Responding to overwhelming demand at Nevada’s new recreational marijuana stores, state regulators approved Nevada’s first two pot distribution licenses and were considering emergency regulations Thursday aimed at licensing more.
The state Tax Commission was expected to approve emergency rules endorsed by Gov. Brian Sandoval to address a distribution bottleneck resulting from Nevada’s unique voter-approved measure to legalize recreational sales. Sales began July 1.
Unlike other legal pot states, Nevada’s law dictates that only alcohol wholesalers can transport the drug from growers to storefronts for the next 18 months. The state is challenging the interpretation of that law because of the bottleneck.
Many retailers were previously licensed to sell and distribute medical pot, so they started stockpiling supplies months ago in an anticipation of high demand for recreational marijuana.
But representatives of several of the 47 retailers now licensed to sell recreationally testified before the tax panel Thursday their shelves are nearly empty because there’s no distribution mechanism that allows them to restock.
They urged the commissioners to approve an emergency regulation backed by the governor to allow some pot retailers to serve as their own distributors if there aren’t enough alcohol distributors to do the job.
Nevada Department of Taxation Executive Director Deonne Contine announced at the hearing in Carson City that the agency has approved licenses for two alcohol wholesalers in compliance with a court order to begin distributing recreational pot to retailers.
But she said it’s too soon to tell if Crooked Wine of Reno and Rebel Wine of Las Vegas will be able to handle the demand statewide. She said one of the new licensees is “pretty stressed out about what he’s going to be asked to do.”
“There’s room in this market for plenty of more,” Contine said, adding that she’s hopeful some additional alcohol wholesalers could be licensed in the days or weeks ahead.
“Businesses could close their doors or are not going to be able to get products they are legally licensed to sell,” she said.
The state has filed an appeal asking the Nevada Supreme Court to overturn Carson City Judge James Wilson’s ruling prohibiting distribution licenses for anyone other than alcohol wholesalers.
A lawyer for the Independent Alcohol Distributors of Nevada, which won that injunction, told the tax commissioners on Thursday the emergency regulation they were considering would be just as illegal as an earlier one Wilson threw out. Kevin Benson stopped short of threatening another lawsuit, but said he’s convinced the emergency rules would be invalid.
The Tax Department last week declared the need for the emergency rules after marijuana retailers recorded more than 40,000 transactions in the first weekend.
“Without the ability to license marijuana distributors to continue the flow of product to the retail store, a high likelihood exists that consumers will revert to the black market,” Contine said.
She said unless the matter is resolved quickly, the distribution bottleneck will cost both the state and investors millions of dollars, thousands of jobs and “cause this nascent industry to grind to a halt.”
credit:abcnews.go.com
