Amid fears that sellers of recreational marijuana could soon run out of product, Nevada has issued its first marijuana distributor license to a liquor company — meaning retail stores will be able to receive deliveries of new product from manufacturers and cultivators.
Nevada Department of Taxation spokeswoman Stephanie Klapstein said Thursday that the state issued a license Wednesday night to Crooked Wines of Reno. The company will be partnering with existing medical marijuana transportation company Blackbird.
Klapstein said there are other liquor distributors that are close to receiving licenses, but she said the department still plans to proceed with a proposed emergency regulation that would set up a process to determine whether there are sufficient liquor distributors to serve the marijuana market, and creates certain criteria that distributors would be required to meet before being licensed.
State tax officials are scheduled to vote on that regulation Thursday afternoon.
Nevada Dispensary Association director Riana Durrett said that several recreational dispensaries have begun to run out of certain marijuana products, primarily edibles, but that it’d be several weeks before customers wouldn’t be able to “conveniently access” desired marijuana products. While she welcomed the news of the initial licensure and said the company should be able to start supplying stores in northern and southern Nevada, Durrett said that more licensed distributors were needed in short order to keep up with expected demand.
“They’re not going to be able to serve the entire market by any means,” she said.
State and local officials granted licenses to 47 stores ahead of the July 1 deadline to begin selling recreational marijuana, but distribution has proven to be a tougher nut to crack.
Under the recreational marijuana ballot initiative approved by voters in 2016, smaller-scale liquor distributors say they have the exclusive right to transport the product between cultivators and retail stores for the first 18 months of retail sales.
Despite efforts by state tax officials to grant themselves broad discretion on potentially waiving the requirement if they determined there weren’t a sufficient number of liquor distributors available, a Carson City district court judge sided with the liquor distributors in a court battle and granted an injunction that prohibits non-liquor distributors from receiving a distribution license for the time being.
The decision is being appealed at the Nevada Supreme Court, which has granted the case an expedited timeline.
State tax officials said on Friday that they wanted the emergency regulation — which was also endorsed by Gov. Brian Sandoval — passed on Thursday because some stores are already running low on marijuana products and waiting for more liquor wholesalers to meet the licensure requirements could threaten the industry.
“Unless the issue with distributor licensing is resolved quickly, the inability to deliver product to retail stores will result in many of these people losing their jobs and will bring this nascent market to a grinding halt,” the department said in a statement. “A halt in this market will lead to a hole in the state’s school budget.”
Kevin Benson, an attorney who represents the Independent Alcohol Distributors of Nevada, said in an email earlier this week that it appeared the state was attempting to “moot” the court-ordered injunction through the regulations, and blamed the tax department for not working with alcohol distributors from the beginning.
“We believe that this is not an emergency, and that the Department itself is responsible for creating the current situation, by needlessly rushing the application and licensure process,” he said.
Durrett said that dispensary owners would be happy to work with alcohol distributors, but that those businesses were largely ill-equipped to take on the many regulations and legal requirements required of transporting marijuana — such as background checks, training employees on inventory control, ability to do same-day delivery and setting up video cameras accessible by law enforcement.
“They needed to get started a couple of years ago,” she said. “It took the marijuana establishment years to get their doors open.”
Michelle Rindels contributed to this story.