Las Vegas Sun

August 23, 2017

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Nevada opens pot distribution to nonliquor wholesalers

Updated Friday, Aug. 11, 2017 | 2:20 p.m.

CARSON CITY — Nevada marijuana regulators have decided to start issuing pot distribution licenses to businesses other than liquor wholesalers to keep up with overwhelming demand since legal recreational sales began July 1.

The Nevada Department of Taxation voted Thursday to open up the market previously limited to liquor distributors under the state ballot measure voters approved in November.

They will begin reviewing about 80 applications they received in May from other businesses, department spokeswoman Stephanie Klapstein said.

Tax officials previously tried to open the distribution process to medical dispensaries, but liquor wholesalers argued in court that violated state law.

A Carson City judge sided with the wholesalers, saying the state needed to establish formal criteria to determine if there aren't enough distributors to do the job.

With the backing of Gov. Brian Sandoval, the state tax commission approved an emergency regulation last month intended to meet the judge's concerns.

During Thursday's three-hour public meeting in Henderson, several people spoke in favor of an "expanded pool" of recreational marijuana distributors. Tax officials said they were concerned legal retailers could run out of cannabis products, which would lead to customers returning to the illegal black market.

"I think the evidence is fairly clear today that this market needs to be opened up," said Deonne Contine, executive director of the tax department. "The capacity of only liquor wholesalers to serve the market seems lacking."

The department declared the need for the emergency rules shortly after marijuana retailers recorded more than 40,000 transactions in the first weekend of legal sales. Some of the dispensaries that previously sold pot for medical use said they saw their sales increase 10-fold.

"Without the ability to license marijuana distributors to continue the flow of product to the retail store, a high likelihood exists that consumers will revert to the black market," Contine told the tax commission in July.