After several businesses were denied licensing they motioned to sue the Nevada Department of Taxation “arguing that the state did not administer thorough background checks on applicants and conducted inaccurate and improper scoring to award new business licenses worth millions of dollars.” Deonne Contine, the former director of the Nevada Department of Taxation, testified last week during marijuana licensing hearing stating that “there wasn’t anything wrong with how her department established cannabis business enforcement rules.” She also added “I believe the regulations are valid…I believed then and I believe now that the regulations were adopted under the statute, and they interpret or carry out the provisions of the statute.” Plaintiff lawyers questioned Contine about the background checks they conducted on the applicants. “They also questioned the work she did for a cannabis company after she left the department.”
Last year about 50 conditional retail cannabis licenses were up for grabs. The state received 461 applications in which tens of companies lost bids. In particular, two licensees, Helping Hands Wellness Centre Inc and Clear River LLC, contended “the state did not fairly issue dispensary licenses in December.” These companies teamed earlier this year to form a block trying to stop the state from issuing the licenses. A hearing led by County District Judge Elizabeth Gonzales will determine the fate of this injunction next week.
The affected companies are claiming that there were biases in the selection process. Moreover, they are questioning the legality of the competitive scoring process. Attorney Rusty Graf, who is representing Clear River LLC, claimed that “clients who applied in September 2018 did not receive fair, mandated and procedural consideration to attain a marijuana license, which in turn denied individuals who did not receive licenses of a property right. Citing the 14th Amendment…all license applications needed to follow fair due process.”
What’s at stake?
The recreational and medical marijuana taxable sales totalled around half a billion dollars and with many stakeholders involved, preventing businesses from opening their companies will take a strain on the state’s economy. Todd Bice, an attorney for the companies awarded the licenses, argued that “all it’s going to do is harm my clients and harm the public and keep the black market in play because now there won’t be as many people satisfying the public’s desire for this product,” Bice said. “That’s all that this is about: If I can’t have it, you can’t have it.”