It has been a busy weekend for lawyer Alicia Ashcraft.
For the past few days, the managing partner at Ashcraft & Barr, a local firm specializing in business regulation, has been unpacking boxes and putting the finishing touches on its newly expanded office. In December, Ashcraft & Barr partnered with Colorado-based marijuana law experts Vicente Sederberg to form a practice dedicated to serving the needs of Nevada’s budding medical marijuana industry.
The lawyers can’t get ready fast enough.
“From regulation to taxation to business operations, there are (rules) specific to the marijuana industry that ... you need to have a little bit more specialization and expertise in,” Ashcraft said. “We’re helping businesses tread through the regulatory schemes in order to get open.”
Marijuana is shown at the home of James Parsons, a licensed medical marijuana patient and president of Medical Cannabis Consultants of Nevada, Oct. 26, 2010.
The firm is one of several ancillary businesses cropping up in Las Vegas and throughout the state that are capitalizing on the growing demand for cannabis-related products and services. With the arrival of commercial producers and dispensaries comes a new set of market needs, from accessory vendors to greenhouse manufacturers and security officers to lawyers.
Just how much revenue such businesses will bring in is hard to predict, but experts estimate it to be in the hundreds of millions of dollars nationally. And revenue is expected to grow as the industry expands.
Legal cannabis sales in the United States ballooned 74 percent in 2014, to $2.7 billion from $1.5 billion in 2013. The market in Nevada is expected to grow 341 percent in 2015, according to ArcView Group, a market research firm and investment network specializing in legal cannabis.
“A lot of businesses are looking to expand into Nevada and be able to offer their services because there’s going to be huge, huge growth in the market,” said Troy Dayton, founder and CEO of ArcView. “The cost of cannabis is a very small part of the overall budget. Every other line item on that budget is an opportunity for an ancillary business provider to meet an underserved need.”
Ancillary industries are rife with opportunity in part because their larger, more traditional counterparts remain hesitant to get into the pot business. Some established businesses are deterred by the reputational risks that surround the industry and the fact that the federal government still classifies marijuana as an illegal drug. Medical marijuana also largely is a cash-only enterprise, since most banks won’t work with vendors (although First Security Bank of Nevada has embraced medical marijuana as a new line of business).
But the industry can be a springboard for big opportunities. Among the most common ancillary services: waste management, real estate, consulting and information technology.
“There’s a reason people are calling Nevada the new Amsterdam of the West,” said Leslie Bocskor, a marijuana investor and founding chairman of the Nevada Cannabis Industry Association. “The opportunity in Nevada is huge.”
The industry is equally fertile for entrepreneurs with more unusual niche businesses. Medical marijuana modeling agencies, delivery services, interior design firms and social networks are cropping up in Las Vegas and beyond.
Smokin Hot Talent, for example, is a talent agency that launched last year to provide models, known as “smokesmodels,” for cannabis-related events and photoshoots. Several appeared at Hempfest in October. The models are patients, advocates and supporters of the cannabis movement.
Nevada’s reciprocal card policy and tourism economy make it primed to draw visitors from other states where medical cannabis is legal, including California, which touts the largest cardholding population in the country. That could give rise to ancillary services such as delivery services to marijuana-centered boutique hotels and smokers clubs that even states like Colorado have struggled to established.
The opportunities would increase if recreational use were approved in 2016.
“We’ve been conditioned as tourists to overspend in Las Vegas, and I think you’re going to see that happen with pot as well,” said Mike Nahass, director of Terra Tech, an agriculture technology firm that holds eight production licenses in Nevada. “I think tourism will be a big deal in time to come. When it goes recreational, certainly. Will there be mega-clubs of cannabis? Who knows what it could look like.”