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August 24, 2019

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j. patrick coolican:

Sandoval shouldn’t let last-minute snafu snuff medical marijuana bill

Assembly Marijuana Field Trip

Andrew Doughman

Nevada Assemblywoman Michele Fiore inspects the product and learns about the different uses for and varieties of marijuana during a trip to a dispensary in Arizona on Friday, March 22, 2013.

More than a decade ago, Nevada voters approved medical marijuana in a voter initiative that also instructed the Legislature to make provisions for people to obtain it.

Your Nevada Legislature at work: Twelve years later, lawmakers have finally acted to allow sick people to get their medicine by establishing licensed medical marijuana dispensaries.

The passage of Senate Bill 374 seemed like a rare stroke of legislative competence, though now its future is in doubt.

Democratic Sen. Tick Segerblom, chairman of the Senate Judiciary Committee, enlisted Republican colleague Sen. Mark Hutchison as an ally, giving the legislation some bipartisan bona fides.

The committee, seeking best practices to avoid the medical marijuana fiasco that has plagued California, went on a field trip to Arizona to see how they successfully manage the program there. California failed to provide a clear regulatory structure for the dispensaries, leaving it up to municipalities that often were not prepared for the challenge. As a result, at one time Los Angeles had more dispensaries than Starbucks cafes.

Arizona, by contrast, has instituted tighter controls, which is why Segerblom used it as a model for Nevada.

The bill passed with significant margins, including a majority of Senate Republicans. It would create a limited number of medical marijuana dispensaries, with strict regulation and high barriers to entry.

Now, we await either the signature or veto of Gov. Brian Sandoval. He has a Friday deadline.

The governor should sign it.

Something odd is afoot, however.

Sandoval has said the Nevada Department of Taxation has told him that administering the tax on the medical marijuana dispensaries, which will face the sales tax plus a 2 percent excise levy, will cost $2 million.

If this is really the case, the issue should have been raised during the legislative session, not after the session ended. In the parlance of the legislative process, whenever a proposed law will cost money, it is affixed with a “fiscal note.” This helps legislators from wandering into unintended consequences. (Which they do anyway, but that’s another story.)

The bill had fiscal notes attached by multiple state agencies, such as the Health Division and the Investigations Division, but nothing from the Taxation Department.

“The agency is supposed to report to the Legislature,” Segerblom said. “We had no chance to question them.”

The problem could be that the tax provisions were inserted in the bill in the closing hours of the legislative session — last-minute cramming that is all too typical. The Taxation Department can hardly be blamed for that.

Still, Segerblom doesn’t understand where the $2 million price tag comes from.

The bill only allows 50 dispensaries. It costs $5,000 to apply. If approved, the license costs $30,000. If there are 50 applications and 50 licenses, that’s $1.75 million right there, before the state has even collected a dime of sales and excise tax on the marijuana. Presumably, the department is adept at collecting the sales tax and can figure out how to tack on the 2 percent excise tax.

(I do have a question about the sales and excise tax: We don’t tax Lipitor or Vicodin and other drugs, so why are we taxing medical marijuana? This makes it seem like it’s not real medication.)

Unfortunately, the bill sets aside the resulting tax revenue for the state Health Division to implement the law, with the remaining revenue going to education, but there’s no provision for money to go to the Taxation Department to administer the levy.

Carole Vilardo of the Nevada Taxpayers Association and an expert on Nevada tax policy, said even minor changes in tax law can cost the department significant sums, due in part to antiquated technology.

Segerblom is baffled: “I don’t want to criticize the Department of Taxation. There’s some misunderstanding going on.”

I called Chris Nielsen, executive director of the Taxation Department and a Sandoval appointee, but never heard back from him.

Segerblom said he’s been told the Taxation Department will make its presentation on the fiscal impact Thursday, at which point legislators and staff will be able to respond before Sandoval’s Friday deadline.

I certainly hope the governor won’t use this last-minute snafu to veto the bill.

The people have spoken, and patients need a way to get their medicine.

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