Funding approved to start establishing Nevada’s recreational pot industry

CARSON CITY — A state panel on Tuesday approved a nearly $900,000 request from the Department of Taxation to prepare Nevada for the establishment of recreational marijuana sales by next year.

The request for $887,491 from the Legislature’s Interim Finance Contingency Account was approved by the state Board of Examiners on a 2-1 vote. It now goes to the Legislature’s Interim Finance Committee later this month.

Gov. Brian Sandoval and Attorney General Adam Laxalt voted in favor. Secretary of State Barbara Cegavske voted no, arguing the request should go to the full Legislature for consideration.

The agency expects to repay the startup costs for the implementation of the recreational marijuana law passed by voters in November once tax revenues begin to flow to the state from pot sales.

Cegavske said the Legislature could act quickly on the request when it convenes Feb. 6 rather than through this more expedited process.

But Sandoval said the tax agency has an obligation to move forward with the regulations and there is no certainty on when the Legislature might act on such a request. While personally opposed to the marijuana measure, Sandoval said it passed with strong support from voters.

“Now we have the reality and responsibility of setting up the regulatory regime and setting up the law,” he said.

The money will fund four new positions through June 30, along with equipment and information technology needs to set up the new 15 percent excise tax levy on recreational marijuana sales. The agency will also need funding for the next two-year budget for the program.

Voters approved Question 2 legalizing the recreational use of marijuana by adults aged 21 or older in the Nov. 8 general election. The law took effect Jan. 1 but it could take up to a year before the drug is available for purchase through licensed dispensaries for recreational use. Medical marijuana dispensaries operate in many areas of the state.

The new law assigns responsibility to the Tax Department for establishing licensing qualifications and procedures, as well the regulation of marijuana establishments like cultivation facilities, distributors, and retailers.

The department is also working with the governor’s office on an executive order to develop a task force to provide guidance on issues related to the passage of Question 2.

The department will administer the 15 percent excise tax on wholesale sales imposed by the measure. State and local sales tax, administered by the department, will also apply to recreational marijuana.

The department is working to develop temporary regulations with a public workshop expected to be held early this year. The temporary regulations will allow the department to begin issuing licenses while they complete the lengthier process of developing permanent regulations, which ultimately need to be reviewed by the Legislative Counsel Bureau.

Contact Sean Whaley at swhaley@reviewjournal.com. Follow @seanw801 on Twitter.