On July 13, the Nevada Tax Commission (the “Commission”) held a public hearing to discuss the potential marijuana product shortfall facing the state’s dispensaries following the launch of state-authorized recreational marijuana sales in Nevada on July 1. The reason for the potential product shortfall: a provision in the initiative petition that legalized recreational marijuana in Nevada that gave an 18-month monopoly on recreational marijuana distribution to licensed liquor distributors.

As of the date of the hearing, there were only two liquor distributors that had received licenses as marijuana distributors.  This number appears to be far short of what will be needed to restock Nevada’s 47 licensed retail marijuana dispensaries, which report ongoing heavy traffic from recreational purchasers. According to news sources, these 47 dispensaries reported more than 40,000 retail transactions in the first weekend of recreational sales.

After taking public comment, which included input from liquor distributors and marijuana dispensaries and their representatives, as well as other members of the public, the Commission voted unanimously to adopt the emergency regulations.

The emergency regulations do not automatically open up the recreational marijuana distribution market; they merely give the Nevada Department of Taxation the discretion to consider the situation and make a determination regarding whether more distributors are needed. The regulations include a prescribed process and timeline for the Department to make the determination. In addition, that determination must be made at a publicly noticed meeting, after a request is made with five days’ notice for the state’s marijuana establishments to complete a survey that will help the Department determine if there is a need. This public meeting has not yet been set, but it is expected to be scheduled soon.

Jennifer Gaynor, Greg Gemignani, and Kate Lowenhar-Fisher are Members in Dickinson Wright’s Las Vegas office, and Jeff Silver is Of Counsel in the Las Vegas office. Jennifer Gaynor can be reached at 702.550.4462 or jgaynor@dickinsonwright.com. Jeff Silver can be reached at 702.550.4482 or jsilver@dickinsonwright.com.