Nevada’s process to award retail cannabis licenses in 2018 was riddled with mistakes and disadvantages for applicants without a professional relationship with state officials.
That was part of the closing argument delivered Thursday by attorneys for the plaintiffs, a group of applicants who didn’t receive a conditional license issued by the state last December for the booming industry.
The state approved 61 conditional licenses out of a pool of more than 460 applicants. A group composed of more than two-dozen rejected applicants filed the injunction earlier this year to bring the licensing process to a standstill.
The hearing has been on and off for three months, resulting in millions of dollars of losses for applicants who were granted the licenses they haven’t been able to use, as well as missed tax revenue for the state. In recent months, the state has been collecting $7 million to $9 million per month in taxes from sales from existing dispensaries, officials said.
Plaintiff attorneys Dominic Gentile, Adam Bult and Tedy Parker painted the picture of a competitive process to grade license applicants that was shaped by favoritism in certain instances and incompetence in others. Parker, who represents Nevada Wellness Center, said there was a lack of oversight on the work performed by a group of temporary employees contracted by the state to score applications.
“Within the evaluators’ scoring notes, we found mistake after mistake after mistake,” Parker said. “These were in terms of location, consideration of community impact, and the failure of the scorers to tally up the number of people with college degrees for the education criteria.”
Plaintiff lawyers have also argued throughout the hearing that language within a 2016 Nevada ballot question on whether to legalize recreational marijuana dictated that all owners of a company licensed to sell recreational cannabis be backgrounded.
The state Department of Taxation, which regulates the industry, later decided that only owners with a 5% or larger stake in a company would need to be checked for any past improprieties.
State lawyers, along with a team of lawyers representing a number of defendants, have argued that checking up on every owner, especially for public companies, would be tedious.
“The state isn’t allowed to pass the entirety of its grading process to Manpower,” said Bult, who represents ETW Management Group. “The state is afforded deference, but when the state admits it refused to marry the initiative with the regulations, that is arbitrary and capricious. Nevada deserves better.”
Through much of the 19-day hearing, plaintiff lawyers have questioned why some applicants, they say, were allowed perceived special access to Department of Taxation officials, including deputy executive director Jorge Pupo. Pupo testified earlier in the hearing that he had met with an attorney who represented multiple applicants over meals and gave out his cellphone number.
Pupo told the court, however, that everyone had the same opportunities to contact him to ask questions about the process before a September 2018 deadline for applications to be submitted.
Bult and his fellow plaintiff attorneys encouraged judge Elizabeth Gonzalez to declare the 2018 licenses void.
“We ask that the state be enjoined from taking any further action on approval of conditional licenses made in December 2018,” Bult said.
The defense, led by state attorney Steve Shevorski, will present closing arguments on Friday at the Regional Justice Center. Gonzalez could issue a ruling on the injunction as early as Friday, but it’s expected that her decision will come later.