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On July 1, 2017, Nevada became the fifth state in the United
States to legalize the sale of recreational marijuana. The
epicenter of "what happens here, stays here" tourism just
added a new vice to its repertoire! So, what's the
problem?
Among other things, Nevada's recreational marijuana
dispensaries are facing the specter of empty shelves. Why? Because
a wrinkle in the ballot measure that legalized recreational
marijuana sales in Nevada gives licensed liquor wholesalers a
temporary 18-month monopoly on marijuana distribution rights ...
"unless the [Nevada] Department [of Taxation] determines that
an insufficient number of marijuana distributors will result from
this limitation." In order to fill its shelves, a
Nevada-licensed recreational marijuana dispensary must use a
licensed recreational marijuana distributor to transport the
product from the cultivation facility to its retail outlet, because
the law for recreational use does not allow dispensaries to
transport marijuana from a cultivation facility to their stores
(whereas dispensaries selling medical marijuana were allowed to
move "medical-use" product from cultivation locations
without an independent distribution network).
Despite efforts by marijuana dispensaries to stock up prior to
July 1, overwhelming demand for recreational marijuana has resulted
in dwindling supplies. And now, distributors are nowhere to be
found. That is because very few liquor wholesalers have applied to
become licensed marijuana distributors, and those that have made
such application have failed to meet the requirements for
licensure. The Nevada Department of Taxation (NDOT) reported that
as of July 7, 2017, ZERO distribution licenses have been issued by
NDOT.
Perhaps liquor wholesalers fear risking their federal alcohol
permits issued by the Alcohol and Tobacco Tax and Trade Bureau? It
would appear that marijuana distribution licenses would have to be
issued to persons other than liquor wholesalers – however,
nothing is that simple. A small group of liquor wholesalers, known
as the Independent Alcohol Distributors of Nevada, sued and, on
June 21, won a temporary injunction against NDOT to prevent
marijuana distribution licenses from being issued to persons other
than liquor wholesalers.
In response, on July 7, Governor Sandoval endorsed emergency regulations that would give NDOT the authority to determine whether there are a sufficient number of marijuana distributors to service the market – a determination that would allow NDOT to open up distributor licensing to those other than licensed liquor wholesalers. The emergency regulations will be considered by NDOT on July 13. Stay tuned.
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