Nevada Regulators Tackle Potential Weed Shortage

Jul 14, 2017

Recreational marijuana dispensaries around Nevada raked in an estimated $3-5 million in sales over the recent Independence Day weekend. But less than two weeks after kicking off, retailers are running out of stock.

As Reno Public Radio’s Paul Boger reports, a legal dispute between the state and alcohol distributors over who gets to transport marijuana from growers to retailers may grind sales to a halt.

 

When dispensaries in Las Vegas and Reno began selling pot at midnight on July 1, customers waited in lines for hours just to be a part of the historic moment.

Now, nearly two weeks later, the lines are still there.

Mikel Alvarez, head of retail operations for Blüm Marijuana Dispensaries says sales are booming.

"It's been wonderful. It's been a lot of work. My staff is exhausted. Opening night we saw a 750 percent increase in the number of patrons, so it's been exciting."

And while that may sound great, it may actually be creating shortage across the state. Not because of a bad harvest or lack of preparation. No, instead, a legal battle has developed over who has the right to transport pot from cultivation centers to retailers.

When voters approved the legalization last November, part of the initiative gave alcohol wholesalers first crack at distribution rights. But as the state drafted regulations, officials opened the licensing process to include medical marijuana distributors citing a lack of interest from the liquor industry.

"The department's continued statements to the media that there are no qualified applicants, that there are no completed applicants, etcetera are both untrue and disingenuous."

That’s Kurt Brown, the owner of Capitol Beverages – one of the handful wholesalers in Nevada currently bucking for a distribution license. He says regulators are giving preferential treatment to those already in the cannabis industry, which is when they asked a judge to step in.

According to that judge’s decision last month, regulators had not done a good enough job to determine the number of distributors needed to serve the state. The ruling immediately put a halt to the state’s licensing process and essentially forced dispensaries to only sell the product they had on hand without the ability to restock.

That was until Thursday.

Nevada’s Republican governor allowed the state to adopt emergency regulations. Those new rules once again reopened the licensing process to everyone who meets the state’s rigorous criteria.

"We have a job to do, and our job is to implement this program," says Tax Chief Deonne Contine. She goes on to say the move was needed because the state is relying on the nearly $100 million in projected tax revenue. "It's our responsibility, I feel, when these issues come up and these problems present themselves that we have to take the measures. We have to proactively deal with those problems."

But Kevin Benson, an attorney for an undisclosed number of alcohol distributors, says the new regulations maybe cause for more legal action.

"There very well may be," says Benson. "I need to discuss it with my clients and review the regulation more thoroughly and we'll make a determination from there."

In recent days, regulators have issued licenses to a pair of distributors. However, Nevada is vast and sparsely populated. It is unlikely the two companies will be able to service the entire state which, in turn, could continue to cause shortages.

And if customers can’t get legal pot, some they say they won't hesitate to go back to the black market.