In this Sunday, April 23, 2017 photo large jars of marijuana are on display for sale at the Cali Gold Genetics booth during the High Times Cannabis Cup in San Bernardino, Calif. (Richard Vogel, Associated Press)

Nevada regulators have cunning plan to keep July 1 recreational marijuana sales on track

Official says a medical marijuana dispensary that has a license for recreational sales could sell excess inventory on recreational market effective July 1

RENO, Nev. — Nevada regulators reaffirmed Friday that they intend to issue licenses necessary for retailers to begin selling pot for recreational use on July 1, despite a court order that threatens to scuttle the plan.

The licensees could include as many as 25 medical dispensaries in the Las Vegas area and four others in Reno that already have medical retail licenses and local business licenses, “as long as the inventory they sell as retail meets the packaging and labeling requirements in the emergency regulation we will have adopted Monday,” state Department of Taxation spokeswoman Stephanie Klapstein said.

The fate of the recreational program has been in limbo since a Carson City judge ruled Tuesday that the ballot measure approved by voters requires that alcohol wholesalers have exclusive rights to pot distribution licenses for 18 months.

District Judge James Wilson issued a temporary injunction barring the state from issuing pot distribution licenses to anyone else, including existing medical marijuana dispensaries.

However, Klapstein said Friday the “distributor issue will not hold up licensing of other marijuana establishments.”

“The injunction has no effect on the other license types,” she said. Distributor licenses allow pot to be moved between locations and are different than retail licenses.

“Because the application review process isn’t complete, we can’t say with certainty which businesses will be licensed,” Klapstein said. “That said, those that applied, meet the qualifications and whose applications we get processed before July 1, will be licensed by July 1.”

Klapstein acknowledged those retail sales could be short-lived unless the state issues distribution licenses in the weeks ahead necessary to move additional products not already on-site from growers to retailers.

“Once that inventory runs out, without distributors, they are not going to be able to restock,” she said.

Kevin Benson, a lawyer for the Independent Alcohol Distributors of Nevada, did not immediately respond to a request for comment. The group filed the lawsuit considered by Wilson aimed at blocking any pot distribution licenses outside the liquor industry.

Department of Taxation Director Deonne Contine issued an emergency statement Thursday with the endorsement of Gov. Brian Sandoval explaining the need to implement a number of marijuana-related measures the Legislature adopted and that the governor has signed into law over the past month.

They include provisions that will tax recreational sales at a higher rate than medical marijuana and implement strict rules that mandate child-proof packaging and prohibit use of products found appealing to kids, such as lollipops and gummy bears.

While the new regulations don’t directly impact the startup date for recreational sales, Contine’s emergency statement makes clear the state remains determined to launch the sales as early as next weekend.

“These emergency regulations are necessary to protect the public health and safety of our residents, children and visitors as we transition into an adult-use marijuana market,” Contine wrote in the order.

She said the measures had to be adopted on an emergency basis because the department will issue licenses to begin retail pot sales to adults as of July 1.

The on-again, off-again plan to launch recreational sales has medical marijuana outlets scrambling to stockpile enough pot to meet what’s expected to be extremely high demand.

“It’s been a little chaotic,” said Clint Cates, director of compliance for the operators of the Mynt Cannabis Dispensary in Reno, which sells medical marijuana.

The operators also transport medical pot products between about 25 pot facilities statewide. Unlike recreational pot movement, transporting medical marijuana does not require a distribution license.

Cates said he’s confident some alcohol wholesalers will get pot distribution licenses in the coming weeks while existing stockpiles at dispensaries are sold to recreational customers.

“Our phones have been blowing up with calls from all the dispensaries that we currently serve down in Las Vegas who are trying to stock up on inventory,” Cates said. “We have been back-stocking for four to six months, so we have extra inventory on hand.”

Mike Willden, chief of staff for Gov. Brian Sandoval, said the governor doesn’t intend to propose an emergency regulation allowing anyone other than alcohol wholesalers to serve as pot distributors.

“It’s more important to him to have tight packaging and labeling and tight security and tight controls than to just have an artificial July 1 date,” Willden said.

AP Writer Regina Garcia Cano In Las Vegas contributed to this report