Las Vegas, NV — Nevada’s Department of Taxation has issued a “statement of emergency” amid a shortage of cannabis since the plant was legalized for recreational use at the beginning of this month.
Between July 1 and 4, dispensaries made roughly $3 million in sales and generated as much as $1 million in tax revenue. But the green rush has come with a shortage — one almost certainly created because of the way the law was written and, as a result, the government’s willingness to grant liquor vendors an 18-month monopoly on distribution.
The Department of Taxation announced on Friday that Nevada Governor Brian Sandoval has endorsed the agency’s statement of emergency over the shortage of weed. As a result, state officials will vote Thursday on whether to adopt a regulation to allow the tax department to issue more distribution licenses.
The Reno Gazette-Journal reported:
“The regulation would allow the department to consider a larger pool of applicants for distribution licenses, licenses that permit the transport of recreational marijuana from the cultivation and packaging facilities to the dispensaries. The Nevada Tax Commission will vote on the regulation on Thursday.”
As Anti-Media reported at the end of June, Nevada voters approved a measure last year that legalized recreational cannabis. But in order to avoid a messy battle with the established liquor industry in the state, the backers of the proposition, the Coalition to Regulate Marijuana Like Alcohol, accepted a campaign contribution from liquor vendors in exchange for including an 18-month period in which only liquor vendors could obtain distribution licenses.
The Department of Taxation appeared to challenge this after the November election, claiming not enough liquor license holders had applied for licenses and that, as a result, they needed to expand their pool of applicants (the proposition allowed for this in the event that liquor distributors could not meet demand on their own). This led the Independent Alcohol Distributors of Nevada to sue, and in a court ruling last month, a Nevada state judge in Carson City sided with the liquor vendors, upholding the 18-month monopoly.
Amid the shortage, however, the Department of Taxation is coming out victorious, though the final decision hinges on how the state’s tax commission votes this Thursday.
In an email to the Reno Gazette-Journal Friday, department spokeswoman Stephanie Klapstein said:
“Based on reports of adult-use marijuana sales already far exceeding the industry’s expectations at the state’s 47 licensed retail marijuana stores, and the reality that many stores are running out of inventory, the Department must address the lack of distributors immediately. Some establishments report the need for delivery within the next several days.”
She indicated that the liquor industry has failed to adequately supply the market to meet demand:
“We continue to work with the liquor wholesalers who have applied for distribution licenses, but most don’t yet meet the requirements that would allow us to license them. Even as we attempted to schedule the final facility inspection for one of the applicants this week, they told us their facility was not ready and declined the inspection.”
Only seven liquor distributors have applied to become cannabis distributors.
In contrast, over 80 medical marijuana businesses were eager to apply for distribution licenses but were denied because of the 18-month exclusivity granted to liquor vendors. Klapstein argued that unless they are allowed to participate, people will likely lose their jobs and the state will lose out on revenue slated to go to public education. Because medical and recreational dispensaries must receive their product from licensed distributors, the industry could face grave consequences:
“The business owners in this industry have invested hundreds of millions of dollars to build facilities across the state,” Klapstein said. “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.“
As the government-controlled cannabis market succumbs to pitfalls, however, the demand for the plant in the state is proving — once again — that the tide against prohibition is only growing stronger.