A Carson City judge has ruled that additional businesses can apply to distribute marijuana to dispensaries.
When recreational marijuana sales started on July 1 there was a flood of excitement. Unfortunately, that flood soon turned into a drought as dispensaries have struggled to replenish their inventory due to state regulations.
Liquor distributors have exclusive rights to marijuana transports in Nevada for the first 18 months of recreational sales. There have been court rulings and lawsuits from both sides, but ultimately, the law dictating that only approved liquor distributors can transport marijuana had remained. This has resulted in very few companies being cleared to deliver marijuana to dispensaries.
The problem was apparent about as soon as recreational sales started. Governor Brian Sandoval (R) endorsed a legal fix for this in early July and the Department of Taxation signaled their concerns as well.
“Based on reports of adult-use marijuana sales already far exceeding the industry’s expectations at the state’s 47 licensed retail marijuana stores, and the reality that many stores are running out of inventory,” Department of Taxation spokesperson Stephanie Klapstein said last month.
Sales have dropped between 20 to 30 percent for dispensaries since recreational sales started according to the Department of Taxation. This could be largely to the fact that shops have to wait up to two weeks to replenish their inventory.
Nevada dispensaries may now finally be getting some much-needed help. Carson City Judge James Russell has ruled that additional licenses to transport marijuana can be approved. The regulations approved by voters under Proposition 2 state that in the case of an emergency, transporters without a liquor distribution license can be approved. Last week, the Department of Taxation issued a report concluding that liquor distributors were not up to the task of adequately supplying marijuana to dispensaries.
“It appears to the court that there is a need for additional distributors over and above the alcohol distributors,” Russell said on Thursday.
While the decision may not totally alleviate the concerns of dispensary operators, at least some seemed hopeful after Judge Russell’s decision.
“The judge’s decision to deny the injunction is a step in the right direction towards creating an efficient and safe marijuana industry in Nevada. Although I expect IADON to seek further appeals to the Department of Taxation, I believe this ruling signals the court’s acknowledgment that there are simply not enough alcohol distributors to serve this new industry and that the Department has the discretion to determine an appropriate number. Representatives of the industry have expressed that they welcome the opportunity to work with alcohol distributors when they are ready to enter the market, but at this time, there are not enough that can meet the extensive regulatory and operational demands,” Andrew Jolley, owner of The+Source dispensary in Las Vegas and president of the Nevada Dispensary Association told mg.
Of course, many from the alcohol industry were not pleased with the ruling.
“I’ve never been sandbagged like I was for this hearing,” said attorney Michael Hegemeyer, attorney for Mighty Sun West, a liquor company that holds one of the marijuana distribution licenses.
Judge Russell did state that the Department of Taxation could reverse his decision if alcohol distributors appeal.