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Big Liquor is Going to Start Another Weed Shortage in Nevada

The success of recreational cannabis regulation in Nevada relies on the often messy legal mechanisms of democracy. So far it seems to be working, and the feds should take heed.

Economics

Big Liquor is Going to Start Another Weed Shortage in Nevada

Barely a month old, Nevada’s recreational cannabis market already appears destined for another predictable and embarrassing weed shortage.

A repeat of the inventory shortage that happened in early July, just a few days after retail cannabis sales began in Las Vegas to enormous crowds, long lines, is all but guaranteed after efforts to expand supply were thwarted last week.

For this, you can blame Big Alcohol.

A quirk in Nevada state law reserves licenses to distribute cannabis — the middleman between product sales and product production — to existing liquor wholesalers.

The problem is obvious: At the moment, there are six liquor wholesalers licensed to carry marijuana, and 50 retail outlets, according to the Las Vegas Review-Journal.

On the one hand, having a monopoly is nice — not for nothing, that’s how you win at Monopoly. On the other, having a monopoly doesn’t make you much of a Rockefeller, and certainly doesn’t help consumers if you have complete control and then choose to squander it.

Last week, the Nevada state tax agency sought to fix this market inefficiency by expanding the market and issuing licenses to distribute cannabis to other companies.

Deonne Contine, executive director of the tax department, told the Insurance Journal the need for expansion is obvious.

“I think the evidence is fairly clear today that this market needs to be opened up,” Contine said. “The capacity of only liquor wholesalers to serve the market seems lacking.”

Liquor wholesalers cried foul and asked a judge to intervene. And last week, District Judge James Todd Russell agreed: Russell granted a temporary restraining order, prohibiting for the moment any efforts by Contine and her agency to allow for more marijuana distributors.

Another hearing on the matter is scheduled for August 17 — the third hearing on this exact same topic since the shortage in July — but the battle lines are clear: Liquor wants the playing field to itself, yet can’t be counted on to cover the turf by itself — how do you like that for a metaphor?

Other states should take heed. And some are!

Earlier this year, a provision in California state law mandating third-party distribution — a position openly sought after by the Teamsters Union and alcohol industry veterans — was removed by Gov. Jerry Brown.

For some, the irony is more bitter than stale beer. The alcohol industry has waded into the legalization debate before. Not too long ago, it was to block legalization. If you can’t beat them, take them over. Even if you can’t do that.

TELL US, do you think the liquor industry will gain control of cannabis in Nevada?

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