AB203 - Revises provisions relating to cannabis. (BDR 56-134)

EXEMPT (Reprinted with amendments adopted on April 21, 2025) FIRST REPRINT A.B. 203 - *AB203_R1* ASSEMBLY BILL NO. 203–ASSEMBLYMEMBER CARTER PREFILED FEBRUARY 3, 2025 ____________ Referred to Committee on Judiciary SUMMARY—Revises provisions relating to cannabis. (BDR 56-134) FISCAL NOTE: Effect on Local Government: No. Effect on the State: Yes. ~ EXPLANATION – Matter in bolded italics is new; matter between brackets [omitted material] is material to be omitted. AN ACT relating to cannabis; revising certain requirements relating to the packaging, labeling and delivery of cannabis and cannabis products; authorizing certain persons to enter into a joint-venture agreement with certain cannabis establishments; revising provisions relating to cannabis consumption lounges; prohibiting the Cannabis Compliance Board from imposing certain requirements on cannabis establishments; revising the definition of “usable cannabis”; revising provisions relating to the seizure and destruction of cannabis; revising provisions relating to certain taxes imposed on sales of cannabis and cannabis products; authorizing the Department of Taxation to impose an administrative fine upon a person who engages in the unlicensed sale of cannabis or cannabis products; revising the powers of the Investigation Division of the Department of Public Safety; requiring the Board and the Nevada Gaming Control Board to prepare a report concerning certain issues relating to cannabis and gaming; and providing other matters properly relating thereto. Legislative Counsel’s Digest: Existing law provides for the licensure and regulation of persons and 1 establishments involved in the cannabis industry in this State by the Cannabis 2 Compliance Board. (Title 56 of NRS) 3 Existing law authorizes the Board to adopt regulations setting forth 4 requirements relating to the packaging and labeling of cannabis and cannabis 5 products. (NRS 678A.450) Section 2 of this bill prohibits those requirements from 6 requiring: (1) a package of cannabis or cannabis products which is sold at 7 – 2 – - *AB203_R1* wholesale to contain any label or tag other than a label or tag necessary for the 8 functionality of any computer software used for the seed-to-sale tracking of 9 cannabis adopted by the Board; and (2) a cannabis establishment to include any 10 information on the label for any cannabis or a cannabis product that is already 11 included on the packaging for the cannabis or cannabis product. Section 9 of this 12 bill revises requirements concerning the labeling of cannabis products for the 13 purpose of allowing information required to be included on a label to instead be 14 included on packaging. Sections 1.3 and 1.5 of this bill define the terms “label” 15 and “packaging” for the purposes of the provisions of existing law governing the 16 medical and adult use of cannabis. Section 1.7 of this bill makes a conforming 17 change to apply the definitions set forth in sections 1.3 and 1.5 to the provisions of 18 existing law governing the medical and adult use of cannabis. 19 Existing law prohibits a person from engaging in the business of an adult-use or 20 medical cannabis establishment unless the person holds an adult-use or medical 21 cannabis establishment license, as applicable, issued by the Board. (NRS 678B.210, 22 678B.250) Sections 5-7 of this bill provide an exception from that prohibition for 23 certain cannabis-related businesses operated pursuant to a joint-venture agreement 24 with a licensed cannabis cultivation facility or cannabis production facility. Section 25 5 authorizes a person who does not hold a license issued by the Board and who has 26 been adversely affected by provisions of previous laws which criminalized 27 activities relating to cannabis to enter into such a joint-venture agreement with such 28 a cannabis establishment to operate a cannabis-related business on the premises of 29 the establishment. Section 5: (1) authorizes such a business to engage in any 30 activity in which the cannabis cultivation facility or cannabis production facility 31 that is a party to the joint-venture agreement is authorized to engage; and (2) sets 32 forth various requirements for such a joint-venture agreement and the operation of 33 such a business. Sections 12 and 17 of this bill provide an exception from state 34 prosecution for certain crimes relating to cannabis for a person who has entered into 35 a joint-venture agreement that has been approved by the Board pursuant to section 36 5. Section 16 of this bill provides that the fact that a person has entered into such an 37 agreement does not, alone: (1) constitute probable cause to search the person or the 38 person’s property; or (2) subject the person or the person’s property to inspection. 39 Existing law requires an applicant for an adult-use cannabis establishment 40 license to submit to the Board, among other things, evidence that the applicant 41 controls certain liquid assets. (NRS 678B.250) Section 7 exempts from that 42 requirement a social equity applicant who is applying for the issuance of an adult- 43 use cannabis establishment license for an independent cannabis consumption 44 lounge. Section 8 of this bill removes provisions requiring the Board to set forth 45 certain restrictions on the transfer of an adult-use cannabis establishment license for 46 an independent cannabis consumption lounge. 47 Existing law requires the Board to adopt certain regulations to carry out the 48 provisions of existing law governing the licensing and control of cannabis. (NRS 49 678B.650) Section 10 of this bill prohibits those regulations from requiring: (1) a 50 cannabis sales facility to maintain a visitor’s log; and (2) a cannabis establishment 51 to maintain records concerning sales transactions for more than 3 years. Section 10 52 additionally requires those regulations to allow certain agents of a cannabis 53 establishment to conduct a quarterly inventory, if such a quarterly inventory is 54 required by the Board. Sections 13-15 of this bill make conforming changes to 55 refer to provisions that have been renumbered by section 10. 56 Section 11 of this bill revises the definition of “usable cannabis” to exclude the 57 seeds of a plant of the genus Cannabis. 58 Existing law authorizes a cannabis sales facility to contract with a third party or 59 intermediary business to deliver cannabis or cannabis products. (NRS 678C.440, 60 678D.430) Section 4 of this bill authorizes a cannabis sales facility or a third party 61 or intermediary business with whom the cannabis sales facility has contracted to 62 – 3 – - *AB203_R1* deliver cannabis or cannabis products to a consumer at any location so long as the 63 location is not on the property of a school, community facility or airport or, with 64 certain exceptions, within a certain distance from a gaming establishment. Section 65 4 additionally prohibits the Board from requiring a vehicle used for such deliveries 66 to be inspected by the Board before making such a delivery. 67 Existing law authorizes a law enforcement agency to destroy marijuana that has 68 been seized from a defendant without prior court approval under certain 69 circumstances. (NRS 52.400) Section 18 of this bill specifies that the Board 70 constitutes a law enforcement agency for the purposes of that authorization. 71 Existing law imposes upon each retailer a sales tax measured by the gross 72 receipts of the retailer from the retail sale of tangible personal property in this State. 73 (NRS 372.105, 374.110, 374.111) Sections 19 and 25 of this bill clarify that the 74 provisions of existing law governing the imposition, collection and remittance of 75 the sales taxes apply to a retailer who makes a retail sale of cannabis or cannabis 76 products regardless of whether the retailer holds a license issued by the Board. 77 Section 20 of this bill authorizes the Department of Taxation to impose upon 78 any person who does not hold a license issued by the Board and who sells cannabis 79 or a cannabis product an administrative fine in the amount of the excise tax on 80 cannabis for which the person would have been liable had the person engaged in 81 the sale as an adult-use cannabis cultivation facility or adult-use cannabis retail 82 store. Sections 21, 22 and 24 of this bill make conforming changes to provide that 83 the definitions in existing law apply to section 20 and to clarify that certain 84 provisions of existing law apply to section 20. 85 Existing law sets forth the primary functions and responsibilities of the 86 Investigation Division of the Department of Public Safety. (NRS 480.140) Section 87 26 of this bill additionally authorizes the Division to collaborate with the Board and 88 other state and local agencies for the enforcement of criminal laws relating to 89 unlicensed cannabis activities. 90 Section 28 of this bill requires the Board and the Nevada Gaming Control 91 Board, on or before December 31, 2026, to jointly prepare and submit a report 92 concerning the relationship between the gaming industry and the cannabis industry 93 in this State to the Governor and the Director of the Legislative Counsel Bureau. 94 THE PEOPLE OF THE STATE OF NEVADA, REPRESENTED IN SENATE AND ASSEMBLY, DO ENACT AS FOLLOWS: Section 1. Chapter 678A of NRS is hereby amended by 1 adding thereto the provisions set forth as sections 1.3 and 1.7 of this 2 act. 3 Sec. 1.3. “Label” means written or printed material affixed 4 to or included with cannabis or a cannabis product to provide 5 identification or other information. 6 Sec. 1.5. “Packaging” means the immediate, consumer- 7 facing wrapper or container in which cannabis or a cannabis 8 product is packaged. 9 Sec. 1.7. NRS 678A.010 is hereby amended to read as 10 follows: 11 678A.010 As used in this title, unless the context otherwise 12 requires, the words and terms defined in NRS 678A.020 to 13 – 4 – - *AB203_R1* 678A.240, inclusive, and sections 1.3 and 1.7 of this act have the 1 meanings ascribed to them in those sections. 2 Sec. 2. NRS 678A.450 is hereby amended to read as follows: 3 678A.450 1. The Board may adopt regulations necessary or 4 convenient to carry out the provisions of this title. Such regulations 5 may include, without limitation: 6 (a) Financial requirements for licensees. 7 (b) Establishing such education, outreach, investigative and 8 enforcement mechanisms as the Board deems necessary to ensure 9 the compliance of a licensee or registrant with the provisions of this 10 title. Such mechanisms must include, without limitation: 11 (1) A system to educate, train and certify employees of the 12 Board which: 13 (I) Each employee must complete before he or she may 14 engage in inspections, investigations or audits; and 15 (II) At a minimum, includes training that is the same or 16 substantially similar to any training that is required by the Board by 17 regulation to be completed by a cannabis establishment agent before 18 he or she may be employed by, volunteer at or provide labor to a 19 cannabis establishment; 20 (2) A system to educate and advise licensees and registrants 21 on compliance with the provisions of this title which may serve as 22 an alternative to disciplinary action; and 23 (3) Establishing specific grounds for disciplinary action 24 against a licensee or registrant who knowingly violates the law or 25 engages in grossly negligent, unlawful or criminal conduct or an act 26 or omission that poses an imminent threat to the health or safety of 27 the public. 28 (c) Requirements for licensees or registrants relating to the 29 cultivation, processing, manufacture, transport, distribution, testing, 30 study, advertising and sale of cannabis and cannabis products. 31 (d) Policies and procedures to ensure that the cannabis industry 32 in this State is economically competitive, inclusive of racial 33 minorities, women and persons and communities that have been 34 adversely affected by cannabis prohibition and accessible to persons 35 of low-income seeking to start a business. 36 (e) Policies and procedures relating to the disclosure of the 37 identities of the shareholders and the annual report of a cannabis 38 establishment that is a publicly traded company. 39 (f) Reasonable restrictions on the signage, marketing, display 40 and advertising of cannabis establishments. Such a restriction must 41 not require a cannabis establishment to obtain the approval of the 42 Board before using a logo, sign or advertisement. 43 – 5 – - *AB203_R1* (g) Provisions governing the sales of products and commodities 1 made from hemp, as defined in NRS 557.160, or containing 2 cannabidiol by cannabis establishments. 3 (h) Requirements relating to the packaging and labeling of 4 cannabis and cannabis products. Such requirements must not 5 require: 6 (1) Any package of cannabis or cannabis products which is 7 sold at wholesale to contain any label or tag other than a label or 8 tag necessary for the functionality of any computer software used 9 for the seed-to-sale tracking of cannabis adopted by the Board. 10 (2) A cannabis establishment to include any information on 11 the label for cannabis or a cannabis product that is already 12 included on the packaging of the cannabis or cannabis product. 13 2. The Board shall adopt regulations providing for the 14 gathering and maintenance of comprehensive demographic 15 information, including, without limitation, information regarding 16 race, ethnicity, age and gender, concerning each: 17 (a) Owner and manager of a cannabis establishment. 18 (b) Holder of a cannabis establishment agent registration card. 19 3. The Board shall adopt regulations providing for the 20 investigation of unlicensed cannabis activities and the imposition of 21 penalties against persons who engage in such activities. Such 22 regulations must, without limitation: 23 (a) Establish penalties to be imposed for unlicensed cannabis 24 activities, which may include, without limitation, the issuance of a 25 cease and desist order or citation, the imposition of an 26 administrative fine or civil penalty and other similar penalties. 27 (b) Set forth the procedures by which the Board may impose a 28 penalty against a person for engaging in unlicensed cannabis 29 activities. 30 (c) Set forth the circumstances under which the Board is 31 required to refer m [Text truncated for display. Full text available on LegiScan.]