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 aleoholSoe 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 isCERTIFICATE 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