Judge restricts marijuana retail licenses to alcohol distributors

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CARSON CITY, Nev. (AP) - The Latest on the legal battle of the launch of Nevada's recreational pot sales (all times local):

Judge James Wilson's Carson City courtroom for marijuana hearing 6/19/17

4 p.m. June 20:

Recreational sales of marijuana in Nevada may not begin next month after all.

A judge has extended a temporary order that prevents the state from issuing distribution licenses to existing medical marijuana dispensaries so they can begin recreational sales July 1.

Carson City District Judge James Wilson said in a 11-page ruling (see attached to this story) Tuesday that the ballot measure voters approved in November dictates that licensed alcohol wholesalers have the exclusive rights to pot distribution licenses for 18 months.

He says the regulation the Nevada Tax Commission adopted in May that could have opened distribution up to others was invalid, and he granted a preliminary injunction scrapping the license application deadline that passed May 31.

It's not clear if recreational sales still might begin next month.


1:15 p.m. June 20:

Nevada's marijuana regulators are developing backup plans in case a judge refuses to lift a court order blocking the licensing of distributors necessary to launch the state's first recreational pot sales July 1.

Carson City District Judge James Wilson intends to decide late Tuesday whether the state can license existing medical dispensaries to transport recreational pot from growers to retailers.

He temporarily halted all licensing after a group of alcohol wholesalers filed a lawsuit claiming they have exclusive rights to pot distribution licenses.

Nevada Department of Taxation spokeswoman Stephanie Klapstein said Tuesday if Wilson lifts that order, officials are ready to license existing dispensaries.

If not, they intend to license qualified liquor distributors. She cautions, however, they have yet to determine whether any of the five applicants from the alcohol industry are legally qualified to do the work.


12: 00 a.m. June 20:

A Nevada judge says he expects to decide Tuesday whether the state can move forward with plans for medical marijuana dispensaries to begin selling pot for recreational use for the first time on July 1.

Lawyers for the liquor industry and the Nevada Department of Taxation argued at a daylong hearing Monday whether the state has the authority to issue marijuana distribution licenses necessary to launch the sales to anyone besides alcohol distributors.

Carson City District Judge James Wilson said he had hoped to issue a decision following the more than six hours of testimony but now plans to rule Tuesday.

It's been legal for adults to possess up to an ounce of marijuana in Nevada and consume it in private residences since the beginning of this year, but currently only medical dispensaries can sell it and only to people with medical cards.

The state maintains it has the power to temporarily license some existing medical marijuana cultivators and retailers to serve as their own recreational middlemen. It wants to get a head-start on collecting millions of dollars in tax revenue devoted to education before permanent rules are required by Jan. 1, 2018.

The liquor lobby sued, saying the state has failed to give it the first shot at distribution licenses as called for in the ballot measure approved by voters in November, the only legal pot state with that arrangement.

Wilson has blocked all licensing until the matter is resolved. He refused the state's request last week to dismiss the lawsuit, a move that could jeopardize the July 1 startup.


12:35 p.m. June 19:

The deputy director of Nevada's Department of Taxation says state regulators still intend to have the necessary licenses in place July 1 to start selling marijuana for recreational use despite an ongoing lawsuit over the regulations.

Anna Thornley testified in Carson City District Court on Monday that the state has planned since February to have the "early start" program up and running by July to start bringing in tax revenue before a permanent system must be adopted on Jan. 1, 2018.

Thornley says none of the 90 applications received for distribution licenses have been approved so far. Five of those are from liquor wholesalers and the other 85 are from existing medical marijuana dispensaries.

Thornley says some of the applications are incomplete and have been returned to the applicants to provide additional information. But she told Judge James Wilson, "It's the department's intention to issue licenses by July 1."

The hearing is expected to last all day.


12:10 p.m. June 19:

A Nevada liquor wholesaler who wants to start distributing marijuana next month says the licensing plan the state set up for recreational pot is the most complicated he has experienced in his 45 years in business.

Capitol Beverage Owner Curt Brown took the witness stand Monday as a judge hears testimony on whether some existing medical pot dispensaries can serve as middleman by delivering the drug from growers to retailers.

Part of the legal dispute centers on the fact the federal government still prohibits possession of marijuana.

State regulators say that's made most alcohol distributors leery of entering into the pot business because they fear doing so could jeopardize their federal liquor licenses.

Brown is among those who set up new businesses with a different corporate name to apply for liquor licenses to protect his liquor business if federal officials object to him becoming a marijuana distributor.

He says it's a standard practice and shouldn't keep them out of the pot business.

10:45 a.m. June 19:

Nevada alcohol distributors are challenging the state's claim that their industry cannot handle exclusive distribution of recreational marijuana from growers to retailers.

One witness testifying Monday at a court hearing is an alcohol wholesaler who worked previously as a tour production manager for rock bands including The Allman Brothers and INXS ("in excess").

Red Rock Wines owner Allan Nassau says marijuana is just another product.

He says his company distributes to about 300 restaurants in the Las Vegas area and would have no problem serving more than 100 pot retailers in the state.

Nassau compared moving marijuana shipments to moving tons of stage equipment around the country for musicians.


9:15 a.m. June 19:

A hearing is under way in Nevada where a judge may decide whether the state's first sale of marijuana for recreational use can begin next month.

Carson City District Judge James Wilson is considering whether Nevada's liquor industry should be guaranteed part of the marijuana sales business before tourists and residents can start buying it as of July 1.

He has set aside all day Monday for lawyers for the alcohol distributors, marijuana retailers and state Department of Taxation to make their case.

They are arguing over whether the state has the authority to issue marijuana distribution licenses to anyone besides existing alcohol wholesalers to serve as the middleman between pot cultivators and recreational retail stores.

The judge granted a restraining order last month temporarily blocking all licensing. It's not clear how soon he will rule.

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