Carson City judge blocks pot distribution licenses to non-alcohol distributors
June 21, 2017
Carson City District Judge James Wilson ruled Tuesday the Nevada Taxation Department can't issue recreational marijuana distribution licenses to anyone except licensed alcohol distributors.
He issued a preliminary injunction in the case filed by a small group of alcohol distributors who charged that taxation's plan to issue licenses to medical marijuana establishments and others in addition to alcohol distributors was a clear violation of the initiative that legalized recreational marijuana in Nevada. That initiative says for the first 18 months after legalization, "the department shall issue licenses for marijuana distributors pursuant to this chapter only to persons holding a wholesale dealer's license (for alcohol and liquor)."
State officials said they were determined to still have recreational marijuana sales begin on July 1, but admitted they didn't know how that would happen.
Wilson's 12-page order also bars taxation officials from making any determination of the sufficiency of the number of alcohol distributors until it has adopted valid definitions for determining what number of distributors is needed to serve the market. One of the arguments against taxation's decision there aren't enough alcohol distributors willing to enter the pot market was taxation never defined how it arrived at that decision.
"There is no evidence that the department has determined how much demand any particular alcohol distributor licensee can service," Wilson wrote.
Wilson wrote that Capitol Beverages operator Kurt Brown of Carson City testified his company alone could serve all 106 potential pot retailers with distribution services.
Wilson agreed with alcohol distributor lawyer Kevin Benson without a preliminary injunction while the merits of the case are resolved, Brown and the other distributors interested in the business would suffer irreparable harm. He agreed with the argument by distributors they would likely be shut out of the distribution business entirely if licenses were issued to others — especially in view of the fact medical marijuana providers would rely on their own supply distribution system currently in place for medical marijuana
His order enjoins taxation from issuing retail marijuana distributor licenses "to any person or entity other than wholesale alcohol distributors." The injunction will remain in place until the case is resolved and a comprehensive system for issuing licenses is approved for recreational marijuana distribution and retail sales.