Riana Durrett, at the time the executive director of the Nevada Dispensary Association, poses in this 2017 photo outside the Legislative Building in Carson City. Durrett is the inaugural director of the new Cannibas Policy Institute at UNLV. The institute will serve as a research hub for local, state, national and international cannabis policy, according to UNLV.
Friday, March 8, 2024 | 2 a.m.
Recreational cannabis is a $1 billion annual industry in Nevada that continues to grow — long-awaited consumption lounges finally are starting to open — since it launched in 2017.
Yet, the illegal drug market remains strong here, industry experts said.
“It’s rampant throughout the city; it is thriving,” said Judah Zakalik, a board member of the Cannabis Policy Institute and co-owner of Zion Gardens cultivation facility. “(Illegal sellers) don’t have to deal with the same regulations, as you know; they can go anywhere; and if the consumer doesn’t know where a legal place to buy is or where an illegal place to buy is, then that ignorance is gonna cause problems.”
The topic of illegal sales dominated the conversation during a panel with local leaders in marijuana legislation organized by UNLV’s Cannabis Policy Institute.
It was the first panel hosted by the institute, which was established last year and is led by Riana Durrett, a professor at the UNLV Boyd School of Law and a member of the Nevada Cannabis Compliance Board.
Zakalik said the illegal drug market was seen most commonly on the Strip, where some operations brand themselves as legal cannabis merchants but are not. There are also illegal sellers who deliver cannabis products directly to consumers at hotels, he added.
The state in recent years has been paving ways for consumers to buy their cannabis products legally and consume them safely, but industry experts said consumers still risk that safety if it means spending less money and travel time.
Illegal marijuana sales are a $100 billion annual industry, according to Forbes.
“When you have a very different price between the legal and illegal product from a consumer’s perspective, although the legal product may have been tested, it may have some certifications and be safer, there are some consumers that care about that and there are most consumers who probably just buy the cheapest thing they can find that satisfies their needs,” said panelist Robin Goldstein, director of the Cannabis Economics Group at the University of California, Davis. “If it’s twice as much to buy legal weed as illegal weed, very few people will buy the legal weed.”
Goldstein explained that experts have seen a rise in the quality of illegal marijuana being grown, becoming high enough that “it competes reasonably well as a substitute for the legal stuff,” leading spenders to opt for the cheaper-yet-possibly-unsafe illegal cannabis products over the legal ones.
Battling the illegal market, Zakalik said, starts with educating people about the benefits of buying cannabis products from licensed sources, even if it costs a few extra dollars. Zakalik believes the protections consumers get and the transparency in the type of product they’re buying as well as the ingredients make a safer experience for everyone.
Cannabis consumption lounges, with readily available products and a comfortable environment to legally consume them, could be the solution to buyers wanting the convenience of products and a space to use all in one spot.
Voters approved the recreational use of cannabis through a ballot measure in the 2016 election, and consumption lounges were legalized through Assembly Bill 341, passed into law during the 2021 Nevada Legislature through the sponsorship of Steve Yeager, D-Las Vegas.
Under previous Nevada law, it had only been legal to consume marijuana in private residences, which put visitors purchasing recreational marijuana here in an odd spot because it’s also illegal to use marijuana in hotel rooms or in public, including on the Strip. But as of last week, those visitors have access to another venue to smoke their stash legally in Nevada. Smoke and Mirrors, attached to Thrive Cannabis Marketplace off Sammy Davis Jr. Drive, became the first state-regulated cannabis consumption lounge to be fully licensed in Nevada, according to the Cannabis Compliance Board.
But there’s another big issue for the cannabis industry and possibly consumers, the experts warned: intoxicating hemp beverages.
Hemp is a “cultivar of cannabis” that was removed from the Controlled Substances Act in 2018, explained panelist Marc Hauser, chief of staff at Jardin Cannabis Dispensary.
While hemp and marijuana are both considered cannabis plants, hemp variants contain 0.3% or less of delta-9 tetrahydrocannabinol (THC), the compound that triggers highs. Marijuana, in comparison, has about 15%, according to the National Institute on Drug Abuse under the National Institutes of Health.
Through a “loophole” in the federal law, producers have extracted “intoxicating cannabinoids” from hemp, infused them into beverages and sold them in stores.
If Congress changes language in the 2024 federal Farm Bill, these types of products could go away, Hauser said. But Zakalik said these intoxicating hemp products are “scary,” especially because producers don’t have the same strict regulations that many cannabis cultivators have.
Not only are cannabis businesses being “undercut” by these hemp-infused producers — with their cheaper-made items — but consumers are also suffering from mislabeling, said Dr. John Hudak, director at the Maine Office of Cannabis Policy. He has gotten calls in Maine from principals regarding high school students who have attended classes “high out of their minds” from consuming delta-8 and delta-10 THC-infused drinks.
“Every state is freaking out about this, and probably to a good extent,” Hudak said. “There are a lot of victims of varying levels because of how unregulated this market is and the outsized role of some really bad actors in the way that they operate.”
The U.S. Food and Drug Administration said such products have not been evaluated or approved federally for safe use and may be marketed in ways that put public health at risk. Potency levels of the products are “way off,” and the contamination levels “are unbelievable,” Hudak said.
In 2022, the FDA issued a warning to five companies for selling products labeled as containing delta-8 THC in ways that violate the Federal Food, Drug and Cosmetic Act, the FDA website said.
The FDA said last January that Congress needs to enact regulations that would better control the production of hemp-derived cannabinoids — which encompasses products like delta-8.
In Nevada, the Department of Agriculture supervises the growth and handling of raw hemp but does not regulate consumable hemp products — that’s deferred to agencies like the FDA, the NDA said.
While the state has no explicit ban on these cannabinoid products, there are “substantial regulations, such as a prohibition on synthetic cannabinoid and the 0.3% THC limit that is also included in the 2018 Farm Bill.
Nevada Senate Bill 49 — passed during the 2021 legislative session — prohibits synthetic cannabinoids in the state and allows the CCB to enact disciplinary options.
Hauser said “there’s an incredible amount of confusion” on the legality of these products that needs to be cleared among both producers and consumers. Hudak also wants companies with “blatant” false advertising on their packages, which could put consumers in danger, to be held accountable through enforcement.
“I think we need to spend a lot more time educating the tourists who come in and educating our local constituents and residents,” Zakalik said. “I’m not a big war-on-drugs kind of guy — if you can’t tell already — but I think there has to be some kind of enforcement against these shops as well. What they’re doing is illegal and the rules need to be enforced.”
The panel was one of three the institute is hosting in the coming months, with the others planning to cover the state of cannabis research on May 28 and what gaming operations would look like if cannabis prohibitions were lifted on Aug. 13.
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