Booze Dealers Keep Exclusive on Nevada Pot Sales, For Now

CARSON CITY, Nev. (CN) – A Nevada judge has ruled, at least initially, in favor of wholesale liquor dealers who maintain they have the sole right to be licensed as distributors for the first 18 months of Nevada’s retail recreational marijuana industry, set to begin on July 1.

An initiative legalizing recreational marijuana specifically provides that only licensed alcohol wholesalers in the state can obtain licenses to deliver marijuana from cultivation facilities to retail shops during the 18-month period, unless the Nevada Department of Taxation determines the number of distributors would not be sufficient.

The initiative, approved by voters last November, declared that marijuana should be regulated in a manner similar to alcohol. Nevada has a three-tiered liquor system separating production, distribution and retail sales.

While crafting temporary rules to jump-start recreational sales by July 1, six months earlier than required, the department determined the number of liquor distributors would not be sufficient and allowed existing medical-marijuana establishments in the state to also apply for a distributor license.

A trade group, Independent Alcohol Distributors of Nevada, objected to the department’s determination, calling it invalid in a complaint for declaratory and injunctive relief filed this week.

Carson City Judge James Wilson granted the alcohol distributors’ request for a temporary restraining order, ruling they have demonstrated a strong chance of success on the merits.

“Plaintiff has also demonstrated irreparable harm because they are likely to be entirely shut out of the marijuana distribution business if the department proceeds to issue marijuana distribution licenses to existing marijuana establishments instead of solely to alcohol distributors,” Wilson wrote.

The order prohibits taxation officials from issuing a marijuana distributor’s license to anyone other than a licensed alcohol distributor and making any determination on whether the number of alcohol distributors is sufficient except through a regulation-making process. It also prohibits the enforcement of the deadline for submitting license applications, which was Wednesday.

A hearing on a preliminary injunction will be held later.

In its complaint, the independent alcohol distributors group said its members want to apply to become a marijuana distributor.

“Alcohol distributors … have more than sufficient capacity and capability to serve the relatively limited number of recreational marijuana stores in all regions of the state,” the complaint states.

The complaint also states the Department of Taxation never held a public hearing on how many distributors are needed and whether the number of alcohol wholesalers was sufficient.

A representative of the Department of Taxation did not immediately return a phone call seeking comment.

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