Jim Clark: The tangled web that medical pot weaves in Nevada
“Oh what a tangled web we weave when first we practice to deceive.” — Sir Walter Scott.
Sir Walter died in 1832, but had he lived contemporaneously with the 2015 Nevada Legislature, he would have written: “Oh what a tangled web we got when first we legalized medical pot.”
Medical marijuana has been legal in Nevada since 2000. Prosecutors routinely dismissed persons charged with possession if they could produce a doctor’s prescription. Only problems were: Where do you find a doctor who would prescribe marijuana and where could you buy the substance legally? Neither existed in the Silver State until 2013 when the legislature passed a medical marijuana law. It was not a model of clarity.
First, any licensee attempting to transfer 10% or more ownership would lose the license. Second there was the “Incline Village” problem in which the Nevada Division of Public Health issued three licenses for Incline Village to the consternation of very vocal locals who feared … literally … the village going up in smoke.
The problem was that a license could not be moved more than five miles from its approval location. Third was the “Clark County” problem in which the state and the Clark County Commission each approved a different eight applicants for licenses and neither agency would defer to the other.
To the rescue came the 2015 GOP dominated legislature which eased transferability restrictions, expanded permissible locations to anywhere in the county of jurisdiction (thus allowing County Commissioner Berkbigler to negotiate Incline locations down to one) and doubled the Clark County allocations so their state licensees and county licensees all got approvals. Then the real problems began to surface.
First of all, federal law still prohibits “cultivation, possession or distribution” of marijuana. To accommodate states that have passed medical and/or recreational marijuana laws the US Department of Justice issued “guidance” to the effect that the department would “defer prosecution” of federal marijuana offenses which the states deem lawful.
What happens when a new administration or attorney general comes in? We don’t know!
How about gun rights? Sorry, federal law prohibits ownership or possession of firearms as well as sale of guns or ammunition to marijuana users by licensed dealers. Can you cheat? Sure, but gun buyers have to swear in writing they do not use illegal drugs so do you want to risk a perjury indictment?
Marijuana licensees are going to make a bundle of money, right? Maybe, but what are they going to do with it? Pot is illegal federally, so no federally insured bank, savings association or credit union is going to open an account for even a legal dealer.
Why would any sensible financial institution risk its license based on Justice Department “guidance” that says prosecution will be “deferred”?
Some folks are proposing a state chartered credit union with private deposit insurance to get around the problem. Even if successful, the institution would not be admitted to the federal reserve system so any time they want to transfer cash they would need an armored car instead of using electronic funds transfers.
Here’s another issue. Nevada law (naturally) provides for taxation of marijuana sales … so can the state deposit such tax revenues in a federally insured bank? Still to be determined.
With all that legal drug cash, landlords are going to get rich leasing to marijuana licensees, right? Not so fast. Landlords cannot enter into leases providing for rent based on gross or net sales because landlords would have to be licensees in order to share drug revenues. Is the lease property subject to a mortgage? Better read the fine print in case there’s a “lawful use” covenant.
This column just scratches the surface. With a recreational marijuana initiative on the November ballot, things are bound to get even more interesting.
Jim Clark is president of Republican Advocates. He has served on the Washoe County and Nevada GOP Central Committees. He can be reached at email@example.com.
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Kelley R. Carroll, a certified specialist, handles estate planning and will contests in our office with the help of our firm’s litigation department. I do not handle any, be forewarned.