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The Nevada Independent

State appealing decision limiting pot distribution to liquor licensees; court grants speedy timeline

Michelle Rindels
Michelle Rindels
Woman holding money at dispensary

The Nevada Department of Taxation is appealing a decision that limits marijuana distribution to liquor distributors, and the state Supreme Court has agreed to an expedited timeline for the court proceedings.

The high court’s decision came Monday, after a blockbuster first weekend for recreational marijuana sales. Some had feared that the lower court ruling would delay the July 1 start date — it specifies that only liquor licensees can transport pot from cultivators or manufacturers to retail stores, and none of the five liquor distributors that submitted applications have final approval from the state to do so.

Nevada Department of Taxation spokeswoman Stephanie Klapstein said the state is getting close to issuing distribution licenses, with some just needing a final inspection of their facility. In the meantime, dispensaries are selling existing inventory of medical marijuana to recreational marijuana customers.

Democratic Sen. Tick Segerblom estimated last week that dispensaries have a 30-60 day supply of marijuana and wouldn’t immediately run out if distributor licensing was delayed.

A group of distributors who brought the original case — the Independent Alcohol Distributors of Nevada — say language in the ballot measure approved by Nevada voters in November gives them exclusive rights to distribution licenses for 18 months. They fought, and won an early battle, against a provision that would allow state taxation officials broad discretion to declare there weren’t enough liquor distributors to handle the state’s workload.

A Carson City judge’s decision means marijuana businesses can’t be licensed as distributors and become vertically integrated, at least for now. Liquor distributors argue that they’re needed to ensure integrity in the process and create more independence in the supply chain in a manner similar to the three-tier system that governs the liquor world.

The medical marijuana industry in Nevada already is vertically integrated, meaning manufacturers, cultivators and retail stores can all be owned by a single person or business entity. There is no specific license for distributing medical marijuana, while there is such a category in recreational marijuana.

An order signed by Chief Justice Michael Cherry gives up to 50 days for both sides to submit briefs and responses in the case, although the process could wrap up more quickly.

Kevin Benson, who represents liquor distributors in IADON, said the Department of Taxation rushed the recreational marijuana regulatory process and made it overly difficult for liquor distributors to claim their exclusive spot in the supply chain. He noted the liquor distributors are making major investments to get in the marijuana business quickly, and their ability to keep a hold on their distribution for a full 18 months and recoup their investment, is now in the court’s hands.

“If that exclusivity is lost, it would be a significant blow to the liquor distributors,” he said.

Feature photo: A woman holds money and a marijuana at Reef Dispensaries on Friday, June 30, 2017. (Jeff Scheid/The Nevada Independent)


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