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IN AND FOR CARSON CITY INDEPENDENT ALCOHOL DISTRIBUTORS OF NEVADA, Plaintiff, Case No.: 17 OC 00153 1B Dept. No.: 1 NEVADA DEPARTMENT OF TAXATION, NEVADA TAX COMMISSION, TEMPORARY RESTRAINING ORDER Defendants. This matter comes before the Court on the Plaintiffs’ Renewed Motion for Temporary Restraining Order and for Preliminary Injunction, Complaint, and the supporting affidavits and exhibits. Having reviewed these materials, the Court hereby GRANTS the Application for Temporary Restraining Order. FINDINGS OF FACT. 1, On July 13, 2017, the Department of Taxation (“Department”) adopted an “Emergency Regulation” setting forth various criteria it intended to use to determine the sufficiency of alcohol distributors to serve the marijuana market, pursuant to NRS 453D.210(3). Additionally, the Emergency Regulation stated that the Department would make the determination of sufficiency in a public meeting, noticed pursuant to the Open Meeting Law. Section 2, Emergency Regulation. 2. On July 18, 2017, the Department sent surveys to all of the alcohol distributors and all of the marijuana establishments. The deadline to respond was July 23, 2017. 3. On August 7, 2017, the Department posted an agenda and notice that it would hold a meeting on sufficiency on August 10, 2017 at 1:00pm in the afternoon. No supporting materials were provided prior to the meeting, nor was it disclosed that the Department would present four witnesses, all representatives of the marijuana establishes, and all of whom would advocate for finding that alcohol distributors are insufficient to serve the market. 4, The meeting did not provide any opportunity for anyone to ask questions of any of the witnesses or to review the data and information the Department relied upon when making its decision. 5. At the conclusion of the meeting, the Director stated that she had determined that alcohol distributors were insufficient to serve the market. 6. The Director stated that the Department would begin immediately issuing licenses to non- alcohol distributors. CONCLUSIONS OF LAW 1. Pursuant to Fed.R.Civ.P. 65, this Court may issue an ex parte temporary restraining order if: “(A) specific facts in an affidavit or a verified complaint clearly show that immediate and irreparable injury, loss, or damage will result to the movant before the adverse party can be heard in opposition; and (B) the movant's attomey certifies in writing any efforts made to give notice and the reasons why it should not be required.” 2. Itappears from Plaintiff's counsel’s affidavit that he provided notice to Defendant's attomeys by emailing a copy of the Application and the Complaint, along with the exhibits, to William McKean at the Attomey General’s Office at appro: ately 11:15am, August 11, 2017. Plaintiff's counsel asserts that IADON members will suffer irreparable harm without an injunction because the Department will imminently issue licenses to non-alcohol distributors, based on its determination of insufficiency made in a hearing that provided no real opportunity to participate. 3. The Court finds that this notice was adequate. Furthermore, Plaimtiff has properly asserted that there will be irreparable harm to ADON members if the matter is delayed, while in contrast, there will be little or no impact to the Department by temporarily enjoining the issuance of additional licenses. 4, Due process requires adequate procedural protections before a person is deprived of a protected property right. The only reason the Department can issue licenses to any other applicant is if aleohol Soe ao distributors are insufficient. Accordingly, that determination is critical to alcohol distributors’ rights. Logan v. Zimmerman Brush Co., 455 U.S. 422, 430 (1982); see also Doyle v. City of Medford, 606 F.3d 667, 672-73 (9th Cir. 2010) (Words such as “shall” indicate that a protectable property interest exists, and limited discretion to deny that interest do not undermine the right itself 5. To make that finding, the Department was required to provide the aleohol distributors an adequate opportunity to prepare, present evidence, cross-examine witnesses, and view and analyze the data or information the Department relies upon in making its determination. 6. Itappears to the Court at this time that the meeting held on August 10, 2017, may not have met any of those criteria. No supporting materials were provided prior to the meeting, there was no opportunity to ask questions of any witnesses, and there was no notice that the Department would present the opinions of an economist and three other presenters. 7. Although, it was previously reported to this Court that the outcome of the meeting would not be pre-determined, it appears the Department invited three representatives of the marijuana establishments to give special presentations at the beginning of the hearing. All of those presentations advocated for finding the alcohol distributors insufficient. Thus it appears that the Department invited the speakers in order to support its pre-determined conelusion that alcohol distributors are insufficient. 8. The Plaintiff has therefore demonstrated at this time a likelihood of success on their due process claim. That claim is now ripe because the Department has actually ruled against them. 9. Plaintiff has also demonstrated irreparable harm, because they are likely to be entirely shut out of the marijuana distribution business if the Department proceeds to issue marijuana distribution licenses to existing marijuana establishments, instead of solely to aleohol distributors. Actions that interfere with a business or destroy its credit or profits do an irreparable harm that supports the issuance of an injunction. Finkel v. Cashman Prof'l, Inc., 270 P.3d 1259, 1263 (Nev. 2012); Sobol v. Capital Mgt.. 102 Nev. 444, 446, 726 P.2d 335, 337 (1986); Guion v. Terra Mktg. of Nevada, Inc., 90 Nev, 237, 239-40, 523 P.2d 847, 848 (1974). 10. Because six distributors have already been licensed, and because it appears that there is little likelihood of any significant interruption of revenue from marijuana sales, Plaintiff shall post $2,000 as security. RDER GOOD CAUSE APPEARING, IT IS HEREBY ORDERED THAT: 1. Defendants Department of Taxation and Nevada Tax Commission, and all agents and employees of Defendants, are hereby enjoined and prohibited from issuing marijuana distribution licenses to any applicants other than licensed alcohol distributors; 2. Plaintiff shall post $2,000 as security; 3. This matter is set for a preliminary injunction hearing on August 17, 2017, at 9:30 a.m., in accordance with Nev.R.Civ.P. 65, before the First Judicial District Court, located at 885 East Musser Street, Carson City, Nevada, Department I. Dated this : Q am Ute day of ___ Aepethinr a 2182 aime), U is CERTIFICATE OF MAILING Pursuant to NRCP 3(b), I certify that I am an employee of the First Judicial District ah Court, and that on this |" day of August, 2017, I deposited for mailing at Carson City, Nevada, a true and correct copy of the foregoing Order addressed as follows: Kevin Benson, Esq. PO Box 646 Carson City, NV 89702 Stephanie Rice, Esq. 96 & 98 Winter Street Reno, NV 89503 William J. McKean, Esq. Office of the Nevada Attorney General 100N. Carson Street Carson City, NV 89701 A 5 f eeaeeesestsnIaisnSEESTaaAISISREGN A) Angela Jeffries Judicial Assistant, Dept. 1

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