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Business

Judge Mulling Nevada Bid for Recreational Pot Sales July 1

The law says alcohol distributors have exclusive rights to pot distribution licenses, unless the state determines there is not enough interest to meet anticipated demand

In this March 24, 2017 file photo, Nevada state Sen. Don Gustavson, Republican from Sparks, smells a sample of marijuana as Christopher Price, a ''budtender'' at the Blum medical marijuana dispensary, describes the operation during a brief tour a the store in Reno, Nevada, photo: AP/Scott Sonner, File
6 months ago

CARSON CITY – Nevada’s marijuana regulators are working furiously to launch recreational sales on July 1, a fast-approaching deadline that could hinge on a court deciding whether the powerful liquor industry should be guaranteed a piece of the pot pie before tourists and residents can light up.

Lawyers for the liquor industry and the Nevada Department of Taxation were arguing before a judge on Monday whether the state has the authority to issue marijuana distribution licenses to anyone besides alcohol distributors.

The state says it has the power to temporarily license some existing medical marijuana cultivators and retailers to serve as their own middlemen. It wants to get a head-start on collecting millions of dollars in tax revenue devoted to education before permanent rules are required by Jan. 1, 2018.

The liquor lobby sued, saying the state did not give it the first shot at distribution licenses as called for in the ballot measure approved by voters in November, the only legal pot state with that arrangement.

Carson City District Judge James Wilson blocked all licensing until the matter is resolved. He refused the state’s request last week to dismiss the lawsuit.


The law says alcohol distributors have exclusive rights to pot distribution licenses, unless the state determines there is not enough interest to meet anticipated demand.

The tax department said there was “insufficient interest” among the liquor lobby when it published the proposed regulations. It later said that determination would be made after all applications were processed.

One of the alcohol distributors who insists their industry can handle the job is Allan Nassau, a former tour and production manager for rock bands, including the Allman Brothers and INXS, who now owns Red Rock Wines — a boutique wine distributor.

He testified that his business currently serves more than 300 restaurants in Las Vegas, many on a daily basis. He says delivering pot to more than 100 retailers would be easy compared to that.

“I’ve been responsible for the logistics of literally tons of sound and light and stage gear going from city to city around the country,” Nassau said. “This is something I could basically do in my sleep.”

It was not clear whether Wilson would rule immediately after Monday’s hearing. But he told lawyers last week that it’s “an important issue that needs to be resolved quickly.”

Nassau claimed the existing medical marijuana industry — which filed friend-of-the-court briefs in support of the state but was not allowed to argue in court — wants to monopolize pot business sectors

“They want to grow it, produce it, distribute it and sell it,” he said.

In this July 31, 2015, file photo, people line up to be among the first in Nevada to legally purchase medical marijuana at the Silver State Relief dispensary in Sparks, Nevada. Photo: AP/Scott Sonner, File

Nevada Department of Taxation Deputy Director Anna Thornley testified state regulators have been planning since February to get an “early start” recreational marijuana distribution program running by July to begin bringing in millions of dollars in tax revenue before a permanent system must be adopted on Jan. 1, 2018.

“It’s the department’s intention to issue licenses by July 1,” she told the judge.

Department of Taxation spokeswoman Stephanie Klapstein said no distributor licenses will be issued to applicants that are not liquor wholesalers as long as the judge’s restraining order is in place but said the department is ready to act when it receives clearance.

“We have a ‘war room’ in Vegas where our staff are working long hours to move the applications through the review process,” she said.

Thornley said she believed officials have received 90 applications for distribution licenses and only five from liquor wholesalers.

Klapstein said 93 have been received — five from liquor wholesalers and 88 from existing medical marijuana establishments.

SCOTT SONNER

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