The Current State of Nevada’s Cannabis Industry

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It has been a year of enormous growth in Nevada’s medical marijuana industry. In 2015, the State of Nevada transitioned from a home-grown-only model to a fully functional system of grow operations, testing facilities, and dispensaries that operate under the tightest regulations in the nation.

Even though the cannabis industry in Nevada is in its infancy, there are distinct trends emerging from the perspective of the testing laboratory. DigiPath Labs DIGP: 0.178 +0.008 (4.65%) has now tested more than 240 cannabis flower samples, representing over 1,200 lbs of cured flower, from 7 different cultivators supplying only a handful of dispensaries. As of this week, that there are 16 fully licensed cultivators and 7 dispensaries open, with 55 provisional dispensary licenses and 117 cultivators queued up awaiting regulatory approval to commence commercial operations.

“The changes we’ve seen in just the first year of the legal cannabis industry in Nevada have been immense,” says DigiPath Labs DIGP: 0.178 +0.008 (4.65%) CEO Todd Denkin. “We fully expect 2016 to be a big year for medical cannabis cultivation, production, and sales, and for Nevada to pave the way for the rest of the country when it comes to cannabis testing for potency and safety.”

Nevada Cannabis Dispensaries

Imagine a graph shaped like a hockey stick. The blade, an incremental but steady upward trend, represents the Nevada medical cannabis market in 2015. Based on the current flow of products, we believe we’re at the inflection point, where the blade meets the shaft and soars upward. The latest state report on the upward growth in medical cannabis cardholders in the state of Nevada confirms our observations—Nevada now has 13,000 registered patients, a 70 percent increase from a year ago when the legislation passed.

In addition to attracting local cannabis cardholders, the industry is poised to become a major tourist draw. Nevada’s reciprocity laws allow anyone with a medical cannabis card or medical recommendation from anywhere in the country to legally purchase cannabis here, meaning that visitors from 22 other states and DC can patronize Nevada dispensaries. Already over 42 million people visit Las Vegas annually, and the Nevada Department of Health and Human Services predicts that over 180,000 out-of-state cannabis patients will visit Nevada in 2016.

Darlene Purdy, the managing director of Euphoria Wellness in Las Vegas, says the increase in patient demand has been beyond expectation. Since August 2015, when it became the first dispensary to open in Clark County, Euphoria has seen a steady increase in visits from longtime patients and new cardholders alike.

“Products have been flying off the shelves—we can hardly keep up with demand,” says Darlene. “With our combination of lab-tested, high-quality products and knowledgeable employees, we’ve attracted many new customers and, importantly, many repeat customers.”

Nevada Cannabis Growers

When DigiPath Labs opened its doors in late May 2015, the first cannabis flower samples arriving at our testing laboratory were the fruits of labor of patient growers, as dispensaries were allowed a one-time purchase prior to the arrival of state-licensed cultivation products. The testing results from these first samples were disappointing, with failures for pesticide residues and various categories of microbial screening. The patient-grown samples, which were no doubt representative of what had been available in the Nevada marketplace prior to these new regulations, had a 60 percent failure rate.

“Before safety and potency testing were mandated by the State of Nevada, patients had no idea how strong their medicine was or if it was free from harmful chemicals,” explains Dr. Cindy Orser, CSO of DigiPath Labs. “We set out to combine the most sensitive lab equipment available with the most effective standard operating procedures to ensure that patients can rely on our results. Initially, a majority of the products we tested didn’t meet these strict standards. However, more recently, growers who built their operations to meet the new regulations have had a very high pass rate. We are delighted by how quickly the medical cannabis available in Nevada has improved.”

Grower Steve Cantwell, who founded Green Life Productions (GLP), was determined to change the way cannabis is grown in Nevada.

“We saw the way cannabis had been grown before, and it wasn’t good for patients or the environment,” Steve explains. “We decided to incorporate the ethics and principles of permaculture to create a sustainable, organic grow environment with a low ecological footprint. Our test results and patient reviews show that our ‘No-Till Living Soil’ systems and operating procedures are working”

The second wave of cannabis flower arriving to DigiPath Labs for testing originated from the first wave of Nevada-licensed cultivation facilities. These samples were of much better quality than the patient-grown flowers, with uniformly high-quality potency profiles and very few (5 percent), failing pesticide residue and microbial tolerance levels. And now, with consistent harvests coming into the lab for testing, the quality of cannabis flower has only improved as cultivators realize that they need to reduce or eliminate pesticide use and increase cleanliness in order to get their products in dispensaries.

“From the testing lab perspective, the only remaining issue revolve around microbial levels, and are easily remedied” notes Dr. Orser.

DigiPath Labs has taken a proactive role in the education of cultivators on the importance of starting with and keeping a clean cultivation center, and maintaining a pathogen-free environment, and will continue its educational outreach in the coming year.

Nevada cardholders and out-of-state cardholders who visit can be confident knowing that the medical cannabis products for sale in Nevada dispensaries are thoroughly tested and the safest cannabis available anywhere in the US, and probably in the world, thanks to the hyper-vigilant testing paradigm adopted by the State.

“Thanks to the hard work of regulators, growers, testing labs, dispensaries, and patients, Nevada has gone from having an ad hoc medical cannabis program to having the most stringent rules of any state in just one year,” says Mr. Denkin. “This is a new paradigm for medical cannabis that we’re proud to be a part of.”

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