Nevada weed transport legal battle hinges on timing, justice says

To Nevada Supreme Court Justice James Hardesty, the legal battle over who can transport weed hinges largely on timing.

In oral arguments Tuesday before the high court, representatives from the Nevada Department of Taxation and Independent Alcohol Distributors of Nevada continued their monthslong dispute over who should be allowed to distribute marijuana and restock pot shops in the Silver State.

The liquor distributors have an 18-month exclusive right to distribute recreational pot as approved by voters in November with Question 2. But the Taxation Department, tasked with overseeing pot distribution, can override the exclusivity if it determines liquor distributors cannot perform the task adequately.

Tuesday’s arguments centered on an Aug. 10 hearing at which the Taxation Department formally determined that there weren’t enough alcohol distributors to serve Nevada’s fledgling marijuana industry. The hearing followed the issuing of emergency regulations, approved by Gov. Brian Sandoval, to expand the applicant pool.

But the liquor distributors argued the fight was unfair and that the Aug. 10 conclusion was predetermined.

In September, the liquor distributors appealed the conclusion to the Nevada Supreme Court, challenging whether administrative agencies can create emergency regulations without evidence that “an emergency actually exists.”

“Timing is an important issue here,” Hardesty said Tuesday during the oral arguments. “Do we allow the agency to declare an emergency and justify it later? That looks like, to this record, what’s taken place.”

Recreational marijuana sales started July 1. But without licensed distributors to carry product from cultivators to producers and dispensaries — which is required by state law — stores could not restock.

Lawyers for both sides — Deputy Attorney General William McKean for the Tax Department and Kevin Benson for IADON — reiterated arguments they have made in their legal battle, which stretches back to June.

Benson argued that there was no evidence that there was a need for emergency regulations and said the Aug. 10 hearing flew in the face of due process.

McKean countered that the decision was not predetermined and that the department used notes written before the meeting to outline the final draft of the decision.

McKean said it was obvious from reports that without a functional distribution industry, stores would run out of weed. As a result, Sandoval’s budget — which included more than $50 million from marijuana tax revenue for education and regulation — would fall short.

For now, both sides will wait. Nevada Supreme Court Michael Sommermeyer said that, given the case’s complexity, justices likely will need several months to reach a decision.

Contact Colton Lochhead at clochhead@reviewjournal.com or 702-383-4638. Follow @ColtonLochhead on Twitter.