The business entities were seeking a license under the social equity category, which is for individuals who were punished under old cannabis laws.
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Six applicants who have been waiting more than two years for cannabis consumption lounge licenses under a category reserved for individuals convicted of crimes when marijuana was illegal were notified Monday they were disqualified from the process.
The Cannabis Compliance Board (CCB) said three of the denied applicants — NV Cloud 420 Lounge LLC, Lyxe Consulting LLC and Royal Tree TLC LLC — had applied for locations in Las Vegas. Two applicants, GGGCPA SE 3 Inc. and City Lights Production LLC — applied for unincorporated Clark County. GGCPA SE Inc. applied for Nye County.
CCB Executive Director James Humm did not provide details other than the disqualified applicants weren’t eligible under the guidelines.
The social equity applications were listed under the entity name, which are all limited liability companies (LLC) and were prepared by the majority owner.
A spokeswoman for the CCB directed The Nevada Independent to the statute covering confidentiality in Nevada cannabis law that applications are “confidential and may be revealed in whole or in part only in the course of the necessary administration.”
Four other applicants — MEDSnSIN, Sunflower Compassionate Company, Greenwood Investment Group LLC and N&D Enterprises LLP — all seeking a location in Las Vegas, met the social equity clause that was part of 2021 cannabis legislation and will proceed in the cannabis consumption lounge licensing process.
The idea behind the legislation was to give preference to applicants who were punished for what are now legal activities.
Humm, who took over his role in January after being appointed by Gov. Joe Lombardo, told The Nevada Independent the discrepancies in the six applications had been discovered by June 2023 but were not acted upon by the agency.
Humm said he asked for an audit of the process.
“I can't speak to what happened in the six months,” Humm said in an interview last week. “I wanted to make sure we got it right. This has been extraordinarily long, a lot longer than they would have anticipated.”
The licensing process began in November 2022 when a computerized random drawing selected 10 applicants from the 30 applications claiming social equity qualifications.
According to the statute, an applicant for a license to operate an independent cannabis consumption lounge under the social equity clause has to have been “adversely affected by provisions of previous laws which criminalized activity relating to cannabis.”
Of the 10 applicants selected to receive a prospective license, six of the locations were listed in unincorporated Clark County, three were in the city of Las Vegas and one was in Nye County.
Out of the remaining 20 applications, eight qualified based on the criteria and will be asked if they wish to enter a computerized random number drawing to obtain one of the six slots still remaining now that the six applicants have been informed they were disqualified. Those applicants also were not disclosed.
Smoke and Mirrors cannabis lounge is located inside Thrive cannabis dispensary, is seen on April 4, 2024. (Jeff Scheid/The Nevada Independent)
There are just two cannabis consumption lounges operating in Nevada and both are in Las Vegas near the resort corridor. Dazed! inside the Planet 13 dispensary in an industrial area just west of the Strip, and Smoke and Mirrors inside the Thrive Cannabis Dispensary, which is across the street from a back entrance to Resorts World Las Vegas, opened earlier this year.
An additional 38 lounges are in various stages of consideration, making it unclear when more competition will arrive.
Cannabis consumption lounges were legalized through AB341 in 2021, five years after voters authorized the recreational use of marijuana in 2016. While dispensaries flourished — there are more than 100 retail cannabis stores throughout the state, according to the CCB — the lounges needed extra time to ensure they met state regulations.
Humm said the CCB will return the $2,500 application fees for all 20 applicants not advancing in the licensing process.
“Eligibility requirements have been known since 2022,” Humm said, adding the applicants didn’t meet the social equity [qualifications] as defined in the statute. He said the financial considerations for an applicant weren’t looked at.
“Technically, we aren't rejecting their applications,” Humm said. “They actually can't move forward in the process because they're not eligible.”
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