A judge on Friday froze the permit process for some new Nevada retail cannabis stores, issuing a ruling that sided with companies that lost bids to open recreational pot shops.
Clark County District Court Judge Elizabeth Gonzalez issued an injunction halting several dozen new licenses where questions were raised about the owners’ compliance with the licensing requirements.
Losing bidders argued the process was so riddled with mistakes and bias that Gonzalez should void 61 licenses that were approved last December from among 462 applications.
Attorneys for the state and some companies that won retail dispensary licenses say the process wasn’t perfect, but tax officials are fairly enforcing a voter-approved initiative that legalized recreational pot sales to adults.
All sides expect the ruling will be appealed to the state Supreme Court, with millions of dollars of sales, taxes and profits at stake in a booming retail pot market.
Gonzalez’s decision came after she heard 18 days of evidence and testimony.
Steve Shevorski, a lawyer representing the state Department of Taxation, maintained there would be no basis for an injunction. He characterized the application evaluation process as “faithful to the spirit” of the 2016 voter initiative allowing broad retail sales to people 21 and older.
Lawyers for companies that scored too low to win new permits argued the process for evaluating 462 applications wasn’t transparent and the state improperly used temporary workers to screen applicants.
Several attorneys for winning bidders argued their clients 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.
Tax figures project that the 65 recreational and medicinal pot dispensaries currently open would report about $630 million in total sales for the fiscal year ending June 30.
That would be up almost 19% from a combined $530 million in the 12 months after marijuana retail sales began in July 2017.
All the companies involved in the litigation already have some dispensaries because applications for new licenses were only accepted from operators of existing medical marijuana dispensaries. But Gonzalez’ ruling does not affect the operations of existing dispensaries.
Attorney Todd Bice, representing Essence stores, winner of five new permits, characterized lawsuits by losing bidders as an effort to wrest “market share” from his client.
Bice said the losing bidders wanted the judge to “punish” their competitors by holding the process “hostage” while they find out if they have a claim against the state.