Since Nevada’s recreational cannabis sales started on July 1st, there has been a clear need to finally license more distributors to ensure dispensaries can stay stocked with product. Only a week after sales started, dispensaries were already reporting that they were running low, or in some cases sold out – and there was no chance of getting more product until distributors were properly licensed.
“I think the evidence is fairly clear today that this market needs to be opened up,” said Deonne Contine, executive director of the tax department. “The capacity of only liquor wholesalers to serve the market seems lacking.”
The law passed by voters gave alcohol wholesalers the first right to marijuana distributor licenses, but there doesn’t appear to be enough interest from the alcohol industry to fill the marijuana industry’s needs. After that first week, Governor Brian Sandoval endorsed the state’s taxation office officials in declaring a “state of emergency”, allowing lawmakers to determine an alternate path to licensing distributors.
Unfortunately, the alcohol wholesalers brought the issue to court, and the judge ended up siding with them – claiming that the Department of Taxation needed to prove that there were not enough alcohol wholesalers interested to meet the demand. Only once the office of taxation is able to prove that additional licensing is necessary will they be able to move forward with plans to license anyone else as a marijuana distributor.
“Without the ability to license marijuana distributors to continue the flow of product to the retail store, a high likelihood exists that consumers will revert to the black market,” Contine told the tax commission in July.
When the main reason behind allowing early sales is to cut down on illegal market sales as soon as possible, having a delay in the supply chain like a lack of distributors is a real problem. Dispensaries need to be able to restock, but if there is no one to get the products from cultivators and processors to the dispensaries then you have shops and the state losing money. Filling this gap in the supply chain is important, and the Department of Taxation is working to be able to issue additional licenses and ensure this problem doesn’t continue to grow.