It was just after midnight on a Wednesday morning last month when Las Vegas resident Maria Morales heard a knock at her door.
When Morales answered, she was surprised to see a delivery driver from Nevada Wellness Center, a local cannabis delivery dispensary, with an order she had placed just hours before.
Unlicensed sellers are going to great lengths to capture part of the expanding cannabis market, even posing as well-known licensed stores.
A first-time delivery customer, Morales, 68, said she didn’t expect the order she placed at 9 p.m. to arrive until the next business day. But to her surprise, her cannabis was in-hand by the time she went to bed.
“My first thought [when I heard the knock] at that hour was that I was going to be robbed,” Morales said. “Something seemed strange about the whole thing.”
While Morales’ order – an eighth ounce of Gorilla Glue #4 – was correct, it wasn’t the same quality cannabis she had become accustomed to buying in person at the dispensary. But everything else seemed legitimate. Morales glanced at the driver’s delivery sedan, which bore a decal of Nevada Wellness on its side panel.
Days later, Morales would discover that her suspicions were correct. Her delivery driver, 26-year-old Brandon Orr, was not affiliated with Nevada Wellness at all. And eventually he was arrested for illegally delivering cannabis in the same car to a nearby residence.
The situation faced by Morales is becoming more common throughout the Las Vegas Valley. Unlicensed cannabis sellers are going to great lengths to capture part of the expanding cannabis market, which became legal for all customers 21 and older last July.
Many unlicensed delivery services are advertising on encrypted mobile apps like Radiate, Whisper and Grindr.
Many are using encrypted and hard-to-track mobile apps like Radiate, Whisper and Grindr to advertise and sell their products, Las Vegas Metropolitan Police Captain Sean Toman told Leafly. Posts on popular public sites like Craigslist, Facebook, and Backpage (which was seized by federal authorities last week) direct customers to such apps, and allow black market sellers to vet their customers.
Some, like Maria Morales’s accused driver, are acting as false flag operations, using the logos of legitimate state-licensed companies to trick their customers into thinking they’re purchasing legal lab-tested products. Morales says she contacted her delivery service through Facebook.
Other illicit delivery services post on cannabis-specific sites that don’t ask questions about a service’s licensed status. (Full disclosure: Leafly confirms a company’s state-issued license before listing Nevada cannabis retailers and their delivery services on the company’s dispensary finder.)
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50 Shut Down in 2017
Toman, of the Las Vegas Metro Police, said more than 50 illegal delivery services, some with as many as ten employees, were shut down in 2017. Most of those busts came in the second half of the year, after adult-use cannabis sales began on July 1.
'I think just about everybody who owns a dispensary here has had to deal with this,' said the owner of one retail store.
“These rampant operations are run by people who know that what they’re doing is completely illegal,” Toman said. “But they’re becoming better at hiding themselves.”
David Goldwater, owner of Inyo Fine Cannabis Dispensary in Las Vegas, said he was baffled when he first saw his company’s logo being used in a Facebook ad last fall for an illegal delivery service. While Goldwater immediately reported the service to county and state officials, he has since found “multiple” Facebook ads since then also using Inyo’s logo.
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Undermining the Legal Market
Goldwater says he’s not the only dispensary owner facing the imposter problem.
“I think just about everybody who owns a dispensary here has had to deal with this,” Goldwater said. “When they’re using our logo and leveraging our marketing, it really minimizes the legitimacy and respect we’ve worked to attain as an industry.”
Goldwater and Toman said the illicit market continues to operate successful delivery services by undercutting legal dispensaries’ prices on products. Legal cannabis companies in Nevada are subject to a 30% tax on sales, child-proof packaging regulations, and strict testing standards. None of those costs are borne by illegal sellers, who have no such regulatory restrictions.
State Struggling With the Problem
Stephanie Klapstein, a spokesperson for the Nevada Department of Taxation, said the state’s cannabis regulating agency is still “looking for ways” to curb illegal deliveries.
Delivery services were a bone of contention during negotiations over the state’s final recreational cannabis regulations. They were ultimately allowed in order to prevent the illegal market from dominating that sector of the industry, Klapstein said.
So far, that decision seems to have had a minimal impact, as “bad actors” like Orr are still poaching customers by riding on the coattails of legal companies. Toman said some unlicensed services have been caught illegally delivering up to 10 pounds of cannabis per day to “several hundred” Las Vegas Valley residents.
Delivery is Legal in Nevada, if Licensed
The popular Nevada delivery service Blackbird, which is licensed by the state, handles retail deliveries for more than 30 of the state’s 60 cannabis dispensaries. Blackbird also handles wholesale delivery from production and cultivation facilities to dispensaries.
In an interview shortly after legal sales began last year, Blackbird CEO Tim Conder said he was confident his business could eventually overtake the illicit market, but said the first few months would be “a challenge.” (Conder declined to comment for this article.)
Both Toman and Klapstein said the challenge of the illegal market is still alive and well.
While some unlicensed sellers and delivery drivers may eventually find themselves behind bars, Toman said dozens of illegal delivery services continue to expand.
“It’s a problem we all want to fix,” he said. “And we’re still working on it.”