Judge hears challenge to Nevada’s marijuana business licenses

Several companies denied licenses awarded in December quickly filed suit against the Taxation Department, challenging the application and license awarding process.

In a lawsuit filed earlier this year, the companies accused state tax officials of failing to disclose how they picked 61 winners from a pool of 462 applicants for new pot dispensaries in December.

Attorney Dominic Gentile, who represents Serenity Wellness Center LLC, one of the companies denied a license, argued that the power delegated to the Taxation Department “was exceeded, was expanded and power was usurped.”

He added: “What we have here is a direct constitutional attack.”

At the end of a hearing expected to last through next week, District Judge Elizabeth Gonzalez is expected to decide whether licenses already issued should be put on hold while the selection process is reviewed.

Recent state law transferred licensing and registration for marijuana businesses from the Division of Public and Behavioral Health to the Department of Taxation.

Steve Shevorski, head of complex litigation with the Nevada Attorney General’s office, insisted in his arguments that the selection process was impartial.

“The department is entitled to great deference in its interpretation of the grant of power,” Shevorski said. “I hope you’ll be convinced that these are fair, honest people who work for the department, who worked their tail off, who did their level best to ensure” that companies were treated fairly.

David Koch, a lawyer for Nevada Organic Remedies LLC, one of the companies awarded a license, said the lawsuit was based on “a lot of speculation, a lot of rumors.”

Earlier this month, Gov. Steve Sisolak signed a bill that lifted the curtain on marijuana business ownership in an effort to prevent similar lawsuits.

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