Las Vegas Sun

October 19, 2019

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Marijuana official describes ‘very real damages’ during cannabis licensing hearing

Planet 13 Grand Opening

Miranda Alam/Special to Sun

Opening night of Planet 13’s new dispensary location in Las Vegas on Tuesday, Oct. 30, 2018.

A marijuana industry executive testified Monday that his company is losing up to $1.5 million per month because of a cannabis license injunction hearing that could go into August.

“As I sit here today, I’m losing $1.5 million or more per month on a mothballed facility,” said Bob Groesbeck, co-CEO of Planet 13 Holdings Inc. and the former mayor of Henderson. “Those are very real damages. Those have a very real impact to my bottom line.”

Planet 13’s parent company, MM Development Co. Inc., is one of a number of dispensary companies that combined to file an injunction earlier this year against Nevada over its handling of a competitive retail cannabis license application process.

A number of successful applicants then sided with the state to defend the process.

The companies have alleged the Department of Taxation bungled the decision of which companies would be awarded a limited number of retail marijuana licenses last year. A pool of 461 applications were considered. The state ended up approving about five-dozen from 17 companies.

On the stand during day 15 of the hearing Monday, Groesbeck said Planet 13 is suffering financially because a previously-open facility is not currently being used due to a lack of licenses.

Groesbeck said Planet 13 is a leader in the cannabis industry in Nevada and was unfairly overlooked during the 2018 licensing sweepstakes.

“We’re an excellent operator with a great track record of providing tax revenue and creating jobs,” Groesbeck said. “We got nothing (in 2018) and yet we saw a handful of operators take the lion’s share of licenses. In my opinion, that raises some concerns.”

Others representing companies with non-winning bids also aired their concerns Monday. Along with Groesbeck were Frank Hawkins, co-owner of Nevada Wellness Center, and Brett Scolari, general counsel for Tryke Companies.

On the witness stand for about an hour, Hawkins was blunt when asked by attorney Joseph Gutierrez if he felt there was cheating during the application process.

“Yes,” Hawkins said. “Whoever manipulated the process to change the locations (cheated). Whoever manipulated the process to convince the deputy director to make the changes he did for location. Whoever all those people were, they elected not to follow the law, therefore they cheated.”

Hawkins was referring to perceived confusion by some license-seekers over whether a physical address for a store needed to be submitted with an application.

Some witnesses have testified they were in the dark over the matter while others have said the requirement — or lack thereof — was transparent.

Some plaintiffs maintain the application process was unconstitutional, others seek financial damages. Some, including Hawkins and his business partners, are seeking a complete do-over.

Gutierrez, who is representing Essence Cannabis and Thrive, asked several witnesses Monday if they cared that cannabis tax money — part of which is mandated to help fund public schools — was being missed while the injunction essentially holds hostage the licensing process.

Hawkins downplayed the school funding aspect of the legalization of recreation marijuana by Nevada voters in 2016.

“The state is getting revenue from current (marijuana) operations that are open,” Hawkins said. “If no (2018) licenses have been issued and no businesses opened, there’s no loss of revenue. Projected revenue ain’t real revenue. The (ballot) initiative was put in place because people wanted recreational marijuana — they didn’t give a rat’s butt about a school district.”

While originally thought to be a short hearing — Clark County District Court Judge Elizabeth Gonzalez will decide the fate of the injunction — the litigation has dragged on for weeks.

The hearing will continue at the Regional Justice Center on Thursday, but Gonzalez said proceedings could enter into August because of an additional expert witness the plaintiff side hopes to call.

No matter what Gonzalez decides, it’s widely expected her decision will be appealed to the Nevada Supreme Court.

The sides are battling over a lot of money as, from July through 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.

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