When Nevada began early sales of recreational marijuana at the beginning of this month, long lines of excited shoppers formed outside of each of the state's 47 open dispensaries, making around 40,000 retail transactions during the first twelve days of sales. However, the demand for legal weed was stronger than the industry expected, and dispensary owners soon found their supplies of pot running low. In order to address this cannabis shortage, the Nevada Tax Commission has approved emergency regulations to reopen distribution licensing.
“When businesses operate we get the tax revenue and that's what the state wants,” Deonne Contine, director of the Nevada Department of Taxation, testified this week at a hearing on the licensing issue. “Without the ability to license marijuana distributors to continue the flow of product to a retail store, a high likelihood exists that consumers will revert to the black market. We need to do everything we can to get more distributors licensed so these businesses can continue operating.”
The path to recreational sales in the state has been rocky, as the state's initial decision to allow medical marijuana dispensaries to begin early sales of recreational weed was opposed by the alcohol industry, who had already been promised the first chance at sales. On June 20th, just days before the start date of rec sales, a state district court judge awarded the Independent Alcohol Distributors of Nevada an injunction that removed all non-alcohol distribution applicants from consideration for cannabis licenses.
According to Contine, none of the seven wholesale alcohol distributors passed the state evaluations to begin distribution. Speakers representing the alcohol industry argued against the emergency regulations at the hearing, accusing the tax department of discriminating against them and attempting to push them out of the legal cannabis industry.
Regardless of who ends up being granted the right to supply the state's unprecedented demand for cannabis, the majority of speakers at the hearing agree that solving the industry's supply problems should be resolved as soon as possible. “Not solving the distribution issue would lead to major disruptions and ultimately threaten the program that Nevadans voted for,” said Andrew Jolley, president of the Nevada Cannabis Association.
“We don't want customers to walk away angry because we don't have the product they want and that they're used to buying here,” said Frank Hawkins, owner of the Nevada Wellness Center. “And for the state and customers, we don't want to lose the momentum that we have. Without question, this is impactful.”