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Nevada Cannabis Ruling May Delay July 1 Start Date

(LPETTET/iStock)

Recreational cannabis sales in Nevada may have to wait, after all.

“Now we need to sit down and hammer out a deal.”
Sen. Tick Segerblom

On Tuesday, First Judicial District Judge James Wilson in the Silver State’s capital Carson City granted a preliminary injunction requested by liquor distributors, all but assuring that Nevada’s new adult-use cannabis program won’t be ready to begin “early start” sales on July 1. 

“The plaintiff’s members will very likely be shut out of the marijuana distribution business entirely if the Department issues distribution license to non-alcohol distributors,” Wilson wrote in the 11-page ruling, which followed an eight-hour hearing on Monday during which representatives from the Independent Alcohol Distributors of Nevada (IADON) and the state tax department gave testimony.

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The Ballot Question Was Clear

The injunction prolongs a restraining order preventing the Nevada Department of Taxation from issuing distribution licenses to anyone but alcohol distributors, including current marijuana distributors in Nevada’s medical industry. Ballot Question 2, passed in November, legalized recreational marijuana. The measure provided exclusive adult-use cannabis distribution rights to state alcohol distributors unless the tax department determined that “an insufficient number of marijuana distributors would result from this limitation.”

The Department of Taxation said in March that the limitation did in fact result in an insufficient number of distributors for the new industry. But in its final regulations in May, the wording was revised to say that determination would be made after all applications were processed on May 31.

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Only five of 93 applications for adult-use distribution licenses through the state’s deadline came from alcohol distributors, said Nevada Department of Taxation spokeswoman Stephanie Klapstein.

Alcohol Distributors Were Ignored

Judge Wilson cited testimony from Nevada liquor distributors Kurt Brown and Allan Nassau, both of whom applied in December of last year. Brown and Nassau claimed they were ignored by the tax department when they inquired about the status of their applications.

IADON attorneys Kevin Benson and Michael Hagemeyer did not immediately respond to requests for comment.

Representatives of Nevada’s marijuana industry expressed frustration with the ruling, saying it’d be “a disaster” if the program didn’t begin as scheduled on July 1.

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“Now we need to sit down and hammer out a deal,” said Nevada State Sen. Tick Segerblom, who sponsored and helped passed several laws during the state’s recent legislative session to help kick start the new industry. “We still have several options.”

“We just have to roll with the punches,” said Nevada Dispensary Association Andrew Jolley. “Distributors are an integral part of the recreational program.”

If sales start as planned on July 1, Nevada would be the first of four states to legalize recreational cannabis use in last year’s election to begin sales of the plant.