Las Vegas Sun

June 26, 2019

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Ripe for corruption’: Firms sue over how Nevada awards marijuana licenses

marijuana

Richard Vogel / AP

A group of 11 cannabis businesses in Nevada has filed suit against the state’s Department of Taxation alleging irregularities in its licensing process.

In the lawsuit, which was filed March 18 in Clark County District Court, the firms allege that the state’s process to decide which companies receive cannabis licenses is not transparent and that the system of choosing licensees is “ripe for corruption.”

The lawsuit is one of six cannabis-related suits that have been filed since the department announced in December that 61 conditional recreational marijuana licenses had been granted, department spokeswoman Stephanie Klapstein said.

The suit seeks an injunction that would prohibit the state from issuing the 61 licenses.

“We and 10 other marijuana businesses with existing licenses are still trying to figure out what went wrong at the Department of Taxation,” said John Ritter of the Nevada Dispensary Association and The Grove dispensary, which is involved in the lawsuit, in a statement. “Even though we had excellent records of operating in accordance with the strict regulatory structure in Nevada, we were passed over for recreational licenses in favor of out-of-state and foreign ownership groups.”

The companies involved in the lawsuit include: Serenity Wellness Center, Nuleaf Incline Dispensary, Nevada Holistic Medicine, Tryke Companies of Southern Nevada, Tryke Companies of Reno, Paradise Wellness Center, GBS Nevada Partners, Fidelis Holdings, Gravitas Nevada, Nevada Pure and Medifarm.

“We have no idea what happened because the Department of Taxation has been totally silent on all these issues,” Ritter said. “It’s been nothing but crickets from them. They won’t discuss the licensing review process, they won’t discuss why applicants were approved or turned down, and they won’t discuss what criteria they used. At this point, our only avenue is to attempt to go through the courts.”

When reached Friday afternoon via email, Klapstein referenced Nevada Senate Bill 32, which was amended Thursday to dictate that the names of those receiving state marijuana licenses be made public.

“The department has introduced amendments that would allow us to release a lot of information that has thus far been confidential under statute and regulation,” Klapstein said. That would include information about who applied, what their scores and ranks were, how we evaluated the applications, and who has ultimately received licenses. That should help dispel a lot of the misinformation that is in those lawsuits.”

The amendment, which would allow for “qualifying documents” received by the department on or after May 1, 2017, to be disclosed.

“This amendment is an important step in a multi-pronged approach to greater transparency in marijuana licensing under my administration,” Sisolak said in a statement. “As our legal marijuana industry has evolved and flourished, it’s more important than ever that the industry and the public enjoy the benefits of a completely open and transparent process from licensing to operation so that our marijuana industry can become the gold standard in the nation.”

In its first year in 2018, Nevada’s legal marijuana industry brought in more than $400 million.

In his statement, Ritter alleged that applications for the December round of license applications were “graded by temporary workers from Manpower.”

Klapstein said contracted workers were used in the process, adding they were “highly trained” on how to score the applications properly.

Ritter also, however, praised Sisolak and Nevada Department of Taxation Executive Director Melanie Young for calling for greater transparency in the marijuana business licensing process.

“Transparency will allow Nevada’s cannabis industry to stand out as the finest in the world,” Ritter said.

As of March 1, the Department of Taxation website lists 65 stores in Nevada that are licensed to sell recreational marijuana, 48 of which are in Clark County.