A civil legal fight over Nevada's 2018 marijuana dispensary licensing round - one of the more contentious episodes in the state's short history of regulated cannabis - may be moving toward partial resolution, with a proposed settlement announced Wednesday that would redistribute several licenses among 17 business entities and the Nevada Department of Taxation. The Nevada Tax Commission is scheduled to act on the agreement Friday afternoon. But not everyone in the room is ready to let it close.
What the 2018 Licensing Round Actually Unleashed
The dispute traces back to a single application cycle. In 2018, Nevada opened a competitive process to expand the number of retail marijuana dispensary locations - 127 applicants submitted materials, but only 17 walked away with one or more of the 61 additional licenses on offer. One entity alone, Lone Mountain Partners (operating as Zenleaf), received 11 of them. That concentration set off alarm bells immediately.
Plaintiffs who were shut out argued that state regulators - including former Department of Taxation employee Jorge Pupo, who has since left the agency - coached favored applicants, boosting their scores above competitors who received no such guidance. That kind of insider access, if true, would have fundamentally compromised what was supposed to be a merit-based process. A series of lawsuits followed. The litigation multiplied to the point where the ongoing trial in Clark County had to be relocated to the Las Vegas Convention Center simply to accommodate everyone while maintaining social distancing.
That is not a detail to pass over lightly. A cannabis licensing dispute large enough to fill a convention center floor speaks to how much money, and how much regulatory dysfunction, was in play.
What the Settlement Actually Proposes
The proposed agreement involves a transfer of licenses from companies that received them in 2018 - several of which were already enjoined from moving forward after a court found background checks had not been completed on all owners - to plaintiffs who received nothing. The redistribution, in outline:
- Lone Mountain Partners surrenders licenses in Las Vegas, Reno, Lincoln County, Esmeralda County, Eureka County, and Douglas County to various plaintiffs including Qualcan, the "ETW plaintiffs" group, and Thrive.
- Helping Hands Wellness Center gives up one unincorporated Clark County license to LivFree Wellness (The Dispensary in Reno).
- Nevada Organic Remedies (The Source) transfers one unincorporated Clark County license to MM Development Company (Planet 13) and one Carson City license to Qualcan.
- Greenmart of Nevada (Health for Life) transfers one unincorporated Clark County license to Nevada Wellness Center.
- Thrive transfers one Henderson license to the ETW group.
Beyond the license reshuffling, settling plaintiffs agree to drop their suits. In return, the state agrees to expedite ownership transfers and inspections for the settling parties and extend by 14 months the deadline to have dispensaries built and inspected - a meaningful concession given how construction timelines have stretched across industries during the pandemic. The Cannabis Compliance Board, the new regulatory body that took over from the Department of Taxation this past summer, also agrees to recommend an industry-funded study examining black market deterrence, protections for minors, local fee structures, and whether license caps should be revisited.
The Plaintiffs Left Outside the Deal
Here's the catch. Not all plaintiffs are party to this agreement, and those left out are not staying quiet. THC NV (doing business as Canna Vibe) and Herbal Choice have filed for a restraining order to block the settlement, with a hearing scheduled for Friday morning - just hours before the Tax Commission vote. Their argument is pointed: if the majority of plaintiffs settle and exit the litigation, the remaining parties lose the collective weight needed to prevail at trial. They would then be left negotiating from weakness, without the settlement's benefits either.
Their court filing puts it plainly: settling plaintiffs have allegedly made clear that a majority settlement would leave smaller holdouts unable to carry a trial forward and "forced to take smaller nuisance fee type settlements." That framing suggests the excluded parties believe they were deliberately sidelined, not accidentally overlooked - a way to divide the gains among fewer hands while stranding the rest.
Whether a judge agrees is another matter. But the dynamic is familiar in complex multi-party litigation: the moment a critical mass of plaintiffs defects to a settlement, the calculus for those remaining shifts entirely. Their leverage evaporates; their legal costs continue. It is a structural pressure, not just a perception.
What This Signals for Cannabis Regulation in Nevada
The broader implications extend past this particular dispute. Nevada's cannabis industry is still relatively young, and the 2018 licensing debacle exposed a recurring vulnerability in state-administered licensing systems: when the number of available licenses is sharply capped and the financial stakes are high, the application process becomes a target. Allegations of insider access and scoring manipulation are not unique to Nevada - similar complaints have surfaced in other states that moved quickly from legalization to a controlled rollout without establishing genuinely insulated review processes.
The creation of the Cannabis Compliance Board, which has taken over from the Department of Taxation, is at least partly a structural response to those failures. Whether it proves more durable under pressure remains to be seen. The study the Board has agreed to recommend - covering everything from black market dynamics to license caps - could, if conducted rigorously, inform a more defensible regulatory framework going forward. Or it could become one more report that sits unread on an advisory commission's shelf. The difference will be in the follow-through.
For now, the immediate question is narrower: whether Friday's Tax Commission meeting proceeds over the objections of excluded plaintiffs, and whether a broader settlement involving all parties eventually follows. Lone Mountain's three remaining licenses - for Lander, Mineral, and White Pine counties - are held in reserve specifically for a global resolution, suggesting at least some parties believe a fuller agreement is still possible. Whether that optimism survives the weekend is an open question.
