There’s been a lot of recent push back Nevada’s “early start” program that would allow recreational sales to begin on July 1st, 2017. Two complaints were issued towards the program, and both complaints have the power to stall recreational sales set for July 1st, 2017.

Timeline of retail cannabis sales in Nevada

  • November 8, 2016 – Voters approve Question 2, which legalized possession of cannabis for adults 21 and older.
  • Jan. 1, 2017 – Possession of cannabis becomes legal for adults 21 and older.
  • July 1, 2017 – Expected rollout of Nevada’s “early start” program that would allow for adult-use sales to begin before the deadline set in Question 2.
  • Jan. 1, 2018 – Deadline for tax department to have a regulatory structure for adult-use sales in place.

The first complaint was filed by Jim Hartman with the Nevada attorney general’s office. The complaint cites the May 8 meeting in which the tax commission adopted temporary regulations to allow recreational cannabis to be sold starting July 1st of 2017 — the proposed date sets the timeline for recreational sales six months earlier than called for by Question 2.

Hartman claims the meeting’s agenda violated open meeting law because it did not reference “marijuana,” “early start” or “Question 2,” in the public notes for the meeting. If the meeting is found to be in violation of the open meeting laws, the commission could be forced to re-hear the agenda item June 26, which could potentially delay the roll-out date of adult-use sales by about two months.

This first complaint is very out there in my opinion and feels like it is an attempt to grab at straws and buy time.

The second complaint was filed by Sam McMullen, the attorney representing the Independent Alcohol Distributors of Nevada who filed a complaint arguing that the November voter-approved ballot measure that legalized cannabis in Nevada gives liquor wholesalers exclusive rights to cannabis distribution licenses for the first 18 months of sales in the state.

“The statute clearly gives a priority and exclusive license to alcohol distributors, in order to promote the goal of regulating marijuana similar to alcohol,” the judge ruled.

To further add to my confusion as to why the complaint was filed in the first place, I’ll reference a statement released by the Las Vegas Review-Journal, “The tax department reached out to all licensed alcohol wholesalers in the state soon after Question 2 passed to gauge their level of interest in distribution. The department said it only a handful of dealers showed lukewarm interest, and no concrete business plans were submitted for how those companies would distribute marijuana.”

Another statement cites how cannabis businesses need access to these distribution licenses in order for operations to take place, “Part of the issue the department cited was liquor distributors are licensed on the federal level, where marijuana remains illegal, and acting as a distributor of marijuana could put those licenses at risk. In March, the department decided that it would open the applications for distribution licenses beyond alcohol distributors. Tax department director Deonne Contine said in several meetings that the industry needed licensed distributors under Question 2 or the industry could not operate.

Clearly, the alcohol companies had months to review Question 2, and consider working with the state and local officials to get on the same page with this issue, but they choose now to file a complaint?

How is the local cannabis industry reacting?

Armen Yemenidjian, CEO of Essense Cannabis dispensaries in Las Vegas, stated to the LV Review Journal that requiring a third-party distributor for cannabis baffles him.

Yemenidjian’s cultivation facility is less than a mile from his dispensary, he told LV Review Journal. Other cannabis companies have cultivation centers located on the same property as its dispensary. That means that in those specific cases, the cannabis companies would need to pay a distributor to take the cannabis products from one room in a building to another.

What if it’s delayed?

If the early start program is delayed, the potential impacts could go beyond local businesses losing out on revenue and cannabis users having access to product. The proposed budget is based on sales starting July 1, 2017, and calls for nearly $70 million in taxes over the next two fiscal years to fund the state’s public education fund.

Stay tuned for further developments in this case.

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