After a hard-fought win to begin the early roll-out of cannabis sales in Nevada, the alcohol industry blocked the July 1st planned start date in court on Wednesday, May 30th. The judge’s ruling extends the May 31st deadline for applications and also mandates that any licenses issued must be to “a person holding a wholesale [alcohol] dealer license…”
The Independent Alcohol Distributors of Nevada filed the lawsuit which challenged the issuance of licenses in a way that broke with the language and intent of Question 2, the ballot measure to passed in November. Under the measure, cannabis was supposed to be regulated like alcohol, and the group further argued the language of the measure gave the right exclusively to alcohol distributors for the first 18 months of sales.
“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 temporary restraining order explained. The Judge’s ruling is likely to delay the July 1st launch.
The attorney for the distributors, Sam McMullen told Las Vegas Review Journal (RJ), “We just want our rightful place. We don’t want to slow this down inordinately.”
The Nevada Tax Department did reach out to distributors early on. They seemed unprepared and apparently were generally indifferent to the idea. The RJ reported:
“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.”
The Tax Department pushed through temporary rules earlier this year after legislation was pushed to do the same, which would help the state more quickly collect some of the expected 70 million in tax revenue to flow in for the first two years.
The Department of Taxation spokeswoman Stephanie Klapstein said, “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.”
One current medical marijuana dispensary owner in Las Vegas has his own cultivation facility to supply his three dispensaries. He has created a vertically integrated business that does not need a third part distributor forced upon him.
Armen Yemenidjian, CEO of Essense Cannabis dispensaries, told the RJ, “It doesn’t make any sense.”
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