“I'm fully aware from all of the public comment and the proceedings before the Tax Commission that there were significant issues that led to this litigation,” said board member Dennis Neilander. “Certainly we're not equipped to retry these issues that are in trial now. And in the interest of providing a fresh start for us, we need to deal with these legacy issues.”
Commissioners unanimously voted on Friday to approve the settlement, which involves some 17 plaintiffs and reshuffles some of the licenses that the state awarded in the disputed 2018 application round. It comes in the middle of a trial so big that it had to be moved to the Las Vegas Convention Center and as part of a consolidated lawsuit with so many parties it has earned the nickname “World War Weed.”
There’s still much work to be done in an industry in flux. Marijuana businesses are just emerging from a monthslong freeze of license transfers, a massive court battle over a contentious state licensing round continues, and regulators have raised serious questions about whether independent labs fudged product test results to curry favor from the marijuana businesses that pay them.
A series of lawsuits dating back more than a year and a half accused the state of unfair practices in deciding in 2018 who should receive coveted and strictly limited licenses to expand the number of retail marijuana locations of their business.
According to the complaint, during less than three months in 2019, the company sold 1,793 products that did not have a certificate of analysis indicating they were laboratory tested. The company also allegedly had more than 4,100 marijuana plants that were not registered in the state’s tracking database.
Klimas said there are now 92 outstanding requests to transfer ownership interests, ranging from simple requests for a person to withdraw as an owner to “extremely complex” requests for transfers involving publicly traded companies with complicated ownership structures. Some companies have said the freeze has already stymied highly lucrative acquisitions.
The Nevada Board of Pardons Commissioners, chaired by Gov. Steve Sisolak, voted unanimously to approve a resolution pardoning the decriminalized offense. Records show that 15,592 were convicted of the misdemeanor from 1986 through the end of 2016, and there were 31,124 arrested for the offense. Recreational use became legal in 2017.
“The people of Nevada have decided that possession of small amounts of marijuana is not a crime,” Sisolak said. “If approved, this resolution will clear the slate for thousands of people who bear the stigma of a conviction for actions that have now been decriminalized.”
Although the suit does not include Sisolak’s name, it does accuse defendants of “compelling Plaintiff to make political contributions personally because Defendant had maxed out its legal donations and the CEO had promised additional donations to a candidate in Nevada.”
Company officials said Nevada’s stringent restrictions on marijuana businesses — Sisolak ordered them to move to delivery-only models and only recently opened to curbside pickup and then in-store sales — was a hard hit.
Jorge Pupo was put on leave and then left the Nevada Department of Taxation in fall 2019. State documents show Welch will be representing Pupo in an ongoing case filed in January 2019 by marijuana dispensaries that did not receive state licenses for additional retail stores and have alleged unfair practices by the state.
This year, the quasi-holiday for cannabis enthusiasts was much more of a somber affair. With dispensary storefronts closed and limited to delivery only, and tourists gone, Priscilla Vilchis estimates her sales as a cultivation business are down 85 percent.
Nevada Dispensary Association Executive Director Riana Durrett said while delivery has kept many marijuana businesses going, most are doing just a fraction of the sales they were before and some are not participating at all because the process is “too difficult and inefficient.”
Chairman James DeVolld said on Monday that he thinks his new duties will deal with major litigation between the state and marijuana businesses that argued they were unfairly denied potentially lucrative dispensary licenses. A trial on that matter is scheduled for April.
Attorney Kristina Wildeveld, who is active before the pardons board, said a pardon can take an offense off a person’s record. That could have benefits for people including undocumented immigrants, who can face deportation based on misdemeanors.
Nevada is at a crossroads: still trying to understand the implications of legalizing adult use marijuana three years ago, and how to ensure those who are driving when they shouldn’t face consequences without ensnaring those whose legal high has long since worn off.
The announcement Monday comes after Sisolak earlier this month appointed former Nevada Supreme Court Justice Michael Douglas as chair, and former Gaming Control Board Chairman Dennis Neilander will serve on the board.
In the advisory, the department said 30 marijuana dispensaries scattered throughout the state sold the contaminated products during a roughly three-month period — between Oct. 25 and Jan. 16 — and test results showed the contaminated products contained yeast, mold, aspergillus and other potentially harmful bacteria.