Pot Businesses Press For Nevada To Redo Licensing Process

Ken Ritter, Associated Press

(AP) — Two marijuana businesses that were turned down when Nevada awarded recreational dispensary licenses say the state improperly used a temporary employment service to screen hundreds of applicants.

The claim is contained in a court filing Monday in a lawsuit involving Las Vegas pot retailers Planet 13 and The Dispensary. They say state tax officials used the firm Manpower to screen the 462 applications for the licenses that could be worth millions of dollars.

Attorney Will Kemp, representing the two dispensaries, said awarding 32 of 61 provisional licenses to four entities last December was a "gross disparity" that resulted from "documented bias in favor of certain winning applicants."

Kemp said he expects the documentation will become evident as the lawsuit moves forward. "We're asking the judge to stop everything and send it to the (Nevada) Tax Commission," he said.

A court hearing is set for May 24 in Las Vegas.

The case is one of several asking Nevada judges to freeze the awarding of new licenses at least until applicants' names are made public and the selection procedure is reviewed.

That could happen soon. The Legislature has passed a measure calling for the release of taxpayer information the state now considers confidential.

Democratic Gov. Steve Sisolak is expected to sign the new law. He also wants to create a Cannabis Compliance Board similar to the state commission that oversees casino licensing.

The Nevada Department of Taxation, which currently regulates marijuana, disputed some allegations in the court filing, including a claim that three top department officials met with an attorney for Nevada Organic Remedies, one of the four winning bidders, at a cannabis conference in Boston.

Department spokesman Ky Plaskon said the three officials didn't go to the conference. A lawyer for the company did not respond to messages.

Plaskon also defended use of a temporary employment service and said contract employees were hired to evaluate more than 500 dispensary license applications in 2014, ahead of the start of medical marijuana sales in 2015.

Kemp said 11 new licenses went to Verano Holdings LLC, which the filing called "a multi-billion-dollar Illinois conglomerate," instead of being awarded to a "worthy Nevada business."

A Verano Holdings spokeswoman declined comment.

Eight licenses went to the corporate owner of Essence dispensaries in Las Vegas and Henderson, the court filing said, and seven went to Green Growth Brands, corporate owner of Nevada Organic Remedies. It said six went to TapRoot Holdings.

Representatives and attorneys for those companies did not respond Tuesday to telephone calls and emails.

"These licenses are likely worth tens of millions of dollars each," Kemp wrote in the filing in the lawsuit by MM Development Co., which owns Planet 13, and LivFree Wellness against the state Department of Taxation.

Nevada currently has 65 marijuana dispensaries, mostly in Las Vegas and surrounding Clark County, as well as the Reno-Sparks area.

The MM Development-LivFree Wellness lawsuit noted that each license applicant paid a $5,000 filing fee, meaning the state collected $2.3 million.