Pubdate: Thu, 17 Aug 2017
Source: Seattle Post-Intelligencer (WA)
Copyright: 2017 Seattle Post-Intelligencer
Contact: P.O. Box 1909, Seattle, WA 98111-1909
Author: Scott Sonner, Associated Press


CARSON CITY, Nev. (AP) - A judge cleared the way Thursday for Nevada
to allow more businesses to move marijuana from growers to stores in
an effort to keep up with overwhelming demand since recreational pot
sales began last month.

Carson City District Judge James Russell lifted an order blocking
regulators from issuing pot distribution licenses to anyone other than
alcohol wholesalers. Nevada's voter-approved law is unique among pot
states in providing liquor wholesalers exclusive rights to distribute
marijuana unless they could not keep up with demand.

Russell said after an hour-long hearing that there is overwhelming
evidence alcohol wholesalers don't have the capability to meet the
needs of dozens of recreational pot dispensaries from Las Vegas to

To launch sales July 1, the state adopted emergency rules to make it
clear that some pot shops could serve as their own middlemen in some
circumstances. The judge told a lawyer for alcohol distributors that
sued over the matter that they're free to appeal to regulators.

But "it's not up to this court to supersede the authority of a state
agency," Russell said.

The turf battle between the alcohol industry and the new retail
marijuana business has been in and out of court for the last six weeks
as state regulators complained that a delivery bottleneck was
undermining an otherwise robust industry and the state revenue that
comes with it.

Legal recreational sales of marijuana started with a bang July 1.
Since then, state Tax Director Deonne Contine has insisted the tiny
distribution network's inability to keep pace with demand is forcing
up prices and sending buyers back to the black market.

As a result, Contine said sales had dropped as much as 30 percent at
some marijuana storefronts in recent weeks. She also warned that the
situation was jeopardizing worker safety at dispensaries forced to
stockpile supplies and huge amounts of cash to accommodate erratic

Russell lifted the temporary restraining order he granted to the
Independent Alcohol Distributors of Nevada on Friday, a day after the
Nevada Tax Commission concluded there were an insufficient number of
alcohol wholesalers to meet the growing demand.

The judge said Thursday that he was convinced the state had proven
what was necessary to trigger the exception to alcohol businesses'
exclusive distribution rights.

"There is a substantial amount of evidence that there is a need for
additional distributors over and above the liquor distributors,"
Russell said.

Kevin Benson, the alcohol group's lawyer, told the judge Thursday the
meeting the Taxation Department held last week to authorize the
determination of insufficiency violated his clients' right to due
process. He said they were denied proper notice and prohibited from
calling their own witnesses or questioning a state economist or three
marijuana industry witnesses who testified in support of the state.

"Due process requires those people to have a meaningful opportunity to
be heard at a hearing where the result is not pre-determined," Benson

But Michelle Briggs, the state's senior deputy attorney general, said,
"There is no property right."

"You do not have a due process right to a monopoly. That is what they
are asking for," she said.

Contine said in a declaration signed Tuesday that delivery delays have
forced retail prices up and have "driven sales down 20 percent to 30

"When there is inadequate supply and variety, the prices of legal
marijuana increase and licensed retailers do not have products
demanded by their customers," she said. "Both situations drive
consumers to the black market."
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