Deal reached on Nevada pot shop licenses, but ‘world war weed’ goes on

An agreement to transfer marijuana dispensary licenses awarded almost two years ago was conditionally approved Friday by the Nevada Tax Commission, two weeks into a trial over how the multimillion-dollar licenses were initially doled out.

In all, 18 companies agreed to rearrange licenses for many of 61 licenses for new marijuana stores across the state.

Attorney Will Kemp, who was instrumental in brokering the deal — which is expected to receive final approval from the Cannabis Compliance Board next week — said lawyers had drawn up 175 drafts of different agreements before finalizing one this week for more than 80 percent of the companies involved.

“This isn’t Christmas,” he said, adding that he was discouraged about not reaching a global deal. “This is settlement of a complicated piece of litigation… It’d be nice to get the whole thing done. But I don’t think that’s realistically possible now.”

Dozens of companies that lost bids to open retail pot shops had filed suit against the Taxation Department in late 2018, challenging the application process. The suit worked its way through the court system until the coronavirus pandemic hit, and the bench trial before District Judge Elizabeth Gonzalez was moved to the Las Vegas Convention Center to allow for social distancing among the dozens of attorneys involved.

“I know this is not a perfect agreement,” Tax Commission Chairman Jim DeVolld said Friday. “It doesn’t pull in everybody, but everybody’s got competing needs. And it’s a difficult concept for me to try and figure out how do I get everybody in the tent, and it was pretty obvious to me that that wasn’t possible.”

The trial is expected to continue Monday with several companies that want to open new pot shops battling the Department of Taxation over how it awarded licenses in late 2018.

Even after final approval from the compliance board, Gonzalez could issue a decision that would throw a wrench into the deal. But Kemp said that was unlikely.

In a letter delivered before the decision, David Goldwater, a lobbyist, former Democratic assemblyman and partner with Inyo Fine Cannabis Dispensary, a company denied a new license, asked the commission to reject the settlement.

“It is akin to allowing bank robbers to get out of their crime by paying a fine with the proceeds of the bank robbery,” Goldwater wrote.

“That this proposal is a litigation strategy and not a settlement is abundantly clear because the agreement does not settle the case. The remaining plaintiffs can and will proceed with all the claims against the State.”

Lawyers for the companies not willing to settle still argue that the state did not administer thorough background checks on applicants and conducted inaccurate and improper scoring to award new business licenses. The Nevada attorney general’s office has argued that state officials conducted an impartial review of each of the 462 applications.

Attorneys Dominic Gentile and Ross Miller, a former Nevada Secretary of State, representing companies initially denied licenses, also have suggested that the settlement could lead to even more litigation.

Miller, who referred to the trial as “world war weed” had asked the commission not to act on the settlement.

“There is simply no justifiable reason to rush approval of such an important agreement,” Miller wrote.

Attorneys Amy Sugden and Sigal Chattah, representing companies denied new licenses, had also informed the commission that they contested the deal.

In an email to the Review-Journal after the commission’s decision, Chattah wrote that she wanted the compliance board to review the agreement with an open mind.

“It is my hope that the CCB’s public hearing, as the rightful body to address this, will resolve the past sins of this process and not compound them,” Chattah wrote.

Contact David Ferrara at dferrara@reviewjournal.com or 702-380-1039. Follow @randompoker on Twitter.