CANNABUSINESS

CannaBusiness

NEVADA LEADS THE WAY IN SALES GROWTH

Written By Haitham A.

Over the last two years, the Las Vegas cannabis industry witnessed record-breaking growth numbers. In fact, the state of Nevada, particularly Clark County, is outperforming most of the other legal marijuana markets, and this trend should continue in the summer.

Even though the U.S. cannabis industry, at large, enjoyed substantial sales during the pandemic, proceeds began to decline in the latter part of 2021 as the country lifted Covid-19 restrictions and consumers readjusted their spending habits.

However, Las Vegas is an exception. The local cannabis market benefited from the returning tourists and reopening of the hospitality sector, which kept its sales numbers strong throughout the second half of 2021 and the first quarter of 2022. As we head into quarters two and three of this year, many businesses are partnering with out-of-state investors, expanding their product lines, and unveiling new facilities that include a smoking lounge on the Strip.

Cannabis Sales and the Covid-19 Pandemic

Between July 2020 and June 2021, U.S. cannabis proceeds skyrocketed to record highs. Nevada was no exception, and Clark County, home to Las Vegas, accounted for the majority of the state’s sales.

Equally as important, while cannabis revenues began to decline in mid 2021 in most states’ markets (apart from the ones that only recently legalized its usage), Nevada’s sales figures remained strong.

For example, Colorado’s cannabis sales went up by nearly 25% from July 2020 to June 2021 in comparison to the previous 12 months. In March 2021, marijuana dispensaries in the Centennial State surpassed $200 million in monthly proceeds, which is close to a 30% year-overyear (YoY) increase from March 2020. In spite of that, in March 2022, revenues declined by 22% YoY and went back to their pre-pandemic levels. In the same vein, taxable cannabis sales in California climbed by about 25% from the third quarter of 2020 to the second quarter of 2021 in comparison to the equivalent 12-months period from 2019 to 2020. Yet, since the end of June 2021, proceeds have declined during each quarter.

In fact, this is the case in almost every state that legalized recreational marijuana consumption. A lot of analysts believe that this was driven by the loosening of Covid-19 restrictions, which meant that many people are spending their money at restaurants and on traveling. Additionally, the lack of stimulus checks and enhanced unemployment benefits further decreased the disposable income that consumers can spend on marijuana products and other leisurely activities.

Having said that, the state of the cannabis industry in Nevada, particularly in Las Vegas and Clark County, is entirely different.

A Sustained Growth in Las Vegas

Marijuana businesses in Sin City are continuing to thrive for two main reasons. First of all, the removal of most pandemic-era rules in mid- 2021 was accompanied by swaths of returning out-of-state tourists. Many of them were looking to spend their money on legal cannabis, which sustained the industry’s ballooning revenues. The influx of international visitors boosted these figures even more after the U.S. reopened its borders in the fall of 2021.

From July 2020 to June 2021, Nevada’s cannabis sales surpassed $1 billion. Just over $790 million (or about 80% of the state’s sales) came from Clark County, alone.

However, as other marijuana markets began to witness a decline in proceeds during the second half of last year, dispensaries throughout Nevada witnessed a YoY monthly increase in each of October, November, and December of 2021. To add to that, the figures for the first three months of 2022 remain steady and close to their 2021 levels.

Heading into the tourist-heavy summer months, there are many reasons to expect that the Las Vegas cannabis industry is going to keep thriving.

Expansions, Investments, and Jobs

This year, the Sin City’s visitors will be welcomed by a host of new attractions. For a start, Thrive, one of the largest dispensaries on the Strip, is expecting to open a smoking lounge this summer. In an interview with FOX5, Thrive’s Director of Retail Operations Makinzey Marracco said that the smoking lounge “is going to be really great for the tourists especially to have somewhere safe and legal to consume”.

Similarly, an Arizona company recently acquired the Artisan hotel, which is located by the Strip. The firm, Pro Hospitality, is planning on turning it into a “cannabis-friendly” facility, according to MJBizDaily. Already, Pro Hospitality owns a hotel in Arizona that has a smoking lounge and allows visitors to smoke in certain rooms.

Furthemore, publicly-traded company Mystic Holdings Inc (OTC:MSTH), which already has a presence in the Las Vegas cannabis industry, is working with local partners on launching a new brand that offers a variety of products.

Not only are these developments bringing outof-state investments into the city, but they will probably help create local jobs in the cannabis sector, one that currently employs over 10,000 people both directly and indirectly. Some of these positions come with generous salaries and benefits. As an example, Cultivate Las Vegas, a dispensary, began paying subsidies towards their employees’ childcare costs so that they could better cope with inflation and rising prices.

What the Future Might Hold

As we look beyond the summer and into the fall, local sales may cool down alongside tourist and travel activities. A new wave of Covid-19 cases (and subsequent restrictions) could redirect consumer spending from restaurants and in-person leisurely activities towards dispensaries, just as it did during the first year of the pandemic.

In short, the picture is still unclear.

In any case, the Las Vegas cannabis market, as a whole, is almost certainly going to retain its post-pandemic gains, and the majority of its jobs are likely here to stay.

Existing businesses and upcoming establishments will have the chance to capture a sizable share of the tourist market in the next few months, especially with the Strip’s latest additions of smoking lounges and hotel rooms.

Las Vegas’s local businesses are also in a much better position - both sales and growth wise - than their competitors in nearby states like California and Colorado. In turn, this is allowing them to attract out-of-town investors and partners.

To put it another way, even though the industry outlook in six months is uncertain, the immediate and long-term futures point towards a path of more growth and expansion.