78°F
weather icon Clear

Court order could delay Nevada retail marijuana sales

Nevada’s July 1 roll out of recreational marijuana sales could be in jeopardy after a district court judge signed an temporary restraining order.

A judge on Tuesday signed the order prohibiting the Department of Taxation from enforcing a May 31 license application deadline for the state’s recently approved early start program.

The Independent Alcohol Distributors of Nevada filed a complaint arguing that the November voter-approved ballot measure that legalized cannabis in Nevada gives liquor wholesalers exclusive rights to marijuana distribution licenses for the first 18 months of sales in the state.

Despite that claim, tax commissioners approved temporary regulations on May 8 to give the tax department discretion in doling out licenses for marijuana distributors. Distributors will be responsible for transporting marijuana products from cultivation and production facilities to dispensaries.

“The statute clearly gives a priority and exclusive license to alcohol distributors, in order to promote the goal of regulating marijuana similar to alcohol,” the judge ruled.

Sam McMullen, the attorney representing the wholesalers, said Wednesday that the order will likely delay the expected July 1 start for recreational marijuana sales. But, he said, the group’s intent is not to delay those sales.

“We just want our rightful place. We don’t want to slow this down inordinately,” McMullen said.

Potential Delays

The tax department reached out to all licensed alcohol wholesalers in the state soon after Question 2 passed to gauge their level of interest in distribution. The department said it only a handful of dealers showed lukewarm interest, and no concrete business plans were submitted for how those companies would distribute marijuana.

Part of the issue the department cited was liquor distributors are licensed on the federal level, where marijuana remains illegal, and acting as a distributor of marijuana could put those licenses at risk. In March, the department decided that it would open the applications for distribution licenses beyond alcohol distributors.

Tax department director Deonne Contine said in several meetings that the industry needed licensed distributors under Question 2 or the industry could not operate.

The order issued Tuesday means the department cannot issue licenses to anyone except licensed liquor wholesalers.

Tax department spokeswoman Stephanie Klapstein said that only one licensed alcohol wholesaler had applied for a marijuana distribution license, and that the application came in Wednesday morning.

The extent of the impacts and potential delays likely will not be hashed out until the restraining order is heard. Klapstein said the department expects a hearing to be set in the next couple of weeks.

“The Department is reviewing the temporary restraining order with legal counsel, and we intend to defend our regulations to the fullest extent of the law,” Klapstein said.

Industry reaction

Armen Yemenidjian, CEO of Essense Cannabis dispensaries in Las Vegas, said requiring a third-party distributor for marijuana baffles him.

Yemenidjian cited the same argument the tax department initially made — that he doesn’t understand why alcohol distributors would risk losing their federal license. And logistically, he said, the move doesn’t add up.

Yemenidjian’s cultivation facility is less than a mile from his dispensary, he said. Other companies have cultivation centers located on the same property as its dispensary. In those cases, the companies would need to pay a distributor to take the marijuana products from one room in a building to another.

“It doesn’t make any sense,” he said.

Budget Implications

Should the early start program be delayed, the impacts could go beyond local businesses losing out on revenue and marijuana users having access to the product.

Gov. Brian Sandoval’s proposed budget is based on sales starting July 1, and calls for nearly $70 million in taxes over the next two fiscal years to fund the state’s public education fund.

That new tax has yet to be approved by the state Legislature, which is scheduled to adjourn Monday.

The governor’s office declined to comment Wednesday.

Contact Colton Lochhead at clochhead@reviewjournal.com or 702-383-4638. Follow @ColtonLochhead on Twitter.

Don't miss the big stories. Like us on Facebook.
THE LATEST
NO STIGMA NEVADA: Carson City therapist: How to deal with stress and despair

As the COVID-19 pandemic death toll reaches nearly 100,000 in the U.S. and continues to rise, as do the numbers of unemployed, living with fear, anxiety, stress and even despair has become the new norm in Nevada and beyond.

Man charged in NHP Sgt. killing, faces additional charges

The man arrested in the killing of a Nevada Highway Patrol officer is facing additional charges, according to the Nye County District Attorney’s Office.

Local veterans hold two-man Memorial Day observance

An interesting coincidence occurred just days before Memorial Day, as two local veterans made separate plans to honor this nation’s fallen servicemen and women at the Chief Tecopa Veterans’ Memorial.

Ford joins coalition suing over Clean Car Standards

Nevada Attorney General Aaron Ford on Wednesday joined a multistate coalition of states, cities and counties to file a lawsuit challenging the Trump administration’s rule rolling back the national Clean Car Standards.

In Season: Strawberries are not just for northern climates

If you hail from a cooler, northern climate, you may have nostalgic memories of picking fresh wild strawberries in the spring and summer. The red juices flowing down your chin feel like a bit of heaven. Perhaps this is why I’ve received many questions lately about strawberries. Chief among them, can they be grown here?

Sisolak announces negative test for COVID-19

Gov. Steve Sisolak announced Wednesday his COVID-19 swab test came back negative. Sisolak was tested Tuesday evening and learned of his results Wednesday.

Eight Republicans, six Democrats battling for Nevada’s Congressional District 4 nomination

Editor’s Note: The Pahrump Valley Times had a misprinted page in its 2020 Special Election section on Friday, May 22. Four candidates from Nevada’s Congressional District 4 were affected by this incident (Also, see note to readers from the Times on A1 in this edition). This writing only includes the lost content and doesn’t reflect the original writing in full.