Las Vegas Sun

June 18, 2018

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After court ruling, what’s next for recreational marijuana in Nevada?

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John Locher / AP

In this, Oct. 27, 2016, photo, Rachael Torricelli looks at marijuana for sale at Blum in Las Vegas. Nevada voters legalized recreational marijuana in November, and officials are trying to start selling it on July 1, 2017.

With Tuesday’s ruling temporarily eliminating 88 marijuana distributors from Nevada’s new recreational marijuana program, industry leaders say they are scrambling to make the scheduled July 1 “early start” program a reality.

District Judge James Wilson in Carson City ruled in favor of the Independent Alcohol Distributors of Nevada to give liquor license holders exclusive rights at distribution for the initial 18 months of the state’s new marijuana industry. The ruling eliminates all but five of 93 recreational distribution applicants who were prepared to begin sales in July.

The lion’s share of those applicants are medical marijuana license holders, who already distribute marijuana in the current medical marijuana industry.

So, with less than two weeks left and only five eligible alcohol wholesale distributors to pick up the slack for the recreational industry, how can adult-use weed in Nevada start on time?

The short answer: Nobody seems to know. But representatives from the industry say they’ll do whatever it takes to make the recreational sales go forward on time.

The reasoning is simple, they say.

Armen Yemenidjian, owner of three Essence Cannabis Dispensaries in the Las Vegas Valley, said starting sales on July 1 was “imperative” to maintaining the integrity of the industry, and allowing both Nevada customers and the businesses to move forward as promised.

“Everyone thinks we’re these big bad marijuana companies that are making money hand over fist, but we’re really not,” Yemenidjian said. “I don’t know a single marijuana dispensary here in Nevada that isn’t losing money. It also hurts the customer.”

And it also would hurt Nevada financially. Gov. Brian Sandoval approved the early-start program before permanent regulations are required to begin on Jan. 1, 2018, because the state could bring in millions of dollars in tax revenue from sales.

A ballot question approved by Nevada voters in November allows for adults to possess and consume up to one ounce of marijuana flower or up to one-eighth of an ounce of concentrates, such as shatter, wax and carbon dioxide oil. The Legislature and Department of Taxation this year wrote the framework for medical dispensaries to begin selling recreational marijuana.

Wilson determined the ballot measure dictates that licensed alcohol wholesalers have exclusive rights to distribution licenses for 18 months.

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," department spokeswoman Stephanie Klapstein said in a statement.

“Even though they’ve issued an injunction, the two sides can stipulate to waive the injunction,” said state Sen. Tick Segerblom, D-Las Vegas, a longtime advocate of the plant who pushed through several bills for recreational weed during the recently concluded legislative session. “There are many compromises that could happen.”

The liquor distributors spent about $90,000 to help fund the ballot question campaign, but Segerblom and Yemenidjian labeled their involvement as “a special interest.” They said they aren’t certain if liquor distributors deserved a place in the new industry.

“According to the judge today it is deserved,” Yemenidjian said. “But I don’t know how you can be an alcohol distributor regulated by the federal government while violating federal law.”

Allan Nassau, an alcohol distributor and owner of Las Vegas-based Red Rock Wines, was one such distributor who Wilson deemed “credible” during Monday’s testimony. Nassau referred requests for comment to alcohol distributors attorney Michael Hagemeyer, who did not immediately respond to requests for comment. Neither did Carson City attorney Kevin Benson, who also represents the group.

Longtime Carson City distributor Kurt Brown of Capital Beverages was another such distributor praised by Wilson in Tuesday’s ruling. Brown also declined comment.

Brian Greenspun, the CEO, publisher and editor of the Las Vegas Sun, has an ownership interest in Essence Cannabis Dispensary.

The Associated Press contributed to this report.

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