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Nuleaf CLV Dispensary, LLC v. State, Department of Health and Human Services

Supreme Court of Nevada, En Banc

March 29, 2018

NULEAF CLV DISPENSARY, LLC, A NEVADA LIMITED LIABILITY COMPANY, Appellant,
v.
THE STATE OF NEVADA DEPARTMENT OF HEALTH AND HUMAN SERVICES, DIVISION OF PUBLIC AND BEHAVIORAL HEALTH; ACRES MEDICAL, LLC; AND GB SCIENCES, LLC, A NEVADA LIMITED LIABILITY COMPANY, Respondents. GB SCIENCES, LLC, A NEVADA LIMITED LIABILITY COMPANY, Cross-Appellant,
v.
THE STATE OF NEVADA DEPARTMENT OF HEALTH AND HUMAN SERVICES, DIVISION OF PUBLIC AND BEHAVIORAL HEALTH; ACRES MEDICAL, LLC; AND NULEAF CLV DISPENSARY, LLC, A NEVADA LIMITED LIABILITY COMPANY, Cross-Respondents.

          Appeal and cross-appeal from a final judgment in an action concerning entitlement to a medicinal marijuana dispensary provisional license. Eighth Judicial District Court, Clark County; Eric Johnson, Judge.

          Pisanelli Bice PLLC and Todd L. Bice and Dustun H. Holmes, Las Vegas, for Appellant/Cross-Respondent Nuleaf CLV Dispensary, LLC.

          Adam Paul Laxalt, Attorney General, and Linda C. Anderson, Deputy Attorney General, Carson City, for Respondent/Cross-Respondent The State of Nevada Department of Health and Human Services, Division of Public and Behavioral Health.

          Greenberg Traurig, LLP, and Tami D. Cowden, Mark E. Ferrario, and Moorea L. Katz, Las Vegas, for Respondent/Cross-Respondent Acres Medical, LLC.

          Smith & Shapiro, LLC, and Sheldon A. Herbert and James E. Shapiro, Henderson, for Respondent/Cross-Appellant GB Sciences, LLC.

          OPINION

          PARRAGUIRRE, J.

         NRS 453A.322 governs the registration process for medical marijuana establishments in Nevada. Specifically, NRS 453A.322(3)(a)(5) provides that an applicant seeking to obtain a medical marijuana establishment registration certificate must obtain approval from the local government where the establishment is to be located certifying that the applicant is in compliance with applicable zoning restrictions and building requirements. In this appeal, we are asked to determine whether NRS 453A.322(3)(a)(5)'s requirement must be satisfied before an applicant can receive a registration certificate. We conclude that it does not and that the registration certificate is deemed provisional until the applicant is able to satisfy NRS 453A.322(3)(a)(5). We therefore affirm in part, reverse in part, and remand.

         I.

         Respondent, the Division of Public and Behavioral Health of Nevada's Department of Health and Human Services (Department), is tasked with carrying out the provisions of NRS 453A.320-.370 regarding the production and distribution of medical marijuana.[1] NRS 453A.370. In particular, NRS 453A.322 governs the registration process for those seeking to operate medical marijuana establishments and imposes a duty on the Department to register the establishment and issue medical marijuana establishment registration certificates. A "[m]edical marijuana establishment registration certificate" is "a registration certificate that is issued by the [Department] pursuant to NRS 453A.322 to authorize the operation of a medical marijuana establishment." NRS 453A.119 (internal quotation marks omitted).

         Each year, the Department accepts applications for registration certificates over the course often business days and must evaluate and rank the applicants pursuant to certain criteria set forth in NRS Chapter 453A and NAC Chapter 453A. See NRS 453A.322; NRS 453A.324; NRS 453A.328; NRS 453A.370. "[N]ot later than 90 days after receiving an application to operate a medical marijuana establishment, " the Department must issue registration certificates to qualifying applicants. NRS 453A.322.

         Pursuant to NRS 453A.322(3)(a)(5), an applicant must submit "proof of licensure with the applicable local governmental authority or a letter from the applicable local governmental authority certifying that the proposed medical marijuana establishment is in compliance with [zoning] restrictions and satisfies all applicable building requirements, " Accordingly, the City of Las Vegas (City) enacted Las Vegas Municipal Code (LVMC) 6.95.080, which requires the City to notify the Department when a "proposed location has been found in conformance with land use and zoning restrictions" pursuant to NRS 453A.322(3)(a)(5).

         In August 2014, the Department accepted applications, and its 90-day prescribed deadline to issue registration certificates fell on November 3, 2014. One business day before the conclusion of the Department's 90-day-review period, the City issued a letter to the Department under LVMC 6, 95, 080. The Department did not consider the City's letter and timely released its rankings the following business day. Pursuant to the Department's rankings of Las Vegas applicants, appellant Nuleaf CLV Dispensary, LLC (Nuleaf) ranked third, respondent/cross-appellant GB Sciences, LLC (GB) ranked thirteenth, and respondent/cross-respondent Acres Medical, LLC (Acres) ranked in the thirties. With regard to Clark County dispensaries, the Department can issue up to 40 certificates, but only 12 of those certificates can be allotted to dispensaries located in the City. NRS 453A. 116(4) (defining a medical marijuana establishment to include a medical marijuana dispensary); NRS 453A, 324(1)(a); NRS 453A.326U). Thus, only Nuleaf ranked high enough to receive a certificate.

         However, despite Nuleaf receiving a registration certificate, Nuleaf had been denied a request for a compliance permit by the City in its letter issued to the Department pursuant to LVMC 6.95.080. As such, GB brought the underlying suit against the Department and Nuleaf, alleging that the Department should have disqualified Nuleaf due to its failure to obtain approval from the City under NRS 453A.322(3)(a)(5). While GB's suit was pending, Acres filed a separate suit against the Department, seeking a writ of mandamus to compel the Department to recalculate its score because the Department had inadvertently omitted certain points while totaling Acres' score. The district court granted Acres' petition, and Acres moved up to thirteenth place while GB moved down to fourteenth place. The Department then filed a notice of entry of order regarding Acres' new ranking in the underlying suit.

         Thereafter, GB moved for summary judgment on its declaratory judgment claim and sought a mandatory injunction requiring the Department to revoke Nuleaf s certificate and reissue it to GB. Nuleaf filed a countermotion for summary judgment, arguing that the Department correctly interpreted NRS Chapter 453A's statutory scheme to permit an applicant to receive a provisional certificate pending its ability to receive approval from the applicable local government. While the summary judgment motions were pending, Acres moved to intervene in the underlying suit, arguing that the Department should reissue Nuleafs registration certificate to Acres instead of GB due to Acres' new score and adjusted ranking. The district court issued an order concluding that the application requirement enumerated under NRS 453A.322(3)(a)(5) was an absolute prerequisite for receiving a provisional registration certificate and that Nuleaf should have been disqualified for failing to do so. The district court further concluded that Acres, as opposed to GB, was entitled to receive the registration certificate due to its corrected score. Accordingly, the district court (1) granted in part GB's motion for summary judgment requesting a declaration that Nuleaf was improperly issued a ...


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