LAS VEGAS (AP) — Attorneys for dozens of bidders that weren't approved for retail marijuana dispensary licenses last year raised the specter of broken laws and told a Nevada judge on Thursday the process was so unfair she should order a do-over.
Plaintiffs' lawyers said testimony showed that required background checks weren't conducted on all applicants; scoring was riddled with mistakes; state officials tipped the scales toward some prospective licensees over others; and at least some laws were broken.
Dominic Gentile, attorney for Serenity Wellness Center, was among those seeking an injunction to block the opening of 61 businesses that got permits.
He cited an email in which he said Jorge Pupo, the state Department of Taxation marijuana licensing chief, told tax official Kara Cronkhite to ignore allegations that one winning bidder sold marijuana to someone below legal age.
"Mr. Pupo directed Ms. Cronkhite to withdraw the investigation, to stop it, into ... three sales to someone under 21 years old," Gentile said.
"We don't know how young. We don't know the circumstances. We do know it was never brought to the attention of any law enforcement agency," the attorney said. "They admitted to the crime and they admitted suppressing it."
Clark County District Court Judge Elizabeth Gonzalez planned to hear Friday from attorneys for the state defending how officials evaluated 462 applications to award 61 new retail licenses to 16 applicants last December.
Pupo and Cronkhite testified the process wasn't perfect but was impartial.
Plaintiffs want Gonzalez to declare the process invalid and issue an injunction to stop new recreational pot dispensaries from opening statewide. All sides expect her decision — following 18 days of testimony and evidence since May 24 — will be appealed to the Nevada Supreme Court.
The judge also plans to hear Friday from attorneys for some winning licensees, whose executives complain they're losing money with plans to open new retail pot stores in the booming Nevada market on hold.
Alfred Terteryan, an executive for Helping Hands Wellness Center, testified Wednesday that the delay may cost him a profit of tens of millions of dollars, the Las Vegas Sun reported.
Terteryan said he had to table an offer to sell, for a combined $22 million, two of three licenses that he and his wife obtained using $1.8 million in loans from family and friends.
The 65 recreational and medicinal pot dispensaries statewide were on pace, after 11 months, to report about $630 million in total sales for the fiscal year ending June 30, according to state tax figures. That compares with a combined $530 million in the 12 months after marijuana retail sales began in July 2017.
Year-end figures due for release Friday are expected to show the state took in more than $10 million in taxes and fees.
Theodore Parker, attorney for Nevada Wellness Center, alleged Thursday that "gamesmanship" and "entitlement" led to chummy relationships between applicants and state decision-makers. He noted his client, African American owners of medical marijuana outlets, were denied three recreational dispensary applications.
"This process shouldn't be based on relationships. It shouldn't be based upon favoritism ... (or) who you know," Parker said.
The initiative that voters passed in 2016 to legalize pot in Nevada required background checks on all marijuana licensees, the attorney said, to keep convicted felons out of the legal pot business.
But he noted that testimony showed that former Nevada tax chief Deonne Contine decided checks were only required for owners with an ownership stake of 5% or greater.
"This mistake involves the safety of our residents and the public at large," Parker said. "At every turn ... the state has prevented transparency."