Nevada cannabis official at center of licensing scandal loses job


Chris KudialisOctober two, 2019

Nevada Gov. Steve Sisolak (above) suspended state cannabis regulator Jorge Pupo two weeks ago. This week that suspension became permanent. (AP Photo/John Locher)

Much less than a month following getting placed on leave by Nevada Gov. Steve Sisolak, the state’s major cannabis regulator has been dismissed from his position.

A Nevada Division of Taxation spokeswoman confirmed that Jorge Pupo, the department’s embattled deputy executive director, was no longer employed by the division as of Tuesday afternoon. The tax department’s confirmation came following many business sources told Leafly that Pupo had been fired.

Pupo’s ouster comes amid an ongoing court battle more than his alleged part in amending regulations in a current dispensary licensing lottery. Plaintiffs in a lawsuit have charged that Pupo tweaked these guidelines to aid a modest group of close friends in the business win licenses and hit the green rush jackpot. In court testimony earlier this year, Pupo confirmed that he shared meals with massive-name Las Vegas cannabis consultants and dispensary owners just before altering scoring criteria for retail applicants.

A mixed record beneath Pupo

Pupo’s sacking marks the official finish of his 3-year tenure at the helm of Nevada’s retail cannabis regulatory arm and a lot more than 15 total years of employment with the Division of Taxation.

Promoted from tax manager to oversee Nevada’s launch of retail marijuana sales in July 2017, Pupo’s tenure was filled with each impressive economic successes and controversial regulatory blunders.

The tax division practically failed to launch retail cannabis as planned. About a month just before the planned opening day of July 1, 2017, a group of alcohol distributors won a court injunction that brought wholesale shipments of retail marijuana to a standstill. A district court judge in Northern Nevada sided with the Independent Alcohol Distributors of Nevada (IADN), which argued DoT leadership wholly ignored their requests to apply for distribution licenses in favor of marijuana businesses that wanted to continue shipping their personal flower, as they had beneath the state’s healthcare marijuana guidelines. Ballot Query two, passed in 2016 to legalize recreational cannabis, gave licensed liquor distributors exclusive rights to wholesale shipping in the Silver State for 18 months.

When the injunction left dispensary shelves almost empty, Pupo and then-DoT executive director Deonne Contine drafted an emergency regulation, signed by then-Gov. Brian Sandoval, to open distribution rights back up to marijuana businesses and get the business operating.

Tax income 140% above projections

“There was a stacked deck against us from the starting,” mentioned Allan Nassau, a 1-time IADN member who mentioned he lost tens of thousands of dollars in the failed try to join the shipping business. Pupo and Contine, Nassau mentioned, “liked the way the game was operating and they wanted to preserve it the very same as it was beneath healthcare.”

As the fledgling business hit its stride, the Division of Taxation raked in almost $70 million in tax income more than the 1st 12 months of sales, 140% of initial projections. In 2019, month-to-month tax income has surpassed $9 million. Proceeds have been utilized to assistance public education, homeless solutions, new government jobs, and the state’s rainy day fund. At its present pace, legal cannabis is set to gather a lot more than $100 million in taxes through the subsequent 12 months.

Undone by allegations of favoritism

The department’s accomplishment beneath Pupo was eventually overshadowed by the controversy more than his actions in amending regulations to allegedly aid a modest group of close friends in the business. Pupo testified in June that he did amend the scoring guidelines, and also met many instances with choose members of the cannabis business, who have been also applicants or consulting for applicants.

The adult-use-only licenses have been mentioned to be open to any operators of cannabis cultivation or production facilities, as properly as current retail license holders. But in the finish, licenses have been awarded to only 17 of the 127 businesses that applied, accounting for 61 of 462 total applications. (Some businesses have been awarded licenses for a lot more than 1 retail place.) 4 of the 17 companies—Essence, The Supply, Zenleaf, and Grassroots—received a combined 33 of the 61 licenses, which means a lot more than half of the new dispensary licenses for the whole state have been offered to just three% of applicants.

A procedure ‘partial and topic to manipulation’

In an Aug. 23 ruling, Clark County District Judge Elizabeth Gonzalez wrote that close relationships in between Pupo and the business designed the possible for abuse.

In the 24-web page selection, which resulted in an injunction stopping the Division of Taxation from issuing licenses to about half of the 17 winning businesses, Gonzalez mentioned several factors—including Pupo’s individual relationships with business members, an conveniently manipulated diversity requirement, and the department’s hiring of improperly educated temp workers who have been under no circumstances subjected to background checks—“created a procedure which was partial and topic to manipulation by applicants.”

A 55-web page amended complaint, filed on Sep. six by a host of businesses that did not win licenses in final year’s lottery, proved to be the nail in the coffin for Pupo. Just hours following the amended complaint was filed, and on the heels of a Sept. five Leafly story describing the case, Nevada Gov. Steve Sisolak’s workplace requested that the tax division location Pupo on leave.

Sisolak spokesman Ryan McInerney workplace did not respond to a request for comment. Calls and text messages to Pupo’s individual cell telephone on Tuesday also went unanswered.

Tyler Klimas now major state efforts

Earlier this week, Sisolak’s workplace appointed Tyler Klimas, a 1-time press secretary for former Nevada Gov. Brian Sandoval, as executive director of the new Cannabis Compliance Board. Klimas, who will also head the tax department’s transition to the new regulating physique, will at some point be joined on the Cannabis Compliance Board by 5 other portion-time Sisolak-appointed board members, beginning in January 2020.

Chris Kudialis's Bio Image

Chris Kudialis

Chris Kudialis is a Las Vegas–based cannabis reporter. He has written articles for the Los Angeles Instances, Las Vegas Sun, Charlotte Observer, Houston Chronicle, Detroit Cost-free Press, and Brazil’s Rio Instances, amongst other metropolitan dailies.


Latest posts