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Distribution Hold Up Leaves Nevada Pot Shops Dry

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In Nevada, recreational marijuana proved to be a bit hit as product flew off the dispensary shelves the first weekend in operation. More than 40,000 recreational transactions took place on the fourth of July weekend which left the new-to-rec-use state with a temporary shortage of cannabis.

Those involved in the marijuana program which officially opened July 1 say its a distribution problem that wasn’t remedied before recreational sales began.

You could blame alcohol distribution companies for the shortage. The new cannabis laws in the Silver State gave exclusive distribution rights to wholesale alcohol distributors for 18 months, but none of them had met the requirements for a license by opening day!

The state of Nevada estimates the revenue from their new green market could get them an extra $100 million to add their bottom lines over the next two years. Many say it’s the reason that the state foolishly rushed in to get the goods on sale.

The executive director of the Department of Taxation, Deonne Contine, said she’s determined not to let the money well dry up. As she said last week, “Dispensaries will run out of product ­— they’re already running out of some products — and there will be a budget shortfall if that happens. Because if these businesses can’t sell products, then we can’t collect tax.” It moved the state to declare the marijuana shortage a state of emergency and proposed and approved legislation that opened up the distribution process beyond alcohol distributors.

The hold up isn’t just a problem for the state. Many cannabis dispensaries are worried about the lack of revenue and are worried they can’t afford to keep their employees on payroll.

The executive director of the Nevada Dispensary Association painted a grim picture to the judge at the hearing. “There aren’t enough alcohol distributors serving that market,” said Riana Durrett. “Without a resolution to this, sales can’t go forward and establishments will have to let employees go.” Currently non-alcohol distribution companies are preparing applications for transportation licenses.

Nevada’s Republican Governor, Brian Sandoval set the marijuana taxes at 15 percent on wholesalers and a 10 percent retail sales tax on recreational sales. About $70 million of the $100 million projected to come into the state is earmarked for balancing the $40 million deficit in Nevada’s K-12 education budget.

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