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Businesses Seek License Freeze

Dozens of businesses that lost bids to open dispensaries in Nevada's booming cannabis market want a judge to at least temporarily stop distribution of new licenses.

In this April 20, 2018, file photo, a customer shops for marijuana at the Exhale Nevada dispensary in Las Vegas.
In this April 20, 2018, file photo, a customer shops for marijuana at the Exhale Nevada dispensary in Las Vegas.
AP Photo/John Locher, File

A judge shouldn't tip the scales as dozens of businesses that lost bids to open marijuana dispensaries push to freeze new licenses in Nevada's booming cannabis market, an attorney for the state argued Friday.

Companies that didn't win the licenses are improperly asking Clark County District Court Judge Elizabeth Gonzalez to "substitute your judgment for the people who scored and weighed the evidence. To have a reweighing of the evidence," Steve Shevorski, Nevada's attorney, said at the start of a multiday fact-finding hearing.

With millions of dollars in sales, taxes and profits at stake, attorneys for the marijuana businesses that lost bids last December want Gonzalez to at least temporarily stop distribution of new dispensary licenses.

They are challenging the criteria and personnel used to score 462 applications and award 61 potentially lucrative licenses to 16 companies.

Plaintiffs in at least seven lawsuits complain that the selection process wasn't transparent, that the state improperly used temporary workers to screen applicants and that bias led to the selection of winners and losers.

Some say the process was unconstitutional. Some seek a do-over.

Shevorsky said testimony from state Department of Taxation officials in charge of licensing and the temporary workers hired to do the job will show that applications were fairly and honestly assessed and scored.

The state is backed by several companies that won conditional licenses.

"Everybody's got their own theory of what went wrong," said David Koch, representing the corporate owner of The Source dispensary, which was approved for five coveted licenses.

Some plaintiffs want "to just blow the whole process up" and start again, Koch said, while others complain that they were scored improperly. Still others seek financial damages.

Koch called the challenges "completely inappropriate."

Dozens of witnesses are scheduled, and Gonzalez plans hearings to continue at least through next week.

She is being asked to issue an injunction to stop Nevada from nearly doubling the number of dispensaries open statewide. There are currently 65, mostly in Las Vegas and surrounding Clark County, as well as the Reno-Sparks area.

Medical and recreational pot sales totaled $884 million in just the last six months of 2018, showing rapid growth from a combined $530 million in the full year after marijuana retail sales began in July 2017.

A new state law that released names of applicants immediately after Nevada Gov. Steve Sisolak signed it two weeks ago did not derail the lawsuits that claim the licensing process was opaque, unfair and unconstitutional.

Sisolak, a Democrat, also wants to create a Cannabis Compliance Board similar to the state commission that oversees casino licensing.

Dominic Gentile, representing corporate owners of the Oasis Cannabis dispensary, told Gonzalez on Friday that testimony will show that tax officials unconstitutionally exceeded, expanded and usurped administrative authority outlined in the 2016 voter initiative that legalized recreational marijuana.

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