Days after Nevada became the fifth state in the U.S. to allow recreational marijuana stores, the drug has proved so popular, the state’s governor is pushing for a “statement of emergency” because dispensaries can’t keep up with the demand.
Gov. Brian Sandoval has now endorsed the Department of Taxation’s proposed “statement of emergency,” the agency announced on Friday, which would allow state officials to consider adopting a temporary regulation to get sales going again.
What’s The Holdup?
It’s not that it’s an emergency situation to get these people their recreational drugs, but rather, one for the state’s tax coffers, which could stand to lose a pretty penny if dispensaries can’t sell their product.
At the crux of the issue is the number of dispensaries that are licensed to distribute the stuff: Though there are almost 50 who are licensed to sell it, they can’t restock their inventory without distributors.
And because of a recent court battle over who can distribute marijuana, there are currently no dispensaries licensed to distribute: The state law legalizing recreational marijuana gave wholesale alcohol distributors exclusive rights to transport wholesale marijuana for the first 18 months of legal sales. But Nevada has so far only received seven applications from liquor wholesalers.
The department wanted to open up the process to existing dispensaries, because most of those liquor wholesales haven’t yet met the requirements necessary to get a distribution license, but it was barred from doing so in a June 20 court decision that keeps that exclusivity regulation intact, unless the department finds there isn’t sufficient interest from other potential distributors — which it can’t do because no applicants from a wholesale liquor deal have qualified yet.
“Without the ability to make a sufficiency determination, the Department cannot license other marijuana distributor applicants and, therefore, no marijuana or marijuana product can be transferred to a retail store,” the department wrote. “Without the retail sale of marijuana, the State will not realize the revenue on which the State budget relies.”
This emergency regulation would let the department widen its pool of potential applicants for distribution licenses, allowing them to transport marijuana from grow operations and packaging facilities to the dispensaries.
“The initial weekend of legal operation of marijuana establishments resulted in well over 40,000 retail transactions and some establishments report sales of more than double their estimates,” the department said on Friday, five days after sales opened on July 1. “Additionally, some establishments report the need for delivery within the next several days.”
Widening the pool of applicants is also necessary to keep residents from going back to the black market, the department says, noting that “without the ability to license marijuana distributors to continue the flow
of product to the retail store, a high likelihood exists that consumers will revert to the black market.”
The Nevada Tax Commission will vote on the regulation on Thursday.