Saying the State of Nevada “has done all the right things and the company [Deep Roots Harvest] is doing all the right things,” Mesquite City Councilman Rich Green added that “as a pro-business councilman, I’m embarrassed this is on the agenda.”
At issue was whether Deep Roots, Mesquite’s only medical marijuana grow, production and dispensary facility, could begin selling recreational marijuana on July 1.
Councilman David Ballweg had placed a resolution on the council’s agenda for its Tuesday, June 27 meeting that would impose a moratorium on the sales of recreational marijuana until such time as the city council approved ordinances related to the sales no later than 90 calendar days after the state issued its regulations.
Ballweg argued that without proper ordinances in place the city had no authority to collect fees or taxes associated with the recreational sales like it has with medical marijuana. Without those ordinances, Ballweg said “we are ignoring the basic concepts of oversight into the sale and control of marijuana.”
Councilman Brian Wursten said “I too am very opposed to recreational marijuana. I did ask to wait until rules were in place. But it’s here. We voted to allow it. It’s going to stay. But I am pro-business and I’m having a hard time saying no to recreational marijuana sales when the rest of the state is. We can still make rules and regulations when we get information from the state.”
Councilman George Rapson called the resolution a “smoke screen. It’s a delay tactic. But it’s legal in the state. The alternative is to have no sales and having it delivered from Las Vegas. We get no tax revenue from it.”
Citing the resolution’s language that says there is a lack of zoning allowing recreational marijuana sales, Rapson read a letter written by city officials to the state saying that Deep Roots Harvest is in compliance with all zoning requirements in the city but under medical marijuana laws. He added that the council can create and approve regulations and ordinances within a month that will address taxation and fee issues.
Neal Tomlinson, regulatory attorney for Deep Roots Harvest, addressed the council saying that zoning requirements for recreational marijuana will be exactly the same as those for medical cannabis. “Deep Roots has satisfied all the zoning requirements. The city verified it. This resolution [barring legal sales] will encourage a black market in marijuana sales. Law enforcement wants to allow regulated sales in order to avoid sales on the black market.”
Previously, Keith Capurro, Deep Roots CEO, said his company has paid $370,000 in fees and taxes and spent $10 million in capital improvements since 2015. He said the company just hired 20 new employees to handle the expected workload from recreational sales bringing the total workforce to 70 employees with $2.5 million in payroll.
However, Capurro said that his company had sustained a loss of $400,000 in the last 18 months because of increased competition from other growers and dispensaries in the state. To deprive his company of recreational sales, Capurro said, would cripple his business and deprive the city of revenues.
Tomlinson told the council on Tuesday that Deep Roots has complied with every request the city has made to it and it would be unfair to not allow recreational sales to begin July 1.
“If we keep pushing this down the road, Deep Roots will go out of business,” Rapson said.
Ballweg said he was upholding his fiduciary responsibilities with the resolution and that it would be a terrible precedent to allow recreational sales without proper ordinances. “This is not a smoke screen. The state hasn’t worked quickly enough for the city to put ordinances in place by July 1.”
Bob Sweetin, city attorney, said “the industry is very well regulated. The problem is we don’t have an ordinance that will allow us to impose any sort of fees on Deep Roots.” Sweetin clarified that the city cannot collect fees and taxes without ordinances and cannot retroactively collect them once the rules are adopted.
Sweetin said the state laws allow the city to collect fees but “did not pass the fees for the city.”
The state published its regulations on June 26 and allows the city to collect a three percent fee on sales.
Several of the councilmen agreed that they were okay without collecting fees for approximately one month until the proper ordinances and regulations could be put in place. But “Deep Roots should not be punished.” Rapson said.
Ballweg made a motion to approve the resolution but it died for lack of a second. Therefore, it was in essence a 1-4 vote against the resolution. That opens the door for recreational marijuana sales to begin on July 1 in Mesquite.
Wursten said after the meeting he did not second the motion as many people expected because “while I agree with Dave [Ballweg] that we do need to have the regulations in place, I think it would have hurt our city to not allow our dispensary to take care of this. People are going to be flocking into Nevada this weekend. I prefer they get the product here rather than Las Vegas. It wouldn’t matter. The regulations are going to pass in a couple of weeks so let’s do it now. My action was strictly from a business point-of-view.”