Nevada has approved an emergency regulation aimed at solving a marijuana shortage by expanding who is allowed to transport the drug from cultivation facilities to retail dispensaries.
The Nevada Tax Commission voted unanimously Thursday in favor of the regulation two weeks after the state began allowing the sale of recreational marijuana and supply problems quickly arose because nobody had been licensed to transport it.
The referendum passed last year by Nevada voters legalizing the drug for recreational use stipulated that for the first 18 months of sales only liquor wholesalers would be allowed to apply to distribute marijuana — a nod to the powerful alcohol industry, which is worried about new competition from pot.
But few alcohol distributors applied, and through Tuesday, none had been approved. When sales began July 1, retail shops — all of which were already selling marijuana for medical use — had to rely on their existing stocks, which soon started to run low.
The chairman of the tax commission, Jim DeVolld, said the emergency regulation was needed as the state joined several others in the still-evolving world of legal marijuana sales.
“We’re trying to do the right thing,” DeVolld said. “This is such an important time in the state of Nevada’s existence.”
Nevada’s distribution woes are unique among states that have legalized the sale of recreational marijuana. Colorado, Oregon, Washington and Alaska allow the dispensaries to transport marijuana themselves.
In California, where voters passed a similar measure in November, residents can legally possess and buy recreational pot, but the state has until 2018 to begin issuing licenses to sellers and distributors.
Anticipating the problem, the Nevada tax department had tried to change the rules before legalization kicked in.
But a judge said the department had to go through the regulatory process to see how many distributors were needed.
Republican Gov. Brian Sandoval, who didn’t support the ballot measure, signed off on the emergency regulation this week.
Tax Commission member Thom Sheets said the answer was clear to him when no distributors had been approved. “To this guy, zero is insufficient,” he said.
Riana Durrett, executive director of the Nevada Dispensary Assn., a nonprofit that advocates on behalf of retail pot shops, testified at the hearing that the situation was dire and told stories of stores running low on edibles and popular strains of marijuana.
“There aren’t enough alcohol distributors serving that market,” Durrett said. “Without a resolution to this, sales can’t go forward and establishments will have to let employees go.”
The tax department director, Deonne Contine, said that of the nearly 70 liquor wholesalers in Nevada, seven had applied to transport marijuana. One was approved Wednesday and another Thursday.
Contine said the need to get supply to retailers was critical because the state budget included $100 million in anticipated tax revenue from marijuana sales. She said the regulation would allow the department to determine if there was an appetite outside the liquor wholesalers to become distributors.
Nevada has licensed roughly 100 marijuana growers, enough to supply the dispensaries as long as there is a way to transport the pot.
Dispensary owners testified at the hearing that they already have the experience and equipment to handle wholesale distribution of marijuana.
Kevin Benson, a lawyer representing the Independent Alcohol Distributors of Nevada, blamed the department for the broken supply chain, saying it had set up a cumbersome process and a time frame too short to meet rigorous licensing requirements while also getting approval to set up storage sites from local governments.
“This emergency is really of the department’s own making,” he said. “If the department had reached out to the alcohol distributors early on, we could've resolved these issues.”