, accountants, everything in between. That’s the reality of people using this for true medicinal purposes: Cancer doesn’t care whether you’re rich or poor or old or young.”

A combination of profit motive and social consciousness is one of the blossoming marijuana industry’s chief characteristics. “This industry is getting birthed [by] people who really care,” says Troy Dayton, president and CEO of the ArcView Investor Network, a group that matches cannabis entrepreneurs with investors. Dayton sees it as combining “the best ideals of activism with the best ideals of business. Hopefully we’re building not just a new industry, but a new kind of industry.”

Last month, ArcView hosted a pitch forum at Green Valley Ranch hotel-casino, where “cannabusinesses” from all over the nation presented ideas and sought investors. The ballroom was populated with men in sport coats and closely cropped haircuts, but there was also a smattering of vintage print shirts and fedoras. Dayton views profit as another tool to reform drug laws. “It seems like I’m here for business, but that’s just the suit. My background is in activism,” he explains. “If we were really going to change the laws, we had to build an industry that was responsible, politically engaged and profitable; that was what ultimately was going to move the needle. The goal is to make sure that no adult is punished for this plant ever again.”

The gathering at Green Valley Ranch was actually the second time this year the group has met in the Valley. It was hardly by accident. “All of the people who provide the ancillary businesses to the industry that are based in other places are also excited to be in Nevada, because there’s so much opportunity,” Dayton says.

A selection of medical marijuana “flavors” are displayed at a California dispensary. Dispensaries are scheduled to open up and down Nevada in early 2015—meaning these flavors may be coming soon to a shelf near you. | Photo by Leonard Ortiz/

A selection of medical marijuana “flavors” are displayed at a California dispensary. Dispensaries are scheduled to open up and down Nevada in early 2015—meaning these flavors may be coming soon to a shelf near you. | Photo by Leonard Ortiz/

The entrepreneurs seeking funding go far beyond the stereotypical bongs n’ baggies set. First, there are the new delivery methods that seem like something out of Blade Runner: Fake cigarettes pre-filled with cannabis oil; shots that have an immediate impact, thus lowering the risk of overconsumption; and soft gels that come in “feelings” such as chill, create and giggle.

There are also THC-laden caramels, medical marijuana chili-lime peanuts and cannabis soda. There’s a 100,000-square foot office park specifically for growing and processing facilities and a Victorian castle/hotel that’s being renovated into a “luxury cannabis destination resort,” both in recently legalized Washington state. There are pot-centric iterations of GrubHub, Facebook and Google; insurance companies devoted to ferreting out legalese that might impact marijuana-related industries; security firms that specialize in the industry’s particular requirements and challenges; and even hedge funds that only invest in cannabis-related businesses.

Then there’s the unintended benefit to cultivation: a demand for agricultural innovation and applications that could extend beyond marijuana, into growing food, lowering pollution and cleaning the environment. “We got drug into the cannabis market. They discovered us,” said James Gaspard of Biochar Now, a soil enhancer, when he addressed the ArcView panel. “We’ve got a lot of Ph.D.s in this industry. I’ve met more scientists in the cannabis industry than any other.”


Disruption” is the business buzzword du jour, yet the cannabis industry becomes more disruptive as it moves down traditional corporate paths: Doing an IPO with something that’s still semi-illegal is far more radical than making a new app for the same old. “We entered when they were giving five- to 10-year sentences,” says Terra Tech’s Peterson. “Now that the risk is gone, the pure economics are coming in, and the new suits are coming in and replacing the stoners. But those quote-unquote stoners built this business at a time when they put their own safety at risk. I hope it’s a great symbiotic relationship between pioneers and new money men.”

Who knew that one day Abbie Hoffman would join forces with Ayn Rand?

“I think it’s the next great American industry,” ArcView’s Dayton says. “It’s a generational moment here where the little guy has a chance to take a run at a multi, multibillion-dollar market that’s grown at a remarkable clip. It will be stacked up against the Internet boom, the renewable energy boom, the organic foods boom and all the booms that have come before.”

The sound of that boom is being heard in legislatures and at ballot boxes across the nation. In addition to the 23 states that allow medical marijuana use, four states (Washington, Colorado, Oregon and Alaska), as well as Washington, D.C., permit adult recreational use. Addressing the ArcView forum, U.S. Representative Dina Titus, D-Nevada, said, “As more and more states get on board, that pushes the representatives to represent the business interests in their state.”

Map of Approved Dispensaries in Las Vegas

But even if states legalize, the federal government still considers possession of marijuana to be a crime. Drugs are on federal “schedules” that, according to the Drug Enforcement Agency, rate their “acceptable medical use and the drug’s abuse or dependency potential.” Marijuana sits as a Schedule I drug, along with heroin and LSD; both oxycodone and methamphetamine are Schedule II. In other words, the government believes you’re safer smoking meth than reefer.

Because of the Schedule I status, if an institution receives any form of federal funding—such as for schools or hospitals—they will lose it if they permit cannabis use, even for medical or scientific purposes. Vets who use medical marijuana will be denied other VA services. Marijuana-related businesses can’t keep money in banks, nor can they gamble it in casinos.

But even this may be changing: In October, the Eastern District of California, a court trying a cultivation case, began considering a motion to declare marijuana’s Schedule I status unconstitutional and either lower its place on the schedule or remove it. Who put it there to begin with? Richard Nixon: His own presidential commission suggested that marijuana be left off the schedule entirely. Nixon ignored the recommendation, declaring in one of his recorded Oval Office rants, “The Communists and the left-wingers are pushing the stuff and trying to destroy us.” So he designated it as a dangerous gateway drug.


No doubt medical marijuana will create a lot of revenue to Nevada, but the Megabucks jackpot would come from legalizing recreational use, which is taxed at a higher rate—Colorado has already seen recreational-use sales surpass medicinal. Is Nevada ready to take that step? It won’t take long to find out. The Coalition to Regulate Marijuana Like Alcohol turned in 200,000 signatures in support of legalizing recreational cannabis—they only needed 102,000—guaranteeing that the issue will once again go before voters in 2016.

“We anticipate that Nevada will favor legalizing marijuana for recreational use in the near future once they see how other states have successfully implemented their programs,” NORML’s Arevalo says.

Segerblom concurs, pointing out how Nevada schools will directly benefit from medical marijuana sales: According to the current legislation, the school district in the county where the marijuana is purchased will receive 75 percent of the sales tax. “Everyone I talk to says, ‘We already know it’s out there; let’s pass it and regulate it,’” Segerblom says. “If Colorado, Washington and Oregon can do it, it seems like a no-brainer for Nevada.”

A recent study by the Congressional Research Service states that Colorado collected $37 million in taxes between January and September of 2013, and Segerbloom thinks that our “Whatever happens here, stays here” state can beat that number. “You can come here, be a renegade, be an outlaw,” he says, “then go home and tell your friends what happened. It’s perfect for people who want to indulge.” As a lure for the young-adult market, can legalized marijuana really be worse than bottle service, the Electric Daisy Carnival or The Hangover?

Even the less-excessive crowd might be inclined to have a puff or two in a town of sparkly lights and nightly fireworks, pirate battles and acrobat shows, clubs, concerts and every variety of food that can be put on a plate. “You couldn’t ask for a better complement to what we already are,” Segerblom says. “I definitely think it will raise our profile nationally and internationally. It will bring more business, less gambling.”

Clearly, the 21st-century marijuana user is no longer just the dreadlocked kid puffing on a joint and devouring Funyuns. It’s also the 6-year-old with cancer being given THC extract by his mom so he can eat and sleep. It’s the glaucoma patient using it to alleviate eye pressure. It’s the roomful of biologists trying to build a better fertilizer. It’s a farmer using a new form of greenhouse. It’s the private club where people sip top-shelf cocktails and puff artisanal strains. It’s your neighbor on a Friday night.

It’s also the future, something Nevada has never shied away from.