Nevada’s fledgling recreational marijuana program finally has some money to get off the ground.
The state’s Interim Finance Committee on Thursday approved a seed loan of approximately $871,000 for the startup of the new program under the Department of Taxation.
“We just want to make sure that we are meeting our responsibility and getting this all done by the deadline,” said Stephanie Klapstein, spokeswoman for the department.
The program will be regulating and taxing the recreational marijuana industry since Nevadans voted in November to legalize the substance as of Jan. 1.
The loan will be pulled form the Interim Finance Contingency Account and will go toward costs incurred between Feb. 1 and the end of the current fiscal year, in June. Thereafter, Gov. Brian Sandoval has proposed a $1.9 million annual budget for the program during Fiscal Year 2018 and the same amount for the following fiscal year, according to Mari St. Martin, spokeswoman for the Governor’s Office.
The committee approved a smaller amount than initially requested, about $887,000, because of a reduction in rent costs since the Department of Taxation wrote the original proposal.
The department’s first order with the loan will be to hire four positions to begin in February, including a deputy director, chief investigator, tax examiner and administrative assistant. The deputy director will be based out of Carson City, and the others will be based out of Las Vegas. Salaries will total slightly more than $129,000 during the five-month duration of the loan and travel expenses will cost about $8,000.
The bulk of the loan will be spent on software programming, about $596,000, and other operational expenses including communication services, supplies and rent.
At the beginning of the next fiscal year, an additional dozen employees will be hired to create an enforcement task force within the program.
Until the Department has fully completed its orders to fill in the holes in the current legislation legalizing recreational marijuana, no legal transactions can take place with recreational marijuana.
The Department is hoping by July to establish the following:
- Procedures for the issuance, renewal, suspension and revocation of licenses to marijuana retailers, cultivators, product manufacturing facilities, testing facilities and distributors
- Qualifications for licensure, security, packaging, labeling and testing of marijuana
- Procedures for oversight and enforcement of marijuana businesses and licensees (including record keeping, signage, marketing, display, advertising, etc.)
- Procedures for collection of taxes, fees and penalties.
The Department of Taxation has until Dec. 31, 2017 to write the regulations for the recreational marijuana industry in Nevada.
The expectation is that the department will pay back the loan next year after revenue starts flowing in from the 15 percent wholesale tax on recreational marijuana and licensing fees paid by those distributing it. The tax could bring in as much as $12.7 million in the first fiscal year, in addition to about $4.4 million from fees, according to projections from the state finance office. If Sandoval’s proposed 10 percent sales tax is tacked on, he expects an additional $29.5 million for the state during the same period.
Sandoval expressed earlier this month that he does not expect payback of the loan to be an issue.