Recreational Cannabis in Nevada Hits a Roadblock

Excited for recreational marijuana in Nevada on July 1? Hold that thought.

On Tuesday, a Carson City judge, James Wilson, issued an injunction that reverses the Tax Department’s decision to allow more than just alcohol wholesalers to transport recreational marijuana from growers to dispensaries. The move could delay a planned July start date for recreational cannabis sales.

When voters approved Question 2 to legalize recreational marijuana in November, the initiative included a requirement that distribution licenses would be issued only to alcohol wholesalers for the first 18 months of sales.

Representatives from the Independent Alcohol Distributors of Nevada (IADON) and the state Department of Taxation gave testimony on Monday in an 8-hour hearing. In his 11-page ruling, Wilson said that a “brief filed on behalf of the liquor distributors corroborated evidence that the businesses would be shut out of the marijuana distribution business entirely if the tax department issues licenses to non-alcohol distributors…Once licenses are issued to others, it will be difficult if not impossible to revoke those licenses.

However, the Department of Taxation said in March that there was limited interest among alcohol wholesalers and that the requirement would result in an in insufficient number of distributors.

According to the spokesperson for the tax department, Stephanie Klapstein, at the end of the application deadline in May, only five of 93 applications for recreational cannabis distribution licenses were issued to alcohol wholesalers. And of those five, none have actually completed the application. The other 85 applications were from existing medical marijuana dispensaries.

The Nevada Department of Taxation is reviewing the court’s decision with the attorney general’s office and “will explore all legal avenues to proceed with the program as provided in the regulations,” Klapstein said in a statement.

The approval of Question 2 tasked the state with creating a regulated marijuana sales structure by the start of 2018. But after visiting and studying other states that legalized marijuana, Nevada officials determined that waiting a full year after the drug became legal would risk growing the black market. Instead, they planned for an “early start” to get the program up and running by July.

 

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