Nevada declares emergency: Not enough legal marijuana

By Allen Cone  |  Updated July 12, 2017 at 8:58 PM
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July 12 (UPI) -- Nevada has declared an emergency regarding marijuana.

Unlike other states dealing with illegal use, the Silver State has problems with not enough of the legal stuff available.

Since recreational marijuana became legal on July 1, the 47 retail dispensaries have been unable to keep up with the demand.

The state Department of Taxation declared a state of emergency last week, warning "this nascent industry could grind to a halt."

Gov. Brian Sandoval, who did not support legalization, last week endorsed emergency regulations to increase supply.

He authorized the Nevada Tax Commission to hold a hearing Thursday to establish emergency reforms, including speeding up the review process for transport licenses and allowing cannabis companies to move pot if they meet certain requirements.

Sandoval said he endorsed the state of emergency prepared by the department's executive director, Deonne Contine, who said the industry would be unable to function "unless the issue with distributor licensing is resolved quickly."

"This Emergency Regulation is necessary to provide for the structure that will allow the department to, if necessary, make a determination that will maintain a flow of revenue related to the legal sale and regulation of marijuana. ... Such a determination will prevent a 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."

The problem is not growing -- there are 100 in operation across the state -- but in distribution and state rules on who is allowed to transport the pot.

The ballot measure, approved last November that allows adults 21 and older to buy 1 ounce of marijuana, stipulated that for the first 18 months of pot sales only wholesale alcohol distributors can transport marijuana from cultivation facilities to the dispensaries.

The state's powerful alcohol lobby was concerned that the pot sales would cut into liquor store revenue.

The state Department of Taxation, which regulates legal marijuana, said none of the seven applications from alcohol distributors had so far met the state licensing requirements, including background checks and security protocols.

So the dispensaries -- all of them already in the medical marijuana business -- are relying on marijuana they had in stock.

"We didn't know the demand would be this intense," Al Fasano, cofounder of Las Vegas ReLeaf, said Tuesday to the Los Angeles Times. "All of a sudden you have like a thousand people at the door...We have to tell people we're limited in our products."

In late June, the Department of Taxation loosened the licensing rules to allow dispensaries to transport their own marijuana. But District Court judge said the state needed to go through the regulatory process to determine how many distributors were needed. The ruling has been appealed to the Nevada Supreme Court.

The four other states where recreational pot is legal -- Colorado, Oregon, Washington and Alaska -- allow the dispensaries to transport marijuana themselves.

In Nevada, the state dispensary association estimated customers bought between $3 million and $5 million worth of pot in the first four days.

The state takes a cut of the revenue with a 10 percent tax on sales and 15 percent tax on growers. Nevada tax officials expect pot sales to generate $100 million in revenue over the next two years.

"The business owners in this industry have invested hundreds of millions of dollars to build facilities across the state," Department of Taxation spokesperson Stephanie Klapstein said in a email to media outlets. "They have hired and trained thousands of additional employees to meet the demands of the market. Unless the issue with distributor licensing is resolved quickly, the inability to deliver product to retail stores will result in many of these people losing their jobs and will bring this nascent market to a grinding halt. A halt in this market will lead to a hole in the state's school budget."

State Sen. Tick Segerblom -- a proponent of legalizing recreational marijuana who even has a strain named after him -- said if the Department of Taxation votes to expand the license eligibility, the cannabis conundrum will be immediately rectified.

"It's pretty amazing for our governor, who publicly opposed [recreational marijuana legalization], to now come full circle," Segerblom told NBC News. "He has bent over backwards to make sure this happened. It's very exciting."

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