Gov. Sandoval endorses emergency regulations to address marijuana distribution problem

CANNABIS COUNTDOWN | We are digging into the impacts the legal recreational marijuana market could have on Nevada. (Nathan O'Neal | KSNV)

Governor Brian Sandoval has endorsed emergency regulations that would give Nevada's Department of Taxation the authority to determine whether there are enough liquor wholesalers to serve the legal marijuana distribution market.

Nevada launched recreational marijuana sales on July 1, becoming the fifth state in the country to do so.

According to the Taxation Department, adult-use marijuana sales are already far exceeding the industry's expectations at the state's 47 licensed retail marijuana stores.

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Based on those reports and the reality that many stores are running out of inventory, the Department expressed the immediate need to address the lack of distributors. Some marijuana establishments have reported the need for delivery within the next several days.

The Department of Taxation says they will continue to work with liquor wholesalers who have applied for distribution licenses, but according to the governor's office, the seven applicants who have wholesale liquor licenses don't yet meet the requirements to allow them to be licensed.

According to the Department, they attempted to schedule the final facility inspection with one of the applicants this week but were told the facility was not ready and the inspection was declined.

"Without the ability to license marijuana distributors to continue the flow of product to the retail store, a high likelihood exists that consumers will revert to the black market," said Deonne E. Contine, the Executive Director of the Nevada Department of Taxation in the emergency regulations.

According to the governor's office, the adoption of an emergency regulation is not uncommon and is used in narrow circumstances that allow for a prompt response to a temporary situation.

"Adopting an Emergency Regulation to allow for such a determination will prevent reversion to the black market and preserve the legal market so that legally licensed and regulated businesses continue to operate, pay employees and realize the returns from their investments," said Mary N. St. Martin, the Communications Director for Gov. Sandoval.

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As of Friday, no distribution licenses have been issued.

The Department of Taxation asserts the emergency regulation is in compliance with a June 20 court decision requiring the Department go through the regulatory process before it makes a decision about whether there are enough liquor wholesalers to serve the market as distributors.

"The Department is also continuing the process of asserting our rights through the Court. Late last week, we filed our appeal of the June 20 decision with the Supreme Court of Nevada, and we were granted an expedited schedule," said Stephanie Klapstein, the spokesperson for the Department of Taxation.

The emergency regulations will be considered for adoption by the Nevada Tax Commission on July 13.

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