How Nevada's marijuana rules will — and won't — change after the legislative session
Nevada lawmakers headed into the 2017 session fresh after voters opted to legalize recreational marijuana, and they put forward 23 proposals geared toward shaping the brave new world.
Bills addressed fears that medical marijuana patients would take a back seat to the larger and more lucrative recreational industry, and concerns that kids would get their hands on cannabis-infused gummy bears and pot products that imitated Reese’s peanut butter cups. They were also full of ideas on how to tax the burgeoning industry and bring a fresh influx of tax money to schools or state programs.
In the end, only about one-third of the bills made it all the way through the legislative process, with many duplicative or ambitious measures getting the boot. Sandoval put his stamp of disapproval on three measures — one that would allow cannabis oil massages, another that would facilitate apprenticeship programs in the medical marijuana industry and another that would allow people to get minor marijuana convictions vacated.
“I would say we got 100 percent of what we needed and 90 percent of what we wanted,” said Will Adler, a lobbyist for the Sierra Cannabis Coalition.
While Nevadans 21 and older are clear to use marijuana recreationally, there are still hurdles to cross before storefront sales begin. Liquor distributors who argue they were squeezed out of the marijuana industry by the state are in the middle of a fight over administrative regulations and secured a temporary restraining order against the Nevada Department of Taxation.
That could potentially delay a July 1 “early start” launch that’s important for the bottom lines of marijuana businesses and the state, and is expected to curb illegal activity taking place because Nevada currently allows people to use pot but not buy it.
“We’re very supportive of sales by July 1 so businesses can compete with the black market,” said Riana Durrett, chief of the Nevada Dispensary Association. “The black market is increasing right now.”
In spite of the hurdles, those who worked on marijuana legislation this session say the state has learned from the mistakes of other jurisdictions that jumped into marijuana legalization earlier, and is poised for a smooth expansion of its marijuana industry.
“We’re definitely learning from others’ challenges,” said Scot Rutledge of the Nevada Cannabis Coalition. “Our state’s history with the regulation of gaming is also really helpful because we have a good idea of how to deal with privileged licensure. Nevada’s just really well positioned because of our history and because of the timing of when we adopted this.”
Here’s a look at how things in the marijuana world will be different now that lawmakers have wrapped up the session.
WHAT WILL HAPPEN:
Medical marijuana will face a 15 percent wholesale tax. This will bring medical marijuana’s wholesale tax in line with the wholesale tax on recreational marijuana, and is described by many as the most important change of the session for marijuana. The existing system imposes a 2 percent tax at the cultivation, production and retail phases, which would mean businesses that want to serve both clienteles would have to segregate their plants into medical and recreational categories for purposes of taxation.
That complication could mean businesses wouldn’t want to bother with the medical side and would only cater to the larger, more lucrative recreational industry, thereby killing medical marijuana, Durrett said.
On top of that, businesses can have difficulty predicting how much inventory they’ll need for recreational and medical customers. If they overestimate their need for medical product, they can’t sell the excess to recreational customers because it’s already been taxed at the lower rate.
“This allows the industry some flexibility,” Rutledge said.
The provision was part of Democratic Assemblyman Nelson Araujo’s AB422, which was signed on Monday.
Proceeds from the wholesale tax will go to education and account for an estimated $30 million in Nevada’s schools budget.
Recreational marijuana will face a 10 percent excise tax. This tax, authorized in SB487, is on top of the 15 percent wholesale tax imposed on recreational marijuana through Question 2. The first $5 million in each of the next two years will go to local governments to mitigate any impacts of the new industry starting up, while the rest is dedicated to the state’s “rainy day” reserve fund.
While Gov. Brian Sandoval initially proposed this tax in his State of the State address in January and recommended sending the $64 million in proceeds to education, it became a political football and nearly failed when Republicans withheld their votes, hoping to use it as leverage to extract a favorable deal to revive Education Savings Accounts. After the parties struck an agreement late in the session to expand the Opportunity Scholarships program by $20 million, Republicans relented and the tax passed, with money earmarked for reserves to avoid unraveling a complicated budget implementation process.
Adler said it’s actually a relief that the proceeds won’t flow to education because it’s unclear how accurate the revenue estimates will be. Lower-than-expected revenue won’t throw schools in a bind, but it’s always a boon to have more than expected in savings.
“You never want to underfund education,” Adler said. “We’re an unknown product.”
Removing barriers for a medical marijuana card. AB422 seeks to relax a system that originally aimed to keep cartels out of the medical marijuana business but now seems too strict considering any adult can buy pot under Question 2. It specifies that a doctor’s prescription can be valid for either one or two years — up from one year under the existing system. The bill also reduces the maximum fee the state can charge for a marijuana card from $75 per year to $50 per year. Rather than attaching a copy of a doctor’s recommendation to a seven-page, notarized application for a medical marijuana card, the doctor simply must maintain the documentation and furnish it on request, and the patient must affirm that they have such documentation.
Patients can also obtain medical marijuana if they show they’ve applied for a card, rather than having to wait until they actually receive it. Durrett said the new process will ensure medical marijuana is as easy to get as a regular prescription.
The updates will also ensure the medical program isn’t obsolete in a world of readily available recreational marijuana. Patients who use marijuana frequently could see a cost savings that makes a $50 card worth it because medical marijuana won’t have a 10 percent excise tax and will be cheaper than its recreational cousin.
Making marijuana unappealing to kids. SB344 requires each edible marijuana product to be labeled with the amount of Tetrahydrocannabinol (THC), the active ingredient, that it contains, and limits the amount of THC contained in any single package. It prohibits edible marijuana products that look like a lollipop or may appeal to children, such as gummy bears or edible chocolates designed to mimic popular candies. Producers of marijuana-infused cookies and brownies must seal those products in a bag or container that’s opaque. Marijuana businesses are also barred from using advertisements that appeal to children. Medical marijuana dispensaries must sell child-resistant, locking storage containers. They must also provide a written notification that, among other things, adults should keep the products away from children.
Durrett pointed out that people don’t typically lock away alcohol from children and could use some instruction on how edibles could harm kids.
Sandoval signed the bill, sponsored by nonpartisan Sen. Patricia Farley, on Monday.
“During his State of the State address, Governor Sandoval called for a market that was restricted, responsible, and respected,” the governor’s office said in a statement. “This will make Nevada’s recreational marijuana packaging and labeling laws some of the strictest, if not the strictest, legislation in the nation.”
Transfer of medical marijuana oversight responsibilities. Under both AB422 and AB487, regulation of medical marijuana dispensaries moves from Division of Public and Behavioral Health to the Department of Taxation, although the division will still run the medical marijuana card program. The Department of Taxation is already responsible for recreational marijuana regulation, so dispensaries that sell both types of pot will answer to a single agency. Both bills were signed Monday.
Marijuana DUIs won’t be measurable by a urine test. AB135 removes from Nevada law certain urine test benchmarks that indicate some is illegally driving over the influence of the marijuana. Instead, it leaves in the law a ratio of nanograms of active ingredient THC per milliliter of blood as a way to measure a marijuana DUI. Those rules would also apply to driving a commercial vehicle or a vessel.
Assembly Judiciary Chairman Steve Yeager said blood tests offer a more accurate picture of whether someone is actively impaired. Urine tests can pick up on marijuana consumption that may have happened days ago.
More hemp cultivation. While existing law allows colleges and the Nevada Department of Agriculture to create a pilot program for cultivating industrial hemp, SB396 would also allow other entities into cultivation as long as they register with the state. Industrial hemp is a form of the cannabis plant that has a low concentration of the psychoactive chemical THC and a higher concentration of cannabidiol. It can be used to make clothing, plastics and animal feed, or oils and supplements for human use. Democratic Sen. Tick Segerblom said some grows in Lincoln County and Pahrump are already active, but have been unable to sell their product commercially. Legislation passed this session will allow them them to do so.
Agreements between tribes and the state on marijuana. SB375 was signed on June 2. The bill allows the governor or a designee to enter into agreements with tribal governments within Nevada to facilitate cooperation in implementing laws governing medical marijuana. Adler, who also lobbied on behalf of the Pyramid Lake Paiute Tribe, said there was a possibility that tribes would come up with less restrictive marijuana rules than the state overall, and the bill clears the way for more uniformity. It also puts tribes “in the governor’s wheelhouse,” which provides more protection in the event of a federal crackdown, he said.
Parole officers can access data about medical marijuana users. While existing law requires the Division of Public and Behavioral Health to maintain confidentiality of certain medical marijuana information, SB277 creates an exemption and requires the division to disclose certain information about medical marijuana card applicants to the Division of Parole and Probation if the applicant is on parole or probation.
WHAT WON'T HAPPEN:
Marijuana lounges and public consumption. Question 2 legalized recreational marijuana consumption but generally bars its use in public places. SB236 would have authorized county commissioners to allow businesses where marijuana can be used, or to issue permits to organizers so marijuana is allowed at special events. It would have limited those permits to businesses and events that are restricted to people 21 and older.
It passed the Senate but died without getting a floor vote in the Assembly.
Rutledge said there may be a way for local governments to proceed with public consumption ordinances absent a state law.
He argued it’s better for public health that people use pot in a place where an employee can help them if they’ve had too much. It would also prevent marijuana consumption in casinos, which don’t want to get in trouble with the federal government by allowing the banned substance on their premises.
“It’s supervised consumption, in comparison to a tourist going to a dispensary, they purchase marijuana, now what do they do with it? Where do they go to use it?” Rutledge said about marijuana lounges. “The question we have to ask ourselves is would you prefer that some of these first-time consumers have a supervised experience, a place to go where someone will continue to educate and monitor them?”
Adler said some decision makers considered the bill too new and scary to pass at this time, especially because of the consumption it would allow at certain large events.
“One bite of the apple at the time,” he said.
Making it easier to vacate minor marijuana convictions. Existing law allows a court to vacate a conviction in certain circumstances. AB259 allows a court to vacate a conviction for a misdemeanor involving marijuana that is lawful as of Jan. 1, 2017, as long as the court notifies the attorney who prosecuted the original case and that attorney can present evidence to the court deciding whether to vacate the conviction. The bill also requires the court to vacate the conviction if it involved possessing 1 ounce or less of marijuana. Additionally, it allows the court to depart from mandatory minimum sentences for possession of a controlled substance in certain cases.
In vetoing the bill on Monday, Sandoval noted “there is much to commend in AB259” but indicated it went a bridge too far, especially since other bills this session made it easier to seal criminal records. He also said the bill wasn’t clear on what other marijuana-related offenses that are now legal it would allow to be vacated and sealed.
“Presumably this provision would permit vacated judgments and record sealing for all marijuana conduct that is now lawful, potentially including marijuana trafficking and possession of large quantities of marijuana, since such activity is now allowed in Nevada, although limited and subject to significant regulation,” he said.
Marijuana apprenticeships. Sandoval vetoed SB416, questioning whether such apprenticeships met the federal regulation of being in a “high-growth, high-demand” industry. He also pointed out that because the U.S. Department of Labor has the responsibility to certify apprenticeship programs, there could be issues over the federal prohibition on marijuana.
Marijuana massages. SB374 sought to allow massage therapists and health care providers to administer a hemp-based product, such as a topical lotion or oil, to a client or patient. It also would have prohibited professional licensing boards from disciplining a person licensed by the board for lawfully using medical or recreational marijuana and barred employers from punishing employees or prospective employees who express opinions related to marijuana. In his veto message, Sandoval said that the issue of marijuana massages needed more study and raised concerns that the bill would limit the discretion of licensing boards over their members who use recreational marijuana.
Expansion of marijuana research. Existing law requires the University of Nevada School of Medicine to seek federal approval to research medical marijuana and then carry out such research when the approval arrives. SB341 would have expanded the law to all public Nevada colleges and universities. Universities, including UNR, have been apprehensive about participate in marijuana research because they also receive federal grants that could be jeopardized by their participation, Segerblom said. The bill never came up for a floor vote in either house.
Concealed weapons permits for medical marijuana users. Existing law prevents people from possessing a gun if they’re an unlawful user of a controlled substance. SB351 affirms that a person who has a medical marijuana card shouldn’t be declared an unlawful user of a controlled substance and denied a concealed weapons permit just because they use medical marijuana. The bill, sponsored by Democratic Sen. Kelvin Atkinson, died without getting a hearing.
Raising limit on personal marijuana possession: SB329 would have increased the amount of marijuana that a medical cardholder can possess from 2.5 ounces to 2.5 pounds of marijuana leaf and 90 grams of “crude concentrated cannabis or 30 grams of purified concentrated cannabis.” That bill, backed by Democratic Sen. Tick Segerblom, died without ever getting a floor vote in either house.
More home grows. While lawmakers adjusted the law so people who have been growing marijuana at home under the 2013 law can continue doing so, they didn’t raise the plant limit above 12 per location. Medical marijuana patients had pushed hard to get the limitations lifted, saying they want to grow their own marijuana without the pesticides or processing of what they might find in a dispensary.
“I would say they’re extremely unhappy,” Segerblom said about the unsuccessful effort to expand home growing. “I did the best I could do.”
Medical marijuana for opioid addiction. Existing law requires a potential medical marijuana patient to get a doctor’s note saying they have a chronic or debilitating condition that might be alleviated by medical marijuana. SB228 would have added opioid addiction to the list of chronic or debilitating medical conditions, but it died at a mid-April deadline. The omnibus medical marijuana bill AB422, however, aims to make marijuana as easy to get as an opiate. It allows more providers beyond just doctors — including physician assistants — to recommend medical marijuana.
Surveying students on alcohol and drug use. SB166 would have required the Nevada Department of Education to survey students in middle, junior and high schools about use and abuse of alcohol and drugs. It requires the department to choose schools where the survey will be administered and submit an annual report that summarizes the data collected in the previous year. The bill carrying the provision, backed by nonpartisan Sen. Patricia Farley, died in the Senate Finance Committee without getting a floor vote in either house.
Marijuana tax revenue for mental health, substance abuse treatment or child welfare agencies. Sandoval wanted recreational marijuana revenue to go to education, and lawmakers had several other ideas for how to spend new money. SB379, which died in the Assembly, would require the excess money to be distributed as a block grant to agencies that provide child welfare services, so they can provide substance abuse and behavioral health programs. In the end, they directed revenue to the state’s “rainy day” reserve fund because the tax bill, SB487, was passed after the education budget was approved.
Feature photo: Employees for Reef Dispensaries sets up irrigation drip systems for cannabis on Wednesday, Feb. 15, 2017. Photo by Jeff Scheid.