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Local Liquor Distributors Fight for Inclusion in Nevada’s Recreational Marijuana Industry

Liquor distributors want to become an integral part of Nevada's recreational market, but recent regulation proposals leave them out to dry.

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Although the alcohol industry has been one of the most staunch opponents against cannabis legalization, small-scale liquor distributors in Nevada have decided to try and take advantage of the impending market. Back in November, the state voted to legalize recreational marijuana via Question 2, creating an array of exciting opportunities in the region.  

Local distribution companies were major backers of this measure, donating almost $88,000 to launch a campaign that placed marijuana on the same level as alcohol. With this support, they also expected to be given first dibs on cannabis distribution licensing. But regulations that were recently proposed by Nevada’s Department of Taxation seem to leave these distributors out of the picture. 

A handful of smaller distribution companies have formed an organization called the Independent Alcohol Distributors of Nevada. The group is currently working with a legal team to figure out how to proceed with their case against the Tax Commission. These distributors disagree with how the regulations came about, arguing that the proposed model goes against the wishes of voters.

Liquor distribution in Nevada an across the U.S. follows a “Three Tier system”, starting at the producer, then moving through a distributor, before ending up in the hands of retailers. But the Department of Taxation’s proposal would cut out the middleman and place marijuana producers in charge of distributing their own product.

There are arguments both for and against the involvement of local distribution companies in Nevada’s cannabis market. Distributors argue that they have more experience with legal business, meaning that they would be able to better comply with strict regulations than the marijuana industry. 

But in November, the Department of Taxation sent out an inquiry to gauge the interest that the distribution industry had in the recreational marijuana market. Out of the 67 local liquor distributors, only 15 of them  responded affirmatively. The low level of interest caused concern that the state wouldn’t have enough cannabis distributors when legislation went into effect. 

The Tax Commission plans to vote on the proposal on May 8, leaving alcohol distributors little time to come up with a formidable argument for why they should be included in the impending market. 

Some proponents worry that a lawsuit would slow down the implementation of Question 2 and the state’s “early start program.” This would allow medical dispensaries sink their teeth into the recreational system six months before the measure requires it to start. 

All in all, the decision to leave liquor distributors out of the cannabis market shows that the Tax Commission is intent on creating a close-knit system. While it’s certainly understandable why these alcohol companies would want a part in this lucrative industry, a lawsuit would potentially postpone legalization and cause more harm than good. 



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