Nev. Dispensaries Violated COVID-19 Rules, Regulators Say

By Jack Queen
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Law360 (July 24, 2020, 4:41 PM EDT) -- Nevada cannabis regulators have filed complaints against a pair of marijuana dispensaries for allegedly violating the state's emergency COVID-19 rules, accusing one of violating the state's mask order and another of illegally providing curbside pickup.

The Cannabis Compliance Board also included a request for more than $200,000 in fines for seed-to-sale tracking lapses at a cannabis cultivator, and fined dispensary operator CWNevada LLC $1.25 million and effectively stripped a dozen of its licenses for allegedly falsifying records, ignoring regulations and failing to pay taxes.

The moves, announced Tuesday at the agency's first-ever meeting since being established last October, come as the newly minted agency looks to assert itself after state leaders criticized Nevada's former pot regulator for lax enforcement.

MM Development Co. LLC, which operates the sprawling Planet 13 dispensary in Las Vegas, allowed an employee to walk through a showroom without a mandatory face covering in June, according to the complaint against the company. A customer was also seen making a phone call and buying pot without a mask, video footage provided by the company showed.

The board said the alleged lapses violated Nevada Gov. Steve Sisolak's June emergency directive mandating face coverings in public spaces, and the agency seeks a total fine of $7,500 for the violations. 

In the complaint against Nevada Wellness Center LLC, the board accused the dispensary of conducting curbside pickup sales in violation of emergency COVID-19 guidance, which only allowed for cannabis delivery.

Nevada Wellness made 195 curbside pickup sales on March 22, the day before the dispensary submitted its pickup plans for approval by state regulators, according to the complaint. Las Vegas police shut down the sales and gave the dispensary a warning, the board said.

Dispensary owner Frank Hawkins told investigators that the delivery-only rule was "detrimental" to his customers, who "vigorously complained" about it, according to the complaint. The complaint asked the board members to approve a total fine of $13,277, including the costs of the investigation.

The board also lodged a complaint against cannabis cultivator Herbal Care LLC, seeking $205,900 in fines for a laundry list of alleged seed-to-sale tracking violations and obstruction of a regulatory investigation.

The complaint is the latest turn in a long-running saga between Herbal Care and Nevada cannabis regulators. The state's tax department, which formerly oversaw the Silver State's cannabis companies, launched a 17-month investigation of the company and eventually suspended its license in September 2018.

Herbal Care sued the tax department in February of this year, asking a state court to force the agency to wrap up its disciplinary process so the company can move on. The suit claims the department was also unresponsive to Herbal Care's efforts to pay $412,000 in fines.

The board said settlement negotiations broke down during Herbal Care's suspension, prompting it to resume the disciplinary process with the new complaint after the company filed its suit.

A board spokeswoman told Law360 that all three companies have been served with complaints and will have the opportunity to pay the recommended fines or make their case before the board.

MM Development, Nevada Wellness and Herbal Care did not immediately respond to requests for comment Friday.

The board is represented by L. Kristopher Rath and Ashley A. Balducci of the Nevada Attorney General's Office.

Counsel information for the cannabis companies was not available Friday.

The cases are Cannabis Compliance Board v. MM Development LLC, case number 2020-007, Cannabis Compliance Board v. Nevada Wellness Center LLC, case number 2020-006 and Cannabis Compliance Board v. Herbal Care LLC, case number 2020-05 before the Cannabis Compliance Board.

--Additional reporting by Diana Novak Jones. Editing by Steven Edelstone.

For a reprint of this article, please contact reprints@law360.com.

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