Alcohol Wholesalers May Slow Legal Pot in Nevada

By law Nevada is scheduled to begin recreational cannabis sales next week.

But is the state ready?

Nevada officials set an ambitious goal when they approved a special measure to permit sales of recreational cannabis starting July 1. That’s less than nine months after voters approved legal pot by ballot, 54% to 46%, last election day.

Originally the idea was for the legal market to be up and running in about a year. But Nevada officials feared delays that have hampered recreational markets from emerging in other states that legalized. Rather than wait until the market was ready as a whole, and risk legislative delays, state leaders came up with a temporary solution.

They passed a measure that allows existing medicinal cannabis shops to retail recreational cannabis until the legal market is up and running, assumedly many months later. In the meantime, consumers could shop for recreational pot at medicinal stores. (Oregon kicked off their recreational sales similarly.)

Problem with loopholes, though, is that they tend to necessitate other loopholes. This can lead to a messy legal situation. Nevada now faces such an issue, with the July 1 launch date looming.

In the original law, state officials granted exclusive cannabis-distribution rights, for the first 18 months, to alcohol wholesalers. When this group learned about the early-start program signed into law by the governor, they went to court to protect the exclusivity of their rights.

A judge last week ruled in their favor. Medicinal marijuana businesses cannot receive cannabis for sale as recreational product from a non-alcohol wholesaler. And because Nevada’s alcohol wholesalers are reportedly still gearing up for their new role, there appears to be a lack of distributors ready and available for the July 1 opening day.

Nevada officials, however, believe they have another temporary fix (for their original temporary fix). Reportedly they still plan on handing out up to 30 recreational licenses to medicinal shops next week. This would allow those businesses to classify and sell existing product as recreational pot.

When they run out of that round of cannabis, however, they could not legally acquire cannabis for recreational sale until an alcohol wholesaler is prepared to provide it. Until then, restocking is essentially impossible.

This perhaps paints Nevada as an example of why some states have chosen the slow route with recreational cannabis. Even if a majority of voters support legalization, politicians understandably prefer to wait and see about potential issues by keeping an eye on states like Nevada that have dove in headfirst.

Of course, that also establishes Nevada and other early-legalizers as critical testing grounds for progressive cannabis laws. Without these willing states, the broader cannabis market would never evolve, grow and improve.

In the meantime, the state is working on a deal with the alcohol wholesalers to get them where they need to be to provide recreational pot.

Elsewhere, as Nevada approaches July 1, the state expects strong sales at its borders with Utah, Idaho and Arizona. These three states do not have legal pot. While it is legal for non-state residents to purchase cannabis in Nevada, transporting it across state lines is against the law.

Nonetheless, law-enforcement officials from both Nevada and Utah reportedly do not plan specific crackdowns around July 1. While officers will be on alert for stoned drivers, no further cannabis enforcement is planned around the launch day. Getting caught with a low amount of cannabis is a misdemeanor in Utah; any more is a felony.

Kyle Swartz is managing editor of Beverage Dynamics magazine and editor of Cannabis Regulator. Reach him at kswartz@epgmediallc.com

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