Published Friday, March 24, 2017 | 2:37 p.m.
Updated Friday, March 24, 2017 | 4:59 p.m.
CARSON CITY — Waiting a year after voters OK’d recreational marijuana to start selling it would continue to prop up the black market and cost the state millions of dollars in tax revenue, according to backers of a state Senate bill that would allow legal sales as early as July.
Senate Bill 302 would allow state-certified medical marijuana dispensaries to begin sales July 1 instead of Jan. 1 while the state transfers regulation of the marijuana industry from the Department of Health and Human Services to the Department of Taxation.
“We’re not trying to compete with the Department of Taxation,” said Sen. Tick Segerblom, D-Las Vegas, a cosponsor of the measure. “This bill will be there in case there are any hiccups.”
In Nevada, possessing an ounce or less of marijuana or an eighth of an ounce or less of marijuana concentrates, like shatter, wax or carbon dioxide oil, for recreational use is no longer a crime. But the ballot question that legalized recreational marijuana did not authorize dispensaries to sell it when the law went to effect in January.
Instead, the ballot question, which passed 54 percent to 45 percent, left it up to this year’s State Legislature to decide when sales would begin.
Another bill co-sponsor, freshman Assemblyman Steve Yeager, D-Las Vegas, said a fact-finding trip he made to Portland, Oregon, last November with Segerblom and other Nevada lawmakers showed that implementing an early start program not only cut Oregon’s black market for the plant, but brought significant tax revenue to state coffers through local marijuana businesses.
Oregon brought in $54 million in sales tax from Jan. 1, 2016, to Oct. 1 of that year, selling only for recreational use at a 25 percent sales tax rate, according to the Oregon Liquor and Licensing Commission. Oregon officials estimate recreational sales will bring $40 million annually, because the state lowered its sales tax rate starting rate this year..
The Nevada bill calls for a 5 percent excise tax on medicinal marijuana to replace taxes of 2 percent from each from the state, county and local municipalities. A 15 percent excise tax on recreational sales would be charged to buyers.
“The only difference right now would be you’d pay a different tax rate,” Segerblom explained.
Of the 15 percent tax on recreational marijuana, 10 percent would go to the state to satisfy a state tax increase outlined by Nev. Gov Brian Sandoval in his Jan. 17 State of the State address. The final 5 percent would be divided up between local municipalities, Segerbloom said.
Segerbloom argued opening the doors to recreational marijuana sales by July would also help the industry meet the $100 million in tax revenue included in Sandoval’s recommended state budget from 2017 to 2019.
“We need to get this out early because we’re trying to help the governor, we’re trying to help the teachers and we’re trying to help the state with education,” Segerblom said.
Deonne Contine, executive director for the Nevada Department of Taxation, testified that the recreational program could be “done quickly,” but “depends on how much you want to spend.”
“Our staff is still working on a fiscal note and we’re waiting on feedback,” Contine testified.
While most people who testified at the SB302 hearing on Friday did so in favor of the bill, some also testified in opposition.
Recreational marijuana opponent Jim Hartman argued that not enough had been done to address the danger of edibles, which in Colorado accounted for nearly half of all items purchased from dispensaries selling recreational marijuana. Hartman, the president of Nevadans for Responsible Drug Policy, also criticized the bill for overriding Ballot Question 2’s pledge to leave a gap of one year between legalizing recreational possession and use before legalizing its sale. He called the idea of an early start program in Nevada “irresponsible.”
“It was advertised to people that it would be done prudently, carefully, intentionally and responsibly and that we would have this year’s gap in time,” Hartman said.
Segerblom rebuffed a second argument by Hartman that the early start bill was not wanted in 75 percent of counties across Nevada. Segerblom said only the medical marijuana vendors in Carson City and four of Nevada’s 16 counties medical marijuana sales would be qualified under the recreational program.
The Democratic senator ended the hearing with an assurance to Nevada’s voters and those who have invested in the industry, saying the Department of Taxation and legislators would work together to find a solution.
“We’re going to get this done,” Segerblom said.