As we previously discussed
here, excitement was high going into Nevada’s July 1 st opening day for adult-use cannabis, but tensions were mounting after a Nevada District Court ruling left dispensaries without any means of resupplying once stocks ran out. Most reports cited long lines but an otherwise successful debut weekend. The growing question since opening day has been, without change, when will dispensaries run out?
To recap, during the 2016 Election, Nevada voters voted overwhelmingly for the passage of Question 2, the law to legalize the possession, sale, and private consumption of marijuana for adults over the age of 21. Included on the ballot initiative was the creation of a new license category for distribution. These distribution licenses would be limited, initially, to those entities already possessing a Nevada liquor distribution license. However, with the July 1
st opening day fast approaching, and no alcohol distributors approved for cannabis distribution, the Nevada Department of Taxation (“DOT”), the state department charged with issuing distribution licenses, introduced regulations to allow others to apply. Specifically, Section 14(1) reads, “[p]ursuant to NRS 453D.210(3), the Department has determined that there is an insufficient number of distributor licenses from persons holding a wholesale liquor dealer’s licenses to serve the intended marijuana market…”
The DOT declaration caused several liquor distributors to file a lawsuit (
Ind. Alcohol Distributors of NV v. NV Dept of Taxation, First Jud. D. Ct. of the State of NV in and for Carson City, Case Number: 17 OC 00098 1B) arguing two points. First, that DOT failed to properly solicit applications from licensed liquor distributors, and second, that DOT failed to define how it determined that an “insufficient number” of licensed alcohol distributors applied. On June 20, 2017, the District Court Judge agreed with the Independent Alcohol Distributors of Nevada, granting an injunction that prevents DOT from issuing distributor licenses to any person or entity other than wholesale alcohol distributors. The injunction also precludes DOT from making any sufficiency determinations on the number of alcohol distributors until it adopts valid definitions or rules for determining an adequate number of licensees to service the market.
The practical result of the ruling was that not a single distributor was licensed to legally supply Nevada dispensaries on opening weekend. In an effort to move the process forward and keep dispensary doors open, Nevada Governor, Brian Sandoval, issued a Statement of Emergency on Friday, July 7, 2017. The statement gives DOT the right to define the sufficient number of distribution licenses necessary to serve the marketplace. Additionally, on July 13, 2017, in an overwhelmingly pro cannabis industry decision, the Nevada Tax Commission voted unanimously to allow DOT to define the necessary number of licenses to service the Nevada cannabis market. This, in turn, will allow the DOT to determine whether alcohol distributors have the capacity to serve the market alone or whether other cannabis based businesses can distribute as well. This decision ensures that retail licensees can run their businesses without concern of supply running out and that producers and processors can conduct business without fear of having to sit on usable product without a means to sell it.
After several weeks of worry that
highlighted national news coverage, the July 13 th decision provides some relief to move on from the uncertainties and fears of dwindling supply, and truly celebrate the legalization of cannabis in Nevada that has been decades in the making. For an industry already facing so many hurdles, the best optics are successful optics, and Nevada looks to have put itself back in the right direction. We’re likely to see continuing growing pains and certainly some jostling between interested parties as Nevada waits for more permanent regulations to go into effect in 2018, but for now in proper Vegas style, it looks like the show can go on.
*The information in this blog post (“post”) is provided for general informational purposes only, and may not reflect the current law in your jurisdiction. No information contained in this post should be construed as legal advice from Greenspoon Marder, P.A., In New York, Greenspoon Marder, P.A. practices under the name Greenspoon Marder, P.A. P.C. In California, Greenspoon Marder LLP practices using the fictitious name and trademark Greenspoon Marder under license from Greenspoon Marder, P.A., or the individual author(s), nor is it intended to be a substitute for legal counsel on any subject matter. No reader of this post should act or refrain from acting on the basis of any information included in, or accessible through, this Post without seeking the appropriate legal or other professional advice on the particular facts and circumstances at issue from a lawyer licensed in the recipient’s state, country or other appropriate licensing jurisdiction.
About Greenspoon Marder
Greenspoon Marder is a national full-service business law firm with 240 attorneys and 26 locations across the United States. We are ranked amongst
American Lawyer’s Am Law 200, as one of the top law firms in the U.S. since 2015. Since our inception in 1981, our firm has been committed to providing excellent client service through our cross-disciplinary, client-team approach. Our mission is to understand the challenges that our clients face, build collaborative relationships, and craft creative solutions designed and executed with long-term strategic goals in mind. We serve Fortune 500, middle-market public and private companies, start-ups, emerging businesses, individuals and entrepreneurs nationwide.
Natalie Villanueva, Director of Marketing
954.333.4308 | firstname.lastname@example.org
This Greenspoon Marder LLP Client Alert is issued for informational purposes only and is not intended to be construed or used as general legal advice nor a solicitation of any type. Please contact the author(s) or your Greenspoon Marder LLP contact if you have any questions regarding the currency of this information. The hiring of a lawyer is an important decision. Before you decide, ask for written information about the lawyer’s legal qualifications and experience.