Cannabis companies trying to limit penalties, fees charged by state regulators

Naoka Foreman
Naoka Foreman

Cannabis businesses are backing a bill that would cap non-compliance fees at $20,000 per violation and end “time and effort billing” — a practice they say has hit them with hefty bills for routine regulatory tasks. 

Layke Martin, executive director of the Nevada Cannabis Association, presented SB195 to the Senate Commerce and Labor Committee on Wednesday, a bill that also would place a 30-day limit on the number of days that the Cannabis Compliance Board (CCB) has to approve a plan of correction or else it would be automatically deemed approved. 

“When we have an overregulated industry that doesn't allow people to efficiently and effectively and safely grow,” said Sen. Rochelle Nguyen (D-Las Vegas), who sponsored the bill, “I think you will see an even bigger, growing market of black market and gray market sales.”

The proposal would end time and effort billing and prevent the CCB from charging hourly rates of up to $111 for state worker tasks such as reviewing security footage, travel time, communicating with licensees, inspections and audits.

Representatives from businesses such as Green Life Productions, Planet 13 Holdings, RNBW and Jardin Premium Cannabis Dispensary spoke in favor of the bill, stating that the changes would encourage compliance and sustainability in an industry that provides job opportunities with livable wages.

“We have paid the CCB approximately $47,000 in time and effort fees since the 2021 inspection,” said Kouanin Cantwell, co-owner of Green Life Productions. “And what have all these time and effort bills from the CCB accomplished? We have arrived right back to where we started, which is the approved continuation of our family farm methodology that we have used for eight years.”

But CCB Director Tyler Klimas said the agency is doing exactly what lawmakers wanted it to do when the Legislature created the board in 2019. 

“The past three years, the CCB has fulfilled the legislators' request for a strict regulatory regime,” Klimas said, explaining that their operations mirror the Gaming Control Board, which prides itself on maintaining a regulatory “gold standard.” 

Klimas testified as neutral and said there is a step in the investigative process —  a “letter of concern” — before filing a violation. But lawmakers were most concerned that the cost of violations are not listed in statute alongside the rate of fees, providing little transparency. 

The proposal would deny the CCB’s authority to charge fees for violations or complaints that are not explicitly listed in law. This comes after a number of licensed cannabis businesses in Nevada have been fined anywhere from $25,000 to upward of $100,000 in some cases for both self-reported violations and unauthorized sales.

Martin said “mitigating factors” such as self-reporting, good faith efforts to prevent further noncompliance, cooperation with investigators and completing a plan of correction should all be taken into account during investigations and lead to reduced penalties.

The policy also asks the board to use “progressive discipline,” which includes warnings, education and the opportunity for a settlement agreement before the board issues a complaint.

This article was updated at 11:02 a.m. on March 14, 2023, to clarify that the CCB already uses "letters of concern" during the investigation process.


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