Q&A with Las Vegas’ Planet 13 Marijuana Executive Bob Groesbeck
Bob Groesbeck is the President of Planet 13, the recreational marijuana operating entity of MM Development Company LLC, a vertically integrated marijuana company. MMDC holds six operating licenses in Nevada, with operations in Nye and Clark County. In addition to its dispensary location on West Sunset Road, the company offers online ordering, pickup, and delivery.
LIBERTY WATCH: How did you become involved with the marijuana business?
Bob Groesbeck: It was purely by accident. I happened to be attending a public meeting on a wholly unrelated item, and I noticed that marijuana was on the agenda. They were talking about adopting rules, regulations, and procedures. That’s the first time it caught my attention. And it’s the first time that I became aware that it had actually been passed by the Nevada voters in 2000. It took some 15 years before the legislature honored that vote and actually moved forward to adopt rules and regulations that have resulted in the industry we see today. And now we’ve got a vibrant, fully functional industry.
LIBERTY WATCH: We were told that the licensing process was exceptionally burdensome. Is that true?
Bob: It was unlike any licensing process I’ve ever been through. It had two major components: financial and experience. They basically asked for any financial or banking connection that you’ve had for the last 10 years, I think it was. It was a lot. We ended up sending a full pallet with over 100,000 pages of paper to Carson City. It was a mind-numbing process, to say the least. The process was also expensive. Between the consultants, the attorneys, the financial people, it was hundreds of thousands of dollars. The window to apply was also really short. I think we had 10 days from the opening of the application process to actually make the submissions. That was the state application, and of course there was a similar application process for each county. As I said, the process was extensive, as it should have been. It was a privileged license, much like a gaming application. The government entities wanted to make sure that the people they were considering for licensure were qualified and had the ability and resources to actually perform.
LIBERTY WATCH: So how is the marijuana business different than a traditional retail business?
Bob: In many respects, it’s the same. We’re selling a product– a commodity– to customers. The difference is the privileged license component of it. It’s highly regulated, as it should be, but we’ve got multiple layers of regulations that we have to deal with on a daily basis. We have state and county oversight. It’s a full-time job just to keep on top of the regulations. We have a system called seed-to-sale. Basically, we are required to follow the product from the point that it was put into the soil to the point that it’s sold at a register. The process is very rigorous. That’s what differentiates it. We have different tax structures, and we have different taxing entities and agencies. It’s complicated, and it requires a lot of attention. Another difference is the testing process. The testing protocols adopted in Nevada are by far the most stringent in the country. Other states are now looking to Nevada as a model for their testing programs. Some states had no testing initially, which is not okay. It’s vital that the consumer know that the products they’re buying aren’t laced with chemicals or pesticides. As an operator in Nevada, every gram of product I grow is required to be independently tested by a certified state lab. I can only put it on my shelves after it’s passed. And that is important, and that’s part of the regulatory side of this thing that makes a lot of sense. The consumers need to know what they’re consuming.
LIBERTY WATCH: How difficult is it to work with the different regulations?
Bob: Unfortunately, there is not a single regulatory body or process. As I said before, it’s cumbersome. Because if you’re dealing in different jurisdictions, they each have different sets of rules. It’s important that we be regulated, it’s just if an operator is interested in getting into this business, they need to be cognizant of the fact that the regulatory component is very burdensome–and ever-changing.
LIBERTY WATCH: How is marijuana regulated in Nevada?
Bob: At the state level, it’s regulated through statute and rules that were adopted by the various departments. Previously, the Department of Public Health and Behavioral Services dealt with the medical marijuana component exclusively. Now, with the recent changes in the last session of the legislature, the Department of Taxation is basically taking all of those programs and rolling them under that department, and they’re administering both the medical and the recreational programs.
LIBERTY WATCH: Do you feel that the Nevada Department of Taxation was the right department to manage marijuana?
Bob: Yes, I do. I think that the Department of Public Health and Behavioral Services did a good job. It’s important to remember that this was an entirely new industry. It’s something that we’ll probably never see again in our lifetime, and that’s what made it attractive to me as a businessman, in part. I can envision it being something like alcohol when prohibition was lifted, or gaming in its infancy. Back in the day, gaming was in a very similar situation. It was legal in Nevada but federally illegal. It will be interesting to see marijuana develop as an industry. It has been challenging, of course, but it’s exciting.
LIBERTY WATCH: So that brings in the Tenth Amendment question. We’re strong believers in the Tenth Amendment. What is your opinion about where the federal government is and how they’re addressing marijuana?
Bob: It’s interesting how it’s evolved. Marijuana is still a Schedule I narcotic, it is illegal federally. All of those laws are currently on the books. Those laws need to be changed. Obviously, the federal government moves at a much slower pace than state governments. But again, tying into the Tenth Amendment, this is clearly an issue that should be regulated at the state level. 30 states so far have made the decision, through their voters, through a referendum, or otherwise, to legalize marijuana. The federal government should honor and recognize that, as long as they can be reasonably assured that the industry is regulated. I have no problem with that. What I have a problem with is the simple fact that as a legal business in Nevada, it’s almost impossible to obtain banking. If a traditional bank has any idea of the business we are in, they will immediately close accounts. That’s unfortunate, and it’s wrong. And that’s all because of the Schedule I issue. So at some point, Congress has to do what’s right. They have to honor the states’ ability to broaden and legalize this industry and to regulate it. The current roadblocks that are in place make that virtually impossible. I would think that the regulatory entities on the federal level would want transparency. I think they would want the ability to know that the revenues that are being generated are being properly taxed and that taxes are in fact being paid. We need to eliminate the criminal element, and just as importantly, eliminate the black market. Things are evolving, but they’re evolving much too slowly. And it’s unfortunate. I understand people have concerns about marijuana; that’s their right. They have every right to object. But the reality is the voters in these jurisdictions have made these decisions.
LIBERTY WATCH: It’s well-known that you were a pretty big influence in the industry, even though there were a lot of people involved. Is that because of your legal background and experience in working with government entities?
Bob: I don’t know how influential I really was in the overall process. I certainly did not do it alone. There are others that deserve the credit. I’m very fortunate, we had lobbyists and consultants that we engaged that were in-tune to the process. There are so many people that deserve credit. To list all of them would be beyond the scope of this interview. I was highly involved because of my experience in government, and I think that really helped me navigate this process.
LIBERTY WATCH: How difficult was it to explain to legislators why it was so important to create this new industry and allow it to grow?
Bob: The legislators that I had the opportunity to converse with on the issue generally agreed it was pretty basic. The voters voted for legalization. I look at it the same way that I did when I was in public office. When I was sworn in as the mayor of the city of Henderson, I came into office with my personal beliefs and preconceptions of what I thought was right. But at the end of the day, as an elected official, I also had to recognize that sometimes I had to take my personal thoughts out of the process. It’s really what my constituents wanted. I was impressed that that is what it came to in the state. I think it is important for legislators to remember that their personal feelings about marijuana legalization were irrelevant. It’s their job–it’s your duty–to adopt laws that are consistent with what your constituents have demanded. LW: What happens to medical marijuana now? Now that we’ve legalized recreational, does medical marijuana disappear?
Bob: I don’t think so. I was pleased with some of the legislative changes in the last session that made the program more viable. They lowered the price and they made it easier for patients to get cards. Cards are now issued for two years as opposed to one. So there were some nice legislative changes that created an enticement to keep medical cardholders in the program. I think it’s important to maintain a viable medical industry, because the medical customer is different than the recreational customer. We have many patients coming in on the medical side that really need this. They have sincere medical issues, and the only relief they can get is through THC or marijuana products. Their options are limited, and this is a vital option for them. As a company, we’ve made it a priority that we take care of the medical patients. We continue to market to them independently of the recreational customer. We offer pricing and sales on a regular basis that we don’t offer to the recreational customers. We do that because we want to keep them. We know it’s important for them to have access to medicine, and we try to work with them on pricing. So my goal is that it remains viable, and that it continues to grow.
LIBERTY WATCH: There’s a name that always sticks out– Senator Tick Segerblom. He’s considered the father of marijuana legalization in Nevada. Is that a statement you would agree with?
Bob: Oh, absolutely. Tick has really been at the forefront of this entire industry. He had the vision. He saw the importance of adopting rules and regulations. Tick was involved basically from day one. He should get a lot of credit for helping steer this through. But for him and his leadership, I’m not sure we would even be having this discussion today.
LIBERTY WATCH: How much money do you think that the marijuana industry is going to put into the state coffers this year?
Bob: It’s hard to say this early on. The first few days, sales were dramatically higher than they were on the medical side. Things have tapered off quite a bit, but it’s still been pretty robust. The state’s original estimate was approximately $70 million. My guess is that that value was pretty conservative. I think we’ll do better than that. It’s just a question of how the market develops, and on the recreational side, how we as operators are allowed to advertise and market to customers.
LIBERTY WATCH: Where do you think the marijuana industry in Nevada is going to be in five years?
Bob: I think it’s going to be a multi-billion dollar business annually. Again, this is assuming that some things happen at the federal level–that we get some banking regulation in place and that marijuana be de-scheduled, or at a minimum rescheduled. If these things happen, I think it’s going to be a very significant business in this state and nationwide. I’ve seen projections anywhere from $50 to $60 billion annual sales in the next five years.
LIBERTY WATCH: Do you have any concerns that Walgreens, CVS, and the other chain drugstores are going to jump into the industry? How would that affect the current market?
Bob: It would definitely affect our business. To what extent, I don’t know. I think it would be detrimental to the industry as a whole and to the customers ultimately if it became a CVS-type commodity. The costs to produce are significantly higher than in a traditional market. It’s not as simple as putting a plant in the ground and waiting for the money to just fall from its leaves. That’s not how it works. Whether the national brands jump into this, who knows? We’ll see what happens down the road. But I think in the short term, it’s not going to be CVS or Walgreens. It’s going to be the alcohol industry trying to move in, or even tobacco companies. Right now, a lot of them won’t touch this industry because of the federal prohibitions. I see that. I see in the future, there’s going to be a lot of consolidation. I can see a couple large industries potentially gravitating to this market in a very significant way. At that point, it’ll be interesting to see what happens. As an operator of our company, I just want to make sure we’re well-positioned to take advantage of that.
LW: What do you think about term limits for elected officials?
Bob: That said, I do not believe that it is something that you should do for your entire career. I strongly support term limits for members of Congress. I think it’s absurd that these people go back there to die. They lose touch with their constituents, and we need to do something about that. I think it needs to be more than “draining the swamp”. We really need to cover it with dirt and start over. The environment is toxic on both sides of the aisle. A wholesale and systemic change is required. Rank partisanship is destructive. We’ve seen the results of it everyday.
LIBERTY WATCH: So, Bob, what are your plans beyond the marijuana industry?
Bob: I haven’t really thought it through. I enjoy the challenges associated with this business, but we’ll see which opportunities present themselves.
LIBERTY WATCH: Well, are you looking to get back into politics?
Bob: I have always been interested in politics, and I think that I always will be.
LIBERTY WATCH: Would you be interested in the US Senate?
Bob: I appreciate the question, and I appreciate the others that have reached out to me about this topic. Like I said, I have always been interested in politics in general. The way I see it, the biggest downside of politics is having to deal with other politicians. But on a more serious note, holding public office should always be seen as an honor and a privilege. I, like many other Americans, am incredibly frustrated by the current political climate on both sides of the aisle. I think that Washington needs fresh faces, particularly people that have built businesses. As to whether or not I will run, it is too early to say. If I were to decide to run, I would certainly run to win.