Judge denies Nevada marijuana distribution injunction request

CARSON CITY — Carson City District Judge James Todd Russell on Thursday denied a preliminary injunction sought by liquor distributors to stop the Nevada Tax Department from letting marijuana licensees get into the business of transporting pot from growers to retailers.

Russell said liquor wholesalers have appeal rights to the Tax Commission on the decision last week by Tax Department Director Deonne Contine that liquor wholesalers were insufficient to satisfy the demand for recreational pot deliveries.

The judge also rescinded a temporary restraining order issued last Friday stopping the Tax Department from moving forward with licensing marijuana companies to distribute the retail product.

Attorney Kevin Benson, representing the Independent Alcohol Distributors of Nevada, said he will seek a stay on the Tax Department decision and appeal the issue to the Tax Commission.

Benson told Russell that the liquor industry did not get a fair hearing before last week’s ruling.

“We have already requested a stay from the department, and will be sending our notice of appeal to the Commission today as well,” he said in a statement issued after the ruling. “We look forward to the opportunity for a full and fair hearing before the Commission.”

Benson said if distribution licenses are issued to marijuana businesses before a stay is issued, the exclusivity provided to alcohol wholesalers to distribute recreational pot will be moot.

The Tax Department was evaluating the ruling and did not immediately know how it will proceed on the licensing issue.

Months of fighting

Since June, some Nevada alcohol distributors have been battling with the agency over the requirement that their industry has the exclusive right to distribute recreational marijuana for 18 months before the process could be opened to competition.

That right was granted in the 2016 ballot measure that legalized recreational marijuana in Nevada, but the Tax Department was given authority to open distribution rights if the liquor industry was unable to handle the business. That determination made by the agency on Aug. 10.

Senior Deputy Attorney General Michelle Briggs said only seven of the 61 Nevada liquor distributors applied to be distributors, and two of those were medical marijuana establishments that sought alcohol distribution licenses. Most liquor distributors don’t want to risk their federal alcohol licenses by participating in the industry, she said.

Briggs said there are examples of recreational marijuana establishments “self-distributing” in violation of state law. This would end if there was enough competition in the distribution business, she said.

Retail recreational marijuana sales began July 1 in Nevada following voter approval in November of legalizing the use of the drug by people age 21 or older. There are about 50 retail dispensaries located in the state, mostly in Clark and Washoe counties.

Contact Sean Whaley at swhaley@reviewjournal.com or 775-461-3820. Follow @seanw801 on Twitter.