Las Vegas Sun

October 14, 2019

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Guest column:

Common sense is in order for lawsuit against state on cannabis licensing

My wife and I entered into the cannabis business for two reasons. First, we learned of the beneficial effects of cannabis for our daughter, who had pancreatitis and could either use opiates or THC to alleviate the pain. We also subsequently learned of its benefits for many other conditions, including cancer, arthritis, PTSD for our veterans, epilepsy and so many other health care issues. Second, we entered because we run the only free and charitable health care clinic in Nevada, Volunteers in Medicine of Southern Nevada, and we intended that the cannabis sale proceeds would benefit our patient population and other nonprofits in our community that serve the underserved. Our services include medical, dental and mental health care. Last year, the Volunteers in Medicine clinic served over 8,000 patient visits and distributed over $3 million in medications.

We started the clinic upon my wife’s aspiration to provide health care to those who have no access. The coroner was tagging many individuals as natural deaths due to heart attacks, diabetic comas, strokes, etc. We knew these were not natural deaths; these were deaths that could have been prevented if these people had access to health care. Over 250,000 of our fellow Nevadans do not have access to any form of health care.

In an effort to create additional financing assistance for the clinic’s needs and other nonprofits, we entered the cannabis business to ensure a long-term revenue stream. We are part of an entity that won three dispensary licenses under the state supervised application process. We were elated and ready to see our proceeds go to work for the underserved. But there were those who failed to win a license under the merit-based system. They have sued the state, either to stall the process of issuing new licenses or to generate licenses for themselves, or both.

Let’s examine the plaintiffs’ main concerns:

As we understand it, there are three major areas in which the state’s application process is being criticized.

First, the state provided an application that did not require owners of less than 5% to list their names or obtain background checks. Ballot Initiative 2 did say that there should be full disclosure of all ownership. However, the state rightly claimed that for public companies, this would be exceedingly difficult — indeed, nearly impossible — because it’s unreasonable to expect background checks of thousands of shareholders. Instead, for public companies, the state conducted background checks of the management team. The state asserts its approach to this element of the ballot initiative is a reasonable effort to satisfy the goals of background checks.

Second, the state provided an application, which at first required a property location in conformance with the ballot initiative, and then determined an application would not require a specific location to be meritoriously graded because the state did not want applicants tying up properties or attempting to secure properties in certain counties where moratoriums would otherwise bar the applicant. Once again, this seemed like a reasonable adjustment to the process.

And third, the state has now been criticized for including diversity in the scoring criteria. It is a well-known public objective to encourage diversity in every industry. All applicants knew that diversity would be included but the state did not specify the exact number of points because it did not want people to “game” the diversity issue. And again, all of this makes sense from the state’s point of view.

The state agency deserves deference in implementing the voters’ approval of Ballot Initiative 2, as it was executed with good intention and in a reasonable manner for all those applying.

Had the plaintiffs prevailed in the award of licenses, they would be supporting the application process they now complain about.

All of this leads to the two questions of this commentary: What is the substance of this lawsuit? And what is the precedent set, for this state and others, when a state agency is not allowed to manage its program within fair and reasonable criteria?

To the first question, we cannot find the substance of this lawsuit other than disgruntled applicants who are grasping at straws to undermine the state’s determinations in hopes of getting a second bite at the apple. Losing cannabis applicants did the same thing in 2014. Thankfully, the court refused an injunction to halt the licensing process. The court deemed the process reasonable and gave the state the freedom to sensibly implement the medical marijuana program. It should do the same today.

To the second question, the system that Nevada has implemented is fair and public.

It reflects proven and successful regulatory efforts in other states. If the companies that failed to meet the criteria feel the process should be reformed, that is a separate discussion to have about future licensing processes. But it is not a reason to overturn the existing licenses. The current regulatory criteria were available to everyone, known in advance, and the companies that failed had no complaints before the process was finished. They only decided it was unfair after their scores were too low to succeed in securing a license. If the courts allow companies to retroactively complain about a regulatory environment they happily participated in, it invites a kind of chaos that would cripple any industry. The plaintiffs’ actions smack of bad faith.

As we observed this lawsuit, we have been grateful for the court’s willingness to hear all sides. Now, however, we believe it is time for the court to uphold a regulatory process that has proven successful and fair, administered by public servants working in the public interest.

The companies suing the state were perfectly happy with the process before they knew they were refused a license because they didn’t satisfy the criteria. The companies that did receive licenses did so because of hard work, careful investment and engagement with the process. For the sake of sane regulation and continued development in the industry, the courts should rule in favor of the state and prevailing licensees.

In addition to his role with Volunteers in Medicine of Southern Nevada, Gard Jameson is president of the Interfaith Council of Southern Nevada and is a part-time philosophy instructor at UNLV.