Las Vegas Sun

July 18, 2019

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State official: No regrets over how cannabis licenses were awarded

Democrat Lawmakers Support SAFE Banking Act

Steve Marcus

Marijuana is displayed at the Las Vegas ReLeaf marijuana dispensary at Paradise Road and Sahara Avenue Wednesday, Jan. 24, 2017.

Even if Nevada had a mulligan, it wouldn’t change the procedures followed last year when issuing retail marijuana licenses.

That was part of the testimony Tuesday from Steve Gilbert, a program manager for the Department of Taxation, during an ongoing hearing that could decide whether the state acted properly in the licensing process.

“Yes,” Gilbert said plainly when asked by attorney David Koch whether the department had done a good job scoring license applications.

Clark County District Judge Elizabeth Gonzalez will ultimately decide whether the state should be blocked from following through on dozens of granted retail cannabis licenses.

A group of rejected applicants filed an injunction last month in hopes of stopping the process after the state awarded more than 60 conditional licenses last year in a second round of retail marijuana permitting.

Tuesday’s proceedings mirrored several previous days in court as a series of plaintiff lawyers argued that the Department of Taxation’s scoring system wasn’t fair. A team of defense attorneys on the state’s side continued to argue that the state’s grading process was accurate and adequate.

Steve Shevorsky and David Koch, attorneys for the defense, expanded on previous questioning of Gilbert regarding the eight Manpower-issued employees who were tasked by the department to sift through 461 license applications last year.

Gilbert said the temporary employees — six worked to score the applications on a 250-point scale while two others helped with basic clerical duties — hired by the state were skilled professionals recruited specifically because of their areas of expertise.

One, Gilbert said, was the owner of a real estate development company while another had worked as a project manager for Microsoft. Another temp worker spent about three decades, he said, as a fire and building inspector.

Gilbert said the temp agency Manpower was used because the state had an existing contract with the company.

When asked by Koch, who is representing the corporate owner of The Source dispensary, if he thought the temporary employees were intelligent enough to do complete the grading task, Gilbert said “very much so.”

Also when answering questions from Koch, Gilbert said the state “trusted” applicants to be truthful with the information they submitted.

Gilbert added that it likely would have been possible for an applicant to “game the system” a bit because the department simply didn’t have the capacity to comb through every detail in an application, such as checking up on a claim that a business owner or officer was indeed a member of a minority group (applicants were partly scored on the diversity of the organization’s leadership).

The hearing is scheduled to continue Wednesday with testimony from Jorge Pupo, deputy executive director of the Department of Taxation’s marijuana division.

Following an initial round of licensing before recreational sales launched in July 2017, the state last year announced it would accept applications for more than 60 additional licenses statewide.

The two 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.

The Associated Press contributed to this report.

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