At the beginning of the month, Nevada’s recreational marijuana sales began, and unexpected demand from customers has already sent the retail market spiraling into mayhem. Lengthy lines and massive sales marked a highly successful first week for dispensaries, but the resulting shortages caused Governor Brian Sandoval to declare a “Statement of Emergency” to permit more distribution and avoid statewide depletion.
Due to an ongoing legal quandary involving the state’s alcohol wholesalers, who have initial exclusive rights to recreational cannabis distribution, few licenses have been issued as of yet. To solve this problem, Nevada regulators will gather on Thursday to vote on emergency rules that would expedite licensing for pot distributors.
The Nevada Tax Commission is scheduled to consider a new regulation that would permit pot retailers to serve as their own middlemen if alcohol distributors are unable to meet the demand for cannabis. If passed, the new guidelines would temporarily allow sales to carry on while this legal battle over distribution rights continues.
"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. Unless the matter is resolved quickly, the distribution bottleneck will cost both the state and investors millions of dollars, thousands of jobs and "cause this nascent industry to grind to a halt,” said Deonne Contine, executive director of the Department of Taxation.
According to the proposed regulations, a cannabis wholesaler must demonstrate that it "has resolved to the best of its ability any potential conflicts with its federal liquor licensing and the distribution of a federally illegal product." Over the next 18 months, the current law only allows alcohol wholesalers to transport cannabis from growers to dispensaries. However, less than 10 alcohol wholesalers have applied for pot distribution licenses, and zero of them have managed to meet state qualifications.
Nevada has already started implementing new regulations to help dispensaries satisfy the enormous customer base. These retailers will now be allowed to restock their shelves with medical cannabis products and sell to consumers looking for recreational buds.
For instance, Reno dispensary Blackbird Logistics is now permitted to serve the recreational market with the state’s first recreational distribution license. The company struck up an exclusive operating agreement with a local alcohol wholesaler that allows them to distribute its own cannabis.
In the past, advocates feared that the ongoing legal battle involving alcohol distributors would delay retail sales. Instead, there is now an urgent need for licensed retail pot shops, but they are unable to legally purchase cannabis from growers. Thankfully, Nevada lawmakers have taken note and seem to be moving fast to find a solution.
