We have written quite a bit on Nevada cannabis license transfers in Nevada. If you haven’t read our previous posts tracking the legislation, approval, and ultimate sales of licenses, check them out here, here, here, here, and here. We previously stated that the market is going to boom and bust for those selling licenses. Even with recent policy changes from the state, we still think this is true.
As a refresher, Nevada has said that provisional licenses will expire in May. At one point this meant that a licensee not operational prior to this deadline risked the state pulling its provisional licenses. But about eight hours after our last post on license sales the state of Nevada issued a policy statement indicating that it did not intend to nullify the license of a licensee making “significant progress towards opening.”
This has brought up a whole new slew of questions for our cannabis licensees. What exactly is “significant progress?” For example, does this mean that a licensee must start construction? How about getting bids to start construction, does that count? What about if a licensee is working diligently to secure a location after having its initial location fall through? All of these are real-world scenarios that have happened to our clients and they are all worried they will no longer have a license come May.
It’s language like “significant progress” that keeps lawyers in business.
Usually language like that used by the state can be argued back and forth by parties and decided by a court. In this case, there is a state agency that will be making the decision on whether to rescind licenses. There may be an ability for a licensee to plead their case, but we’re not sure what, if any, process there will be to do so because nothing firm has been established. We are thinking we will see a policy statement on this soon. Maybe in 8 hours?
What does all of this mean for Nevada cannabis licensees? If you are worried about whether you have made “significant progress” or if you are now realizing you lack the funds to move forward on your license, now could well be a good time for you to sell your license. Nevada cannabis licenses are going for hundreds of thousands of dollars — millions if we’re talking about dispensaries. There is money to be made by selling Nevada cannabis licenses and it makes no sense to let one go unused. License prices are holding pretty firm right now, but we expect they will soften as May approaches and when they do, we anticipate a fast crash to zero, as the licenses will eventually become unusable.
Purchasing a Nevada cannabis license now is a bet on the future of Nevada marijuana. If you buy a the license now, you will be getting involved in a cannabis industry that caters to the small Nevada population of medical marijuana card holders and out of state visitors with their own medical cards. BUT, if recreational marijuana passes in our election in November (which we are believe will happen), these licenses will almost certainly start selling for a lot more even than today.
Are you willing to bet on the future? Whether you’re an MME license holder wondering whether proving you’ve made “substantial progress” sufficient to avoid rescission, or you’re a potential investor wondering if Nevada will be going recreational in November, it’s a bet you’re going to have to make. But this is Nevada, after all. What more were you expecting?