After two weeks of watching inventory dwindle, Nevada pot shops will soon be able to restock their shelves.
The state awarded its first marijuana distribution licenses to a pair of alcohol wholesalers, and those companies can begin transporting marijuana products from cultivation and production facilities to dispensaries, Department of Taxation spokeswoman Stephanie Klapstein said Thursday.
This means that some two weeks after Nevada cannabis stores started legally selling recreational marijuana, they can restock their supplies.
“It takes that worry away. Definitely,” said Armen Yemenidjian, CEO of Essence Cannabis Dispensaries. “We’re just happy that we now get to concentrate on the experience and the customer as opposed to everything else.”
Also Thursday, during a feisty meeting, the state Tax Commission unanimously approved emergency regulations that will let it expand who can apply for distribution licenses. That could bring about another legal challenge from a group of alcohol wholesalers.
The state’s first marijuana distribution license went to Crooked Wine, a federally licensed liquor distributor based in Reno, Klapstein said. Crooked Wine will not distribute the pot to stores.
Klapstein said Crooked partnered with Blackbird Logistics, the main distributor for Nevada medical marijuana companies. With the partnership, Crooked will hold the license while Blackbird acts as its agent for marijuana distribution. Crooked Wine will continue alcohol distribution, although that license could be in jeopardy if federal regulators have a problem with the setup for marijuana, which is federally illegal.
The second license went to Las Vegas-based Rebel One.
Both Blackbird (through Crooked’s license) and Rebel One can immediately begin distribution, Klapstein said.
“They are licensed, and they can start,” Klapstein said.
Having licensed distributors means the nearly 50 marijuana dispensaries in Nevada will be able to restock their shelves for the first time since retail sales began on July 1.
“The relief is that it’s not all going to come to a stop,” said Riana Durrett, executive director for the Nevada Dispensary Association.
But Durrett said two or even three distributors won’t be able to fully serve the industry. More distributors are needed to keep distribution prices from spiking and to ensure all distribution demands are met, she said.
Emergency regulations passed
The Tax Commission’s passage of the emergency regulations signed last week by Gov. Brian Sandoval will give the state more discretion in dishing out distribution licenses.
Before the vote, the meeting got testy as state officials, commissioners and marijuana advocates verbally sparred with alcohol distributors.
Kevin Benson, attorney for the Independent Alcohol Distributors of Nevada, said the emergency regulations were not well thought out and might even be invalid if adopted.
Benson said the problem has only arisen because the tax department rushed to get sales rolling by July 1. The ballot measure mandated sales by Jan. 1, 2018.
And he said he doesn’t believe that the emergency regulations would be valid unless the state could prove a delay would cause a budget shortfall.
“There’s no emergency here,” Benson said during the meeting.
Deonne Contine, executive director of the Tax Department, admitted to rushing the process but said the department has been working with alcohol distributors for over a month to try to get them licenses, she said.
As for the budget shortfall, Contine said it’s pretty simple.
“I know for a fact that if we don’t have the product at the stores, the businesses can’t sell the product and the tax can’t be collected,” she said.
Fight not over
The fight over these distribution licenses isn’t over. Commissioner Thom Sheets said after the vote that he was told liquor distributors planned to file a restraining order against the state in response to the regulations.
Benson, the IADON attorney from Carson City, did not immediately respond to request from comments Thursday evening.
Contact Colton Lochhead at firstname.lastname@example.org or 702-383-4638. Follow @ColtonLochhead on Twitter.