The judge didn’t make any ruling but scheduled a hearing for Aug. 23
Attorneys for Nevada and some companies that won retail marijuana dispensary licenses last year told a judge Friday that mistakes might have been made, but tax officials are fairly enforcing a voter-approved initiative that legalized recreational cannabis.
There would be no reason to stop the licensing process or order a do-over, said Steve Shevorski, a top deputy state attorney general, because Department of Taxation officials didn’t abuse discretion or exceed their authority in shaping rules and regulations for applicants seeking to open retail cannabis shops.
He said the state was “faithful to the spirit of” an initiative approved by voters in 2016 to allow broad retail sales to people 21 and older, and the rules weren’t “unreasonably impractical.”
Losing bidders presented no evidence, he said, that officials favored some bidders or improperly shaped the rules by not requiring criminal background checks of every applicant or by having temporary workers evaluate and attach numerical scores to 462 applications before the tax agency awarded 61 new licenses.
Attorney David Koch, representing the owners of winning bidder The Source dispensaries, pushed back against allegations Thursday by a lawyer for companies that were denied licenses that officials in charge of marijuana enforcement suppressed information about a licensee selling to someone under 21.
State officials learned of the incidents because the licensee “self-reported,” Koch said, calling the willingness to tell regulators and address the issue themselves “the epitome of compliance.”
“You could have had a better system. That’s not what we’re here for,” Shevorski said in his summary of 18 days of testimony in the last 12 weeks before Clark County District Court Judge Elizabeth Gonzalez. “We did our best. We acted fairly.”
Losing bidders want the judge to issue a court order freezing the licensing process until a trial can be held.
The judge didn’t make an immediate ruling but scheduled a court hearing Aug. 23 for a possible written order. All sides expect her decision to be appealed to the Nevada Supreme Court.
Dennis Prince, attorney for the owners of Thrive stores, said Friday that because all bidders already had medical marijuana dispensary licenses, everyone knew the rules and had a fair chance.
The issuance of 61 conditional licenses last December nearly doubled to about 125 the number of outlets allowed to open statewide. Most are in the Las Vegas and Reno areas.
Prince was among several attorneys who argued that winning bidders are losing money because they can’t open, would-be customers are being hurt because they aren’t being served and the state is losing tax revenue.
The judge was told the 80 licenses allowed in Las Vegas and surrounding Clark County are worth an estimated $10 million each.
The companies also face a one-year regulatory deadline of Dec. 5 to have their recreational outlets operational, the attorneys said.
State tax officials report the 65 recreational and medicinal cannabis dispensaries currently open statewide were on pace after 11 months to report about $630 million in total sales for the fiscal year ending June 30.
That’s up almost 19% from a combined $530 million in the 12 months after marijuana retail sales began in July 2017.