Cannabis companies seek advance notice before state charges them for costly investigations

Naoka Foreman
Naoka Foreman

The Nevada Cannabis Association is pushing forward with a policy that would trim down the Cannabis Compliance Board’s (CCB) fee structure, including eliminating “time and effort billing” charged to businesses for state workers’ time.

With an amendment, SB195 also seeks to require the CCB to provide estimates for the costs of investigations prior to the commencement of any investigation, remove the CCB’s authority to deny a license, transfer of interest, application, renewal or any regulatory process available to licensees for failure to pay fees, and introduce an appellate process for licensees. 

It also caps violations at $20,000 each and places a 30-day limit on the number of days state regulators have to approve a business’ plan of correction or else it would automatically be deemed approved. 

Current procedures include billing businesses rates of $111 an hour for “time and effort fees” totaling to costs as high as $47,000 for investigations that lead back to square one, according to the cultivation company Green Life Productions. Failure to pay fees results in a non-renewal of business licenses. 

If the policy passes, cannabis operators could appeal the cost of an investigation if the fees exceed the estimate originally presented by the CCB by more than 25 percent. 

“You have no choice in the [current] system because there is no appellate process,” said Sen. Rochelle Nguyen (D-Las Vegas), the bill’s sponsor, during the bill’s hearing on Thursday. “You have to pay, otherwise you are risking your entire business license.”

Sen. Heidi Seevers Gansert (R-Reno) raised concerns regarding licensees forfeiting their businesses to avoid paying fees that could leave a hole in the CCB’s budget after conducting investigations. But Layke Martin, who is the executive director of the Nevada Cannabis Association and helped present the bill, said the agency could bill that licensee for a withdrawal fee under the proposed amendment.

Martin and Nguyen presented the bill at a Senate Finance Committee hearing on Thursday morning after it was passed by the Senate Commerce and Labor Committee in April, but it has yet to receive a vote of the full Senate. The policy, which is now exempt from bill deadlines, will have to be approved by the budget committee as lawmakers examine the financial impact it might have on the state. 

The CCB estimates the policy would cost the state agency nearly $4 million dollars for the biennium, and noted in a fiscal note that proposed changes could lower their ability to contribute to the state’s education budget. 

Nyguen said the fiscal note is a nonfactor because it has no effect on how the CCB is funded.

“The CCB is funded by the wholesale excise tax, which is more than sufficient to cover the CCB’s operating budget,” she said. “For example, the wholesale excise tax revenue was $63 million in 2022 and the CCB’s operating budget was $10 million.”


Featured Videos