Marijuana, Miller and Muddles: Nevada’s Legalization Dilemma

The silver state may not have a reputation for being “420 friendly” that places like California and Colorado have

But it’s still one of the pioneers of legal recreational weed. In Nevada, the laws that make marijuana legal for recreational use carry an interesting provision not found in the other six states.

That is, only licensed alcohol wholesalers are allowed to traffic legal weed. There are 37 licensed dispensaries in the entire state, and as of August 2017, every one of them is struggling to keep weed on the shelves. The reason? Alcohol wholesalers haven’t made the investments in infrastructure to support the drug, and some are even afraid of punishment from the Feds.

A Conflict of Interest for Nevada

Marijuana remains illegal in the eyes of the federal government, and while the Obama administration made it clear they wouldn’t invest government money to punish legal dispensaries, it’s anyone’s guess how Trump’s administration will treat them.

Still, what’s the point in allowing the state to tax marijuana sales if no one can get access to marijuana? It seems the state government neglected to consider what might happen if the small number of well-connected companies that control business in Nevada got the keys to legal weed. Moreover, not every wholesaler got in on the action. At first, there was only a small selection of companies that were legal weed distributors within the alcohol industry.

It’s not just the alcohol wholesalers that are frightened. Dispensaries in the state are said to deal only in cash so they can avoid leaving a money trail for the Feds to follow. That shouldn’t be a problem in the state’s gambling centers where greenbacks trade hands in ridiculous quantities, but it might not go over so well in rural parts of the state.

Emergency Pot Shortage

It sounds like something out of “Friday,” but the alcohol wholesalers did such a poor job of making pot available that the government had to declare a state of emergency. Tax dollars the state is relying on won’t be there if there’s no weed to sell.

To resolve the situation, the state’s commission has voted unanimously to approve a new measure that allows all alcohol wholesalers to distribute weed. The state simply was not prepared to deal with the post-legalization rush. Unfortunately, even though light has been shed on the obvious mistake here, it will be some time before Nevada dispensaries have a healthy stream of product.

The case must now go through the appeals process and back to the Nevada supreme court. The court will accept briefs for a period of fifty days, which is probably fifty days longer than the average pot enthusiast would prefer to wait for a joint.

Competing With Themselves

It is likely that alcohol distributors feel they’ve got something to lose by letting the drug become popular. In a 2016 study, research company Brewbound cited that MillerCoors saw a 4.4% drop in sales of premium beers such as Coors Light and Bud Light in the states of Colorado, Washington and Oregon, all of which offer legal pot. The study did not take into account market share lost to craft beers, which have threatened these American-made staples for some time now.

What Happens in Nevada

Still, you would think in a state that’s home to Sin City, booze and weed could get along. Part of the case for legalization in Nevada was exactly that. People go there to get away and let loose, so why not give them the opportunity to indulge in marijuana while they’re at it?

The state has projected that pot sales can generate $70 million in tax revenue with pot being taxed at 33 to 38 percent. The proceeds from this revenue would be used to pay for improvements in the state’s malnourished education system.

In case you’re wondering whether you can now trade that free drink at the craps table for a pinner of Pineapple Kush, the answer is no. Since the state’s casinos operate on reservations that are subject to federal regulations, that would inevitably lead to trouble for the state’s most famous attractions.

Nevada has already seen half a million in tax revenue generated, but if the state is going to keep the momentum alive, it needs to act quickly to avoid future shortages.

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