Las Vegas Sun

October 17, 2019

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Nevada judge gives OK for some new retail pot stores to open

marijuana

Richard Vogel / AP

More than a dozen new dispensaries could open in Nevada's booming retail marijuana market in coming weeks, after a judge gave the go-ahead Thursday to companies that underwent background checks and won licenses.

State marijuana regulators said as many as 36 stores could open.

But lawyers for the state and companies claiming the licensing process was flawed said about 16 cannabis shops could soon join the 65 currently open statewide.

Other new license holders would need more time to obtain local use permits and undergo final inspections.

Will Kemp, an attorney for the owners of Planet 13 and Medizin — whose applications for new licenses were denied — said he thinks about 12 new stores will open in the Las Vegas area, two in or around Reno and two elsewhere.

The ruling by Clark County District Court Judge Elizabeth Gonzalez softened the effect of an injunction she granted a week ago freezing the entire permit process so regulators could identify licensees that met screening requirements when applications were submitted a year ago.

All sides expect her order to be appealed to the Nevada Supreme Court.

Meanwhile, dozens of plaintiffs who lost bids for licenses last year will head to trials before state and federal judges. Ten lawsuits are pending.

Plaintiffs generally argue they were harmed because the process of ranking and choosing winners from among 462 applications was riddled with mistakes and bias.

The judge, who heard 18 days of evidence and testimony, agreed in her detailed 24-page order last week.

She bluntly called a decision by state tax officials to only require background checks of owners with a 5% share of a dispensary business a violation of the state constitution, "an abuse of discretion, and arbitrary and capricious."

Background checks were required by the 2016 voter initiative that legalized recreational marijuana sales to adults 21 and older.

Gonzalez also called a decision by regulators to delete a requirement that applicants list a physical address for a proposed dispensary "evidence of conduct that is a serious issue."

Losing bidders wanted Gonzalez to void all 61 licenses that were approved in December in a competition for 64 available permits. Three were not awarded in counties that received no bids.

New tax figures show the 65 recreational and medicinal pot dispensaries currently open reported nearly $640 million in total recreational and medical cannabis sales for the fiscal year ending June 30.

The state took in a little more than $99 million in taxes and another $9.9 million in licensing and application fees.

All the companies involved in the litigation already have some dispensaries, because applications for new licenses were only accepted from operators of existing medical marijuana shops.