As licensed dispensaries plan to open their doors to sell recreational marijuana on July 1, it is not without a last-minute hangover in the form of a court case brought by the Independent Alcohol Distributors of Nevada (IADON) against the Nevada Department of Taxation.
After filing a temporary restraining order against the Nevada Department of Taxation on May 30 prohibiting it from enforcing a May 31 license application deadline for marijuana distribution licenses, IADON made their case in front of Carson City Judge James Wilson on June 19. Today Judge Wilson handed down his ruling in favor of the alcohol wholesalers, granting them a preliminary injunction.
The crux of the case began with IADON filing a complaint on May 30th, arguing that the November voter-approved ballot measure, known as Question #2, which legalizes cannabis in Nevada, gives liquor wholesalers exclusive rights to marijuana distribution licenses for the first 18 months of sales in the state.
Although alcohol wholesalers were to have exclusive distribution rights according to the language in Question #2, in mid-March the Department of Taxation opened the licensing application process to the marijuana industry.
“Opening that distributor license up to everyone gives them a monopoly, and I don’t believe the voters voted in a monopoly. It would allow them to become vertically integrated and handle everything from start to finish and none of us believe that’s what the people voted in when they said regulate marijuana like alcohol,” said Peggy Arquilla, IADON member and president of West Coast Wine & Spirits.
The Department of Taxation opened licensing to the marijuana industry because of concerns that there wouldn’t be enough alcohol wholesalers to service the industry. Arquilla disputes that. “In reality one or two liquor distributors have more capacity to service 100 or 200 customers and the fact that there were 30 who expressed interest, we can all just kinda do the math and I think that answers that question.”
During the May 15-31 application process, 93 applications were turned in for marijuana distribution licenses — five were from liquor wholesalers and 88 were from existing medical marijuana establishments, according to State of Nevada Tax Department spokesperson Stephanie Klapstein.
As a result of Judge Wilson’s ruling this afternoon, the 88 applications turned in by the marijuana industry will be set aside leaving liquor wholesalers as the only ones eligible to handle distribution of recreational marijuana beginning July 1.
“The majority of the distributors I know are even much larger operations than I am and have scalable businesses, they already have refrigeration, they all have refrigerated transportation and inventory control systems. It’s just a matter of mirroring those same logistics,” said Arquilla of being ready to distribute next month.
Massimo D’Arrigo of Bevi Beverages agreed, “We have everything in place, our operation is extremely simple.”