On Friday August 23rd, Clark County District Court Judge Elizabeth Gonzalez has frozen the permit process for a number of new recreational cannabis stores in Nevada.

An injunction was issued by the judge after concerns arose regarding compliance among Nevada’s cannabis retail business owners; the business owners in question were accused of failing to comply with the state’s licensing requirements.

A total of 61 licenses have been put under review following the ruling from Gonzalez. These licenses were initially approved in December 2018, when 462 recreational cannabis business owners in Nevada submitted their applications.

Gonzalez ruled to freeze licenses for pot shops in Nevada following 18 days of reviewing evidence and listening to testimony from defendants.

Nevada cannabis permits frozen: Plaintiffs will appeal to the State Court

Lawyers fought on behalf of the plaintiffs that did not score enough points to legally open a retail cannabis shop in Nevada; they argued that the state went against the rules by employing temporary workers to oversee applications. 

Adult-use cannabis business owners in Nevada protested their cases, claiming that not only are they failing to make money but also, they are losing money due to their applications being rejected. The attorneys who represented them say that the state is missing out on sizable tax revenue as a result of Judge Gonzales’ ruling.

Since the State only accepted applications from business owners who have previously established medical cannabis shops in Nevada, applicants who have had their applications frozen have something to fall back on, at the very least. Existing dispensaries have not been affected.

Tax revenue estimates for Nevada’s recreational cannabis industry are promising

The launch of Nevada’s adult-use cannabis market is expected to be very lucrative for the state, where legal recreational cannabis sales began in July 2017.

According to state estimates, tax revenue gleaned from sales at 65 operational dispensaries is expected to yield $630 million for the fiscal year concluding on June 30.

If these estimates are correct, tax revenue earned from Nevada’s adult-use cannabis industry would surpass the combined $530 million that was raked in during the initial 12 months of sales, representing a potential 19 percent increase.

While the plaintiffs’ argument may be strong, an attorney providing representation for the Department of Taxation, Steve Shevorski, says that the claims lack substance. He says that the reviewing of retail cannabis business application were “faithful to the spirit” and dealt with in accordance with the 2016 voter-approved law that kick-started Nevada’s adult-use market.

Nonetheless, with the freeze on permits creating a dent in the state’s profits, the ruling will likely make its way to the Supreme Court. At the current time, 10 lawsuits are pending review. 

Meanwhile, state regulators say as many as 36 new cannabis retail stores in Nevada could soon open their doors, after being approved by Gonzales.