Cannabis board cracking down on marijuana companies that are late on taxes, license fees
Nevada’s Cannabis Compliance Board is implementing stricter procedures after holders of some 70 marijuana business licenses had past due taxes or didn’t renew their licenses on time.
Board Executive Director Tyler Klimas said that out of more than 700 marijuana licenses in the state, about 560 were due for renewal by June 30. But 11 licensees, holding a collective 22 licenses, hadn’t submitted renewal paperwork or fees well into July.
“We did not renew these licenses, and instead sent correspondence indicating that METRC access would be shut off immediately,” Klimas said at a board meeting on Tuesday, referring to the state’s seed-to-sale tracking database needed to conduct legal marijuana transactions. “This correspondence resulted in one licensee surrendering its distribution license, and the others fulfilling their financial obligations for the renewal and application submissions.”
He also said 18 licensees, who hold a collective 48 licenses, had outstanding tax debts ranging from $500 to $4 million that dated back as far as March 2019. The board sent messages indicating the companies would be cut off from the tracking database if they didn’t pay up, and all delinquent licensees have since paid their debts or are working out payment plans with the Nevada Department of Taxation.
Klimas said that moving forward, the board plans to notify businesses immediately if they miss a deadline, terminating access to the database until the issue is resolved.
“With these guardrails in place, CCB staff now has the tools to ensure licensees understand that full compliance, including any tax obligations, must be fully resolved before license renewal will be considered,” Klimas said.
Nevada cannabis businesses are subject to several taxes, including the commerce tax on gross revenue over $4 million, the modified business (payroll) tax, sales and use taxes, a 15 percent wholesale tax and a 10 percent retail tax.
The legal marijuana industry yields the state about $100 million in revenue each year just from wholesale and retail marijuana tax. Application, license and other fees yield more than $5 million for the state each year.
Late tax payments are subject to penalties and interest, and intentionally failing to file for, pay or collect tax is considered a Category 1 violation — one so severe that a person would be ineligible to receive a license.
The crackdown on tardy payments is the latest change since marijuana regulation transferred from the taxation department to the Cannabis Compliance Board, which is solely focused on marijuana rather than collecting taxes for a wide range of businesses. The board is modeled after Nevada’s gaming regulatory regime and has imposed tougher sanctions on businesses that are out of compliance with detailed regulations, including handing down a record, $1.25 million penalty earlier this summer.