State employee doesn’t know whether marijuana license application adhered to ballot question language

A Department of Taxation supervisor, Karalin Cronkhite, said in court on Wednesday that she was unsure whether the marijuana licensing application at the center of a disputed round of state licensing was compliant with voter-approved ballot question language. 

Cronkhite was questioned by plaintiff attorney Theodore Parker in regards to the licensing application’s compliance with the 2016 Nevada marijuana legalization ballot measure, also known as Question 2. Parker noted that the regulations stemming from the ballot measure govern a marijuana facility’s physical location, while the application in the recent round of licensing did not seek detailed information on that point.

“Was anyone in charge with the task of ensuring that the application was consistent with the ballot question?” asked Parker. 

Cronkhite said she recalled searching for consistency “sometimes,” and was not sure whether her state worker colleagues — Jorge Pupo, Ky Plaskon and Steve Gilbert, who previously took the witness stand — ensured the new provisions in the recreational licensing application aligned with the ballot question and the recommendations of a task force put together to update the application relative to previous licensing rounds. 

Cronkhite’s testimony was part of a hearing on a motion for preliminary injunction that has been ongoing since late May in Clark County District Court. Numerous business entities that sought lucrative state marijuana dispensary licenses but were rejected have filed lawsuits against the Department of Taxation, arguing the state’s process was opaque and unfair and requesting the court invalidate the 61 conditional licenses awarded to 17 cannabis entities in December. 

Wednesday marked the twelfth day of the proceedings before Clark County District Court Judge Elizabeth Gonzalez, and the attorneys involved in the case project the hearing will go on for several more weeks. 

Plaintiff attorney Parker said that the state agreed the new code created for the licensing of recreational marijuana could not go outside the parameters of the ballot question statutes that were approved in 2016.

One of the ballot question parameters that also wasn’t followed was conducting background checks during the application process on all applicants who were awarded conditional licenses. Cronkhite said applicants would have needed to have one by the time final licenses were issued. 

Cronkhite said she helped train temporary workers from the staffing agency Manpower to screen the non-identity portion of the application, looking for what meets standards versus what are excellent responses. 

“Just because a building is compliant, it just means they are meeting the bare minimum requirements,” said Cronkhite, adding that many existing structures do not meet “excellent” standards for their floor plan and amenities such as sinks, cameras and proper lighting. 

The plaintiffs have continued to argue that the licensing process was unfair, while the Department of Taxation has continued to contend that they did all they could when vetting the 461 applicants under the guidelines of the 2016 ballot measure. 

Prior to Cronkhite, Nevada Department of Taxation deputy executive director Jorge Pupo was on the stand for three days and fielded questions about his relationship with certain applicants who had received licenses. He acknowledged that he had lunches and dinners with several of them just before the Department of Taxation began their grading process. 

“You can’t just stop talking to everyone,” Pupo said when he took the stand on June 20. “We had a lot more business than an application.”

Parker brought up Pupo, who leads the marijuana enforcement division, when questioning Cronkhite. The attorney suggested the state was not forthright about the 250-point rubric used to grade each application on a factors including experience to the marijuana industry, diversity in their business, building plan and financial statements. 

“Do you know why [Pupo] did not want the applicants to know how to prepare their application to maximize their scoring?” Parker asked Cronkhite.

The material that was not ranked, yet still included in the application, includes names and logos and a background check that was pass/fail. 

The stakes for the case are high as a lot of money is involved in the marijuana industry. Nevada collected almost $70 million in revenue from marijuana wholesale and excise taxes during the first year of legal sales, and taxable sales in 2018 topped a half-billion dollars.

Cronkhite’s questioning resumes Thursday, and the hearing is expected to continue through Friday.