Carson City court decision on suit to block recreational pot licenses coming Tuesday

Carson City District Judge James Wilson will rule Tuesday on whether to block the recreational marijuana regulations from taking effect.

Wilson held a day-long hearing Monday over allegations the rules put forth by the Department of Taxation unfairly and illegally ace local alcohol and liquor distributors out of their “exclusive” right to be the distributors for recreational marijuana.

Those distributors led by Carson City’s Kurt Brown, owner of Capitol beverages, say the ballot question approved by voters that legalized recreational marijuana use in Nevada give them exclusive distribution rights for pot for the first 18 months of legal pot use.

But taxation director Deonne Contine said under the voter approved law, the department can issue licenses to others including existing medical marijuana licensees if they determine there aren’t enough alcohol distributors interested in the pot business. Many of those who declined to sign up expressed concerns about what would happen to their Tax and Trade Board federal alcohol distribution licenses if they got into the pot business, since selling or transporting marijuana is still a federal crime.

Contine said she needed to know whether there would be liquor distributors willing to go into the pot business so that she didn’t end up with zero distributors July 1 when the recreational marijuana retailers are supposed to open for business, so they opened up the licensing to others.

Kevin Benson, lawyer for the alcohol distributors, argued the Taxation Department ruled there were not enough alcohol distributors to handle the business in March without no factual findings or evidence to back that decision up.

He told Judge Wilson taxation officials made no effort to spell out what is sufficient to serve the market or even to determine what the market demand is.

“Without that, you cannot determine what is sufficient,” he said.

Benson pointed out that about five alcohol distributors were interested and said that, according to those businesses, they could handle the entire state’s needs for distributing pot to recreational retailers. He said there are only about 36 retailers.

Deputy Attorney General William McKean argued the preliminary injunction is premature at this point because “there hasn’t been a decision made yet.”

He said taxation officials are still reviewing applications and that, once those decisions are made, they are appealable.

“That decision hasn’t been made and it’s not ripe for decision,” he said.

The tax commission, however, has already adopted the regulations.

Because of the late hour, Wilson said he would rule Tuesday on the motion for an injunction effectively blocking taxation from issuing licenses to anyone other than alcohol distributors until the dispute is resolved.