Las Vegas Sun

September 15, 2019

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State cannabis official reaffirms fairness of application process in his last day on stand

Nevada Weed

John Locher / AP

In this June 28, 2017, photo, marijuana plants grow at the Desert Grown Farms cultivation facility in Las Vegas.

During his final day on the witness stand Monday, an official with the Nevada Department of Taxation reiterated that state officials and third-party evaluators were fair in their handling and scoring of retail cannabis license applications last year.

Asked by defense lawyer David Koch for his final thoughts after taking questions for several days during a trial over the state’s issuance of marijuana licenses, Jorge Pupo, deputy executive director for the Department of Taxation, said an imperfect process yielded fair results.

“Are you aware of anyone who has told you that this process was perfect and to keep it intact for the indefinite future?” Koch asked.

Pupo responded that he had not and that state regulators would likely make improvements to the competitive licensing process in any future rounds.

Asked if applicants could also improve during any future rounds, Pupo also answered in the affirmative.

“Oh, yeah,” he said.

In a lawsuit filed earlier this year in Clark County District Court, a host of applicants whose recreational marijuana applications were rejected requested that the state’s licensing process be stopped after more than 60 retail licenses were granted to 17 cannabis entities.

The plaintiffs argue that the process was unfair. An ongoing hearing before District Court Judge Elizabeth Gonzalez is expected to last at least several more days as nine witnesses are still scheduled to testify.

About 460 retail marijuana applications were received last year in Nevada by the state Department of Taxation, which is tasked with presiding over the application process. Over 60 licenses were granted to 17 different entities.

During a two-hour hearing Monday, Koch, representing the corporate ownership of The Source marijuana dispensary, spent about an hour questioning Pupo in an attempt to poke holes in the plaintiffs’ case.

“I do,” Pupo responded when asked by Koch if he thought the state carried out its duty to conduct an impartial bidding process that was guided by a 2016 Nevada ballot question.

As during previous days on the stand, Pupo was asked about the state’s scoring processes as it pertains to the diversity of a company’s leadership body and just exactly who the state meant when it asked for “owners, officers and board members” in the application.

During a hearing last month, attorneys for the plaintiffs wondered aloud whether restaurant outings Pupo said he had with cannabis industry lawyer Amanda Conner affected the state’s ability to be impartial.

Part of Pupo’s response was that it wouldn’t have mattered because applications were scored by temporary workers from Manpower that the state employed.

On Monday, Koch brought up the fact, he said, that Conner represented both winners and losers during the application process.

Close to 40 cannabis entities that weren’t awarded licenses in 2018 banded together to ask for the injunction to block the state from granting the retail marijuana licenses. On the state’s side, attorneys from a number of successful applicants have joined the battle.

Lawyers on both sides also continued to ask Pupo about whether applicants needed to list an address for the location where they planned to open a dispensary.

The sides are battling over a lot of money: For an eight-month period ending in March, recreational and medical marijuana sales in Nevada totaled $464 million. For March alone, $59.7 million in marijuana sales were recorded, according to the state.

Gonzalez, who will decide whether the injunction has merit, said testimony would continue on July 10.

Gonzalez said Monday’s proceedings could have lasted into the afternoon, but additional witnesses had not been scheduled. Dominic Gentile, a lawyer for the plaintiffs, said it had been expected that Pupo’s time on the stand would likely take all day.

Sun publisher Brian Greenspun was part owner of Essence, one of the defendants in this case.