By Brian Bahouth

Reno – On Monday the Nevada Tax Commission adopted temporary regulations that would enable the state to license some of Nevada’s medical marijuana dispensaries to open to the general adult public on July 1 of this year, but a provision in the temporary rules stipulates that the issuance of a state license to sell adult use or “recreational” marijuana is contingent on written notification from municipalities that the dispensaries meet local licensing guidelines, and while the City of Reno has zoning and other rules for medical cannabis dispensaries on the books, they have no regulations for adult use marijuana businesses, so during their regular Wednesday meeting on May 10, the Reno City Council directed city staff to move forward with plans to develop regulatory accommodation for Reno’s four licensed medical marijuana dispensaries to participate in the early start program.

Nevada voters approved Ballot Question 2 last November by a 54 to 46 percent margin, and in accordance with the initiative, the Nevada Department of Taxation must develop and adopt a set of rules to regulate the cultivation, various production, distribution and retail sale of marijuana and marijuana products to people 21 year of age and older by January 1, 2018.  But as of now, adults in Nevada can legally possess cannabis but have no place to legally purchase it, except as a member of the state’s  medical marijuana program, so the Nevada Tax Commission adopted the early start temporary regulations in part to help prevent the formation of illegal cannabis markets and glean tax revenue.

The language of Ballot Question 2 mandates that for the first 18 months of 2018, only medical marijuana businesses already licensed in Nevada can apply for an adult use license, so the temporary licensing of existing medical businesses is potentially a useful test to better understand the operational characteristics of adult use retail outlets, which have never operated in Nevada.  Between now and May 31, a “medical marijuana establishment that has received a medical marijuana establishment registration certificate (in Nevada) and is operating and in good standing,” may apply to operate under the temporary regulations.  Department of Taxation spokesperson Stephanie Klapstein said the Department will be ready to issue licenses beginning July 1.

Several representatives from two of Reno’s four medical marijuana dispensaries, MYNT and Blum, offered public comment in enthusiastic support of the early start program, but Ed Alexander, an owner of Common Sense Botanicals, a Sparks-based cannabis company, encouraged lawmakers to be circumspect and not driven by an arbitrary deadline but good policy.

“I am by no means saying that you guys should delay the process but I would encourage you to take a long hard look at making sure the temporary regulatory language provides for a financial vehicle for the city of Reno, it provides for the opportunity to potentially review zoning requirements, and as many have spoken before, I don’t advocate that we push these facilities out into industrial areas, but while today marijuana has an interesting taste in the mouths of councilmembers potentially, three to five years from now when this is more socially acceptable, folks are not going to want to go to the far reaches of Reno, Sparks, Washoe County to acquire this product into the industrial or commercial areas,” Alexander said.

“With that being said, I don’t necessarily understand the rush to this July 1 date,” Mr. Alexander continued.  “I think that if other local jurisdictions were contacted, i.e. Sparks and Carson City, you may find an appetite for everyone to sit at the table, make sure that ordinance language that is discussed and theoretically approved is similar from jurisdiction to jurisdiction.

“As a representative of the industry saying I would much rather have a concrete foundation that launches on … July 20 or September 1 as opposed to something that’s slightly shaky that launches on July 1.”

No one on the Council indicated there has been or will be any communication with other local municipalities, but Councilmember Naomi Duerr (Ward 2) asked city staff to look into what financial benefit the city could see from opening under the temporary regulations.

“I just want the audience to know and anyone listening, this is not a windfall for local government.  I mean it may help with schools statewide or others as has been discussed, but so far, I’m not seeing it,” said Duerr.

The temporary regulations allow municipalities to charge an annual business licensing fee and collect sales tax on goods sold, but the city’s Legislative Relations Program Manager Scott Gilles said there are several relevant but unresolved bills active in the state Legislature set to adjourn on June 5, so the marijuana revenue forecast for cities is murky.

“Right now, there is no clear-cut, black and white, going to be additional revenue for local governments,” said Gilles.

Scott Gilles emphasized that any changes to code or other aspects of regulation of adult use marijuana businesses would be temporary, and on January 1, 2018 when the state rolls out permanent adult use marijuana regulations, the city will be able to reconsider the regulations for adult use marijuana businesses anew with the temporary period of issuing licenses as useful reference.

“After reviewing the adopted regs, as of Monday, the final terms and met with the City Attorney’s office, we identified an avenue to potentially have a code change in effect to be able to approve an applicant by July 1, 2017,” Scott Gilles said to the Council.

The Council unanimously passed a motion to instruct city staff to make necessary preparations to meet the July 1 deadline.  The Council is expected to hear a first reading of the adult use marijuana ordinance during its May 24 meeting.  Second reading and a vote is expected on June 7, and if councilmembers approve the new ordinance, the effective date will be July 1, 2017.