Nevada To Fast Track Sales of Recreational Marijuana

February 15, 2017Alerts Cannabis Law Alert

Sales of marijuana for recreational use could begin much sooner than expected in Nevada now that the state has launched a task force to fast track a batch of temporary licenses for businesses already serving the medical marijuana market.

In November 2016, voters approved the Nevada Marijuana Legalization Initiative, also known as Question 2, to permit the sale, possession, regulation and taxation of recreational marijuana. The vote came 16 years after Nevada’s electorate said “Yes” to Question 9, which legalized medical marijuana.

The long history of medical marijuana in Nevada has simplified the process of legalizing recreational use because there is an existing regulatory structure for marijuana businesses – and for the taxing of those businesses.

Recreational use became legal on Jan. 1, 2017. But while the law now permits the personal possession and use of recreational marijuana – as well as personal cultivation subject to certain restrictions – the commercial cultivation and sale of marijuana for purposes other than medical cannot occur until regulations are implemented and licenses issued.

With the passage of Question 2, the Nevada Department of Taxation is now required to promulgate “all regulations necessary” within 12 months of the act’s effective date. Accordingly, the Department of Taxation has until Dec. 31, 2017, to adopt the necessary regulations.

The Department of Taxation is also mandated to “begin receiving applications for marijuana establishments” no later than 12 months after the law’s effective date. However, for the first 18 months, it is permitted to accept applications only from persons who already hold a medical marijuana license.

According to conventional wisdom in the cannabis industry, the cultivation and sale of recreational marijuana was not expected to begin until early 2018.

However, Nevada has formed a task force to fast track temporary regulations to permit existing medical marijuana license holders to sell recreational marijuana as early as July 1, 2017. Licenses issued pursuant to the temporary regulations will be effective until the earlier of Dec. 31, 2017 or 30 days after enactment of permanent regulations.

Attorneys in the Cannabis Law practice group at Fox Rothschild are experienced in assisting marijuana businesses in complying with state regulations, securing licenses, forming corporations, leasing real estate and tackling the complexities of banking that are unique to cannabis-related businesses.

For questions or more information about this alert, please contact Mark J. Connot at 702.699.5924 or [email protected] or any member of the firm’s Cannabis Law Practice.

*Please be mindful that possessing, using, distributing and/or selling marijuana is a federal crime, and no legal advice we give is intended to provide any guidance or assistance in violating federal law nor will it provide any guidance or assistance in complying with federal law. Please also note that we are not advising you regarding the federal, state or local tax consequences of engaging in any business in this industry.