90°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
Pahrump expansion to feature Marriott, retail near racetrack

The planned, five-story hotel just outside the gates of the Spring Mountain Motor Resort and Country Club could be a Marriott-brand hotel. The commercial project could get underway by the end of 2019.

Pahrump Purple Heart Day ceremony honors wounded and fallen

National Purple Heart Day is a day set aside for the remembrance and honoring of the brave men and women of the U.S. armed forces who have been injured or lost their lives in service to their country.

Nye County District Attorney’s Report

Editor’s note: The Nye County District Attorney’s Report is provided by the office of DA Chris Arabia. Plans call for it to be provided on a monthly basis as the information becomes available. Duplicate names represent separate cases. See pvtimes.com for a look at recent DA reports.

Smiles Across Pahrump delights community

Smiles Across Pahrump returned to the valley last weekend, bringing grins of delight to the faces of dozens of area children and their families who headed out to enjoy an event filled with free games, activities and prizes, all in honor of the legacy of the late Butch “Patches” Harper.

Nevada Assemblyman Greg Hafen II to seek two more years in seat

Pahrump resident and Nevada District 36 Assemblyman Greg Hafen II announced this week that he will be seeking that seat in the 2020 election for what will be his first-ever official bid for office.

Wildfire tamed near northern Nye community

Firefighters tamed a 650-acre wildfire — believed to have been started Aug. 7 by lightning — near Nye County’s Gabbs community.

Off-highway grant workshop held in Beatty

Folks from Beatty and the surrounding area learned more about the Nevada Off-Highway Vehicle Program in a workshop conducted at the Beatty Community Center Aug. 12.