Governor Sisolak signs executive order creating advisory panel for creation of a

Cannabis Compliance Board

Carson City, NV – Gov. Steve Sisolak today signed Executive Order 2019-03, establishing an
advisory panel tasked with defining the scope of a future Cannabis Compliance Board.

“Nevada’s gaming industry is seen as the international gold standard and there is no reason we
cannot take steps to ensure our marijuana industry is viewed the same way,” said ​Gov.
Sisolak. ​“Today’s executive order is the first step in making sure we allow Nevada’s thriving
marijuana industry to not just continue to grow but to represent the best in the country.”
The executive order creates an advisory panel made up of seven members who will be tasked
with preparing enabling language for a Cannabis Compliance Board for the Legislature’s
consideration during the 80​th​session. Areas for the advisory panel to consider include a review
of potential banking solutions, the Department of Taxation’s current regulatory structure and
licensing procedures, and potential cannabis consumption lounges among others.

Full text of Executive Order 2019-03 is below:

EXECUTIVE ORDER 2019-03

ORDER ESTABLISHING THE GOVERNOR’S ADVISORY PANEL FOR CREATING A

NEVADA CANNABIS COMPLIANCE BOARD

WHEREAS​, the people of the State of Nevada have declared both medical and retail marijuana
(“cannabis”) legal under State law. The success of the general cannabis industry in the State is vitally
important to the economy of Nevada and to the State’s capacity to fund critical educational reforms,
among other public programs. The continued success of Nevada’s cannabis economy is dependent upon
public confidence and trust that certified distribution, cultivation, production, and laboratory testing of
cannabis are conducted with transparency and integrity and that such businesses do not unduly impact the
quality of life enjoyed by residents of the surrounding neighborhoods, that the rights of creditors of
cannabis certificate holders are protected, and that the cannabis industry is free from corrosive criminal
and corruptive elements.​[1]

WHEREAS​, public confidence and trust is best maintained by strict regulation of all persons, locations,
practices, associations and activities related to the operation of medical and retail cannabis distribution,
production, cultivation, and laboratory testing establishments.​[2]

WHEREAS​, all operational cannabis establishments must, therefore, be certified or licensed and
controlled to protect the public health, safety, good order and general welfare of the inhabitants of the
State and to protect the reputation of the State of Nevada and ensure the development of a legal cannabis
economy that captures some—if not most—of the illegal cannabis trade. The federal government should
view Nevada’s cannabis industry as adhering to the following policy mandates:​[3]
 1. preventing the distribution of cannabis to minors;

1. preventing revenue from the sale of cannabis from going to criminal enterprises, gangs, and
cartels;

1. preventing the diversion of cannabis from Nevada, where it is legal under state law, to other
states;

1. preventing state-authorized cannabis activity from being used as a cover or pretext for the
trafficking of other illegal drugs or other illegal activity, especially financial crimes that are the
lifeblood of large-scale criminal enterprises, gangs, and cartels;

1. preventing violence and the use of firearms in the cultivation, production, and distribution of
cannabis, unless used by trained security staff to protect the health and safety of cannabis
establishment patrons, property, and employees; and

1. preventing drugged driving and the exacerbation of other adverse public health consequences
associated with cannabis use.​[4]

WHEREAS​, the development of Nevada cannabis law and policy has been incremental and is still
maturing, as described here:

1. On November 7, 2000, Nevada voters approved Ballot Question 9, a constitutional amendment

titled The Nevada Medical Marijuana Act, which authorized the possession, use and appropriate
methods of supply of cannabis to certain individuals upon advice of a physician for the treatment
or alleviation of certain illnesses. The constitutional provision touched upon “medical use
marijuana” exclusively.

1. In June of 2001, the Nevada Legislature passed Assembly Bill 453—enabling legislation for the
State constitutional provision enacted Ballot Question 9—decriminalizing possession and use of
medical cannabis in certain circumstances and under State law. The legislation authorized the
Nevada Department of Agriculture to create a system of issuing and cataloging medical cannabis
registry identification cards and authorized the Health Division of the Department of Human
Resources to classify certain chronic or debilitating medical conditions for treatment by medical
cannabis. Governor Kenny Guinn signed the legislation, which was codified as Chapter 453A of
the Nevada Revised Statutes (“NRS”). The law did not specify the way qualifying patients and
 their caregivers were to obtain cannabis. Consequently, no State-approved medical cannabis
establishments were licensed under this original constitutional and statutory framework.

1. In June of 2013, the Nevada Legislature approved Senate Bill 374, which Governor Sandoval
signed it into law. The provisions of the bill amended NRS 453A extensively, defining medical
cannabis establishment to include dispensary, production, and cultivation facilities and
independent testing laboratories. The statutory amendment further set out the way one could
apply to obtain a registration certificate to operate a medical cannabis establishment, including
enumerating the merit-based criteria the Health Division of the Department of Health and Human
Services (“Division”) would use in awarding a limited number of medical cannabis establishment
registration certificates. The bill enacted antitrust-similar limits on market concentration for
establishment registration certificate holders. Critically, the bill established a tax structure for the
Nevada medical cannabis economy.

1. In August of 2014, the Division opened the first filing period for applications for medical
cannabis establishment certificates. In November of 2014, the first provisional certificates to
operate a medical cannabis establishment were issued. In March of 2015, a single medical
cannabis cultivation establishment and a single testing laboratory were granted final certificates to
operate, with the first medical cannabis dispensary opening in Sparks in July of 2015.

1. On November 8, 2016, the voters of the State of Nevada approved Ballot Question 2: The
Regulation and Taxation of Marijuana Act (“2016 General Act”), a statutory ballot question
codified as NRS 453D, which confirmed that the “use of marijuana should be legal for persons 21
years of age or older, and its cultivation and sale should be regulated similar to other legal
businesses” and providing for the regulation of cannabis according to the following dictates:

1. Cannabis may only be purchased from a business that is licensed by the State of Nevada.

1. Business owners are subject to a review by the State of Nevada to confirm that the business
owners and the business location are suitable to produce or sell cannabis.

1. Cultivating, manufacturing, testing, transporting, and selling cannabis will be strictly controlled
through state licensing and regulation.

1. Selling or giving cannabis to persons under 21 years of age shall remain illegal.
 1. Individuals must be 21 years of age or older to purchase cannabis.

1. Driving under the influence of cannabis will remain illegal.

1. Cannabis sold in the state will be tested and labeled.

The 2016 General Act designated the Nevada Department of Taxation as the regulatory and taxation
authority for implementation of the 2016 General Act, which legalized the cultivation, use, and sale of
cannabis beyond the 2001 medical applications. The law took effect on January 1, 2017.

1. To prepare the State for implementation of the 2016 General Act, on February 03, 2017,
Governor Brian Sandoval signed Executive Order 2017-02 establishing the Task Force on the
Implementation of Ballot Question 2: The Regulation and Taxation of Marijuana Act (“2017 Task
Force”). Executive Order 2017-02 directed the “Nevada Department of Taxation to adopt all
regulations necessary or convenient to carry out the provisions of the Act, including accepting
applications and issuing licenses for marijuana establishments.” The 2017 Task Force was
comprised of 15 members, including representatives from the Nevada Department of Taxation,
Department of Health and Human Services, Department of Public Safety, Department of
Agriculture, the medical cannabis industry, social service agencies, and local law enforcement
agencies.

1. On May 30, 2017, the 2017 Task Force issued its final report to Governor Sandoval. The 2017
Task Force recommended that, as a first step to create consistency in regulatory oversight of both
the medical and retail cannabis industries, jurisdiction for administering the State’s medical
cannabis industry be transferred by the Nevada Legislature from the Division of Public and
Behavioral Health, Department of Health and Human Services, to the Nevada Department of
Taxation.

1. In June of 2017, pursuant to the recommendation of the 2017 Task Force, the Nevada Legislature
passed Assembly Bill 422, which, among other things, amended NRS 453A to transfer
responsibility for regulating medical cannabis establishments from the Division of Public and
Behavioral Health of the Department of Health and Human Services to the Department of
Taxation, which now regulates retail cannabis. Governor Brian Sandoval signed the bill into law.

WHEREAS​, Nevada’s world class gaming industry and the renowned regulatory structure which protects
the gaming industry, its patrons, and the State’s reputation evolved in a manner instructive to Nevada’s
medical and retail cannabis economies:
1. In 1931, Governor Fred Balzar signed into law a “wide open” gambling statute (“Original Nevada
Gaming Act”). As enacted, this statute provided no authority to regulate gaming. Uncertainty
and pressure from the federal government caused the Original Nevada Gaming Act to be
broadened and improved over time, including transferring regulatory authority for
implementation of the Original Nevada Gaming Act to different State agencies at various early
points in the development of Nevada’s gaming industry.​[5]

1. In 1945, the Nevada Legislature passed law authorizing the first state casino licenses with an
accompanying gaming revenue tax. The Nevada Tax Commission became the first regulatory
authority for the gaming industry. The 1945 statutory amendment to gaming provisions granted
no express authority to the Tax Commission to truly regulate the gaming industry, however.​[6]

1. Nevada Attorney General Alan Bible issued an official Attorney General Opinion, which argued
that the 1945 gaming statute authorizing the Tax Commission to grant casino licenses transferred
implied authority to the Tax Commission to pass regulations necessary to inquire into the
backgrounds and probity of potential casino licensees.

1. In 1949, the Original Nevada Gaming Act was amended to require fingerprinting of casino
employees.

1. In 1950, Tennessee U.S. Senator Estes Kefauver empaneled a federal committee with the charge
of reviewing the influence of organized crime in America. Kefauver chaired the committee,
which became known as the Kefauver Committee. This group soon began intense scrutiny of
Nevada’s early gaming industry and was critical of Nevada’s thin gaming regulatory apparatus.
While Nevada’s federal delegation pushed back on Kefauver and federal efforts to quash the
gaming industry, State leaders realized that they must strengthen the controls of the Original
Nevada Gaming Act.​[7]

1. In 1955, the Nevada Legislature passed the Gaming Control Act of 1955, which created a
two-part regulatory structure with a full time Gaming Control Board acting as the administrative
agency, reporting the findings of its investigations into gaming applicants to the Nevada Tax
Commission, which had ultimate authority to approve casino licenses.​[8]

1. Problems with the gaming industry persisted. Governor Grant Sawyer, who won election in late
1958 on the slogan that “Nevada is not for sale,” pursued legislation during the 1959 Legislative
Session to move regulatory authority for the gaming industry from the Nevada Tax Commission
to an independent agency, the Nevada Gaming Commission.​[9]​ Nevada’s current gold standard
gaming regulatory structure, the Nevada Gaming Control Act, with authority divided between the
 Gaming Control Board and the Nevada Gaming Commission, issued directly from Governor
Sawyer’s 1959 efforts.

WHEREAS​, the historical parallels between the development of Nevada’s legal gaming industry—the
result of the genius and initiative of the industry’s most important figures and the active management of
the industry by Nevada’s world class regulatory structure, often responding to considerable pressure from
federal law enforcement agencies—and the early history of Nevada’s nascent medical and retail cannabis
industry, subject to similar federal law enforcement scrutiny and pressure, suggests that the latter, if
properly managed, could follow a similar trajectory as Nevada’s successful gaming industry.

WHEREAS​, among the 2017 Task Force’s recommendations was that the Nevada Legislature create,
when feasible, a ​Cannabis Compliance Board ​to provide direct oversight and accountability to the
retail and medical cannabis industries. The 2017 Task Force suggested that the structure of such a
Cannabis Compliance Board be based on the gaming regulatory structure contained in NRS Chapter 463
of the Nevada Gaming Control Act.

WHEREAS​, the thoughtful and informed development of a Cannabis Compliance Board is a significant
priority for the cannabis industry, the State of Nevada, and its people; and

WHEREAS​, the 80​th​ Session of the Nevada Legislature begins on February 4, 2019 and establishing a
Cannabis Compliance Board requires that the Legislature pass enabling legislation for creation of the
Cannabis Compliance Board and its associated Executive Branch agency, together with a legislative
appropriation to fund the creation and operations of the new agency, with an effective date after
November 22, 2019.

WHEREAS​, Article 5, Section 1 of the Nevada Constitution provides: “The supreme executive power of
this State, shall be vested in a Chief Magistrate who shall be Governor of Nevada.”

NOW, THEREFORE​, by the authority vested in me as Governor by the Constitution and laws of the
State of Nevada and the United States, it is hereby ordered as follows:

SECTION 1​: The Governor’s Advisory Panel for Creation of a Cannabis Compliance Board
(“Advisory Panel”) is established within the executive department, Office of the Governor.

SECTION 2​: The scope of items for Advisory Panel consideration include, but are not limited to, the
following:

A.​ ​studying the Nevada Department of Taxation’s current cannabis regulatory

structure and licensing procedures; review of Nevada’s gaming regulatory apparatus
and other similar regulatory structures, identifying elements necessary to create an
exemplary Cannabis Compliance Board;
 B.​ ​review of potential banking solutions for Nevada’s cannabis industry;

C.​ ​review of potential cannabis consumption lounges;

D.​ ​review of current advertising restrictions applicable to the cannabis industry;

E.​ ​review of the current confidentiality provisions employed by the Nevada

Department of Taxation in licensing and regulation of the cannabis industry, which
have resulted in claims of opaque application grading and certificate award
processes;

F.​ ​review of current enforcement mechanisms and practices for current cannabis

establishment certificate holders;

G.​ ​review of antitrust provisions concerning market concentration of cannabis

establishment ownership groups;

H.​ ​review of Nevada cannabis law, policy, and compact status for federally
recognized tribes in the State;​[10]​ and

I.​ ​review of other items as directed by the Governor.

SECTION 3​: The Advisory Panel shall ​report to the Governor on the items outlined in Section 2
and work with the Legislative Council Bureau to prepare enabling language for a Cannabis Compliance
Board for the Legislature’s consideration during the 80​th​ Session of the Nevada Legislature.

SECTION 4​: The Advisory Panel shall be comprised of seven (7) members, unless the Governor
otherwise amends the size of the Advisory Panel. Moreover, each member shall be designated by and
serve at the pleasure of the Governor and, unless specifically named, meet the qualifications of one of the
categories below.

A.​ ​Chris Giunchigliani, former member, Clark County Commission, former

member, Nevada State Assembly, past president, Clark County Education
Association, and past president, Nevada State Education Association;

B.​ ​J. Brin Gibson, General Counsel to Governor Steve Sisolak and the Office of
the Governor and former Chief, Gaming Division, Office of the Nevada Attorney
General;

C.​ ​Arlan D. Melendez, Chairman, Reno-Sparks Indian Colony;

D.​ ​Professor Jennifer Roberts, Associate Director of the International Center for
Gaming Regulation, UNLV;
 E.​ ​one member nominated by the Speaker of the Nevada State Assembly;

F.​ ​ ne member nominated by the Majority Leader of the Nevada State Senate;
o
and

G.​ ​a representative of a Nevada county with a population of less than 200,000.

SECTION 5​:​ ​J. Brin Gibson is appointed Chair.

SECTION 6​: The Governor shall appoint a Vice Chair.

SECTION 7​: The Chair shall have the authority to issue guidelines for operation of the Advisory Panel
and to amend such guidelines as necessary. The Advisory Panel Chair may form working groups, in
consultation with the Office of the Governor, chaired by one or more members of the Advisory Panel and
comprised of individuals with subject matter expertise pertinent to the focus of the particular working
group. The Chair of the Advisory Panel shall identify and approve matters for review by any working
group.

SECTION 8​: The Office of the Governor, the Office of the Attorney General, and the Department of
Taxation will provide support staff, facilities, and resources to the Task Force at the Chair’s request and in
consultation with the Office of the Governor.

SECTION 9​: Members of the Advisory Panel shall serve in a volunteer capacity and without
compensation.

SECTION 10​: The Advisory Panel shall meet at regular intervals and at the discretion and call of the
Advisory Panel Chair.

SECTION 11​: All meetings of the Advisory Panel and any working groups of the Advisory Panel shall
comply with the Nevada Open Meeting Law, as codified in NRS Chapter 241.

SECTION 12​: All records documenting the Advisory Panel’s discussions, deliberations, and
recommendations shall be retained and transferred to the Nevada State Library and Archives for retention
pursuant to State retention policies.

SECTION 13​: This Order shall be effective upon signature and remain in effect until the Advisory
Panel, working with the Legislative Counsel Bureau, (1) completes enabling language for the
Legislature’s consideration, not later than March 15, 2019, and (2) reports to the Governor on the items
outlined in Section 2, not later than May 1, 2019, unless the Advisory Panel is terminated earlier or
extended beyond that date by further Executive Order.

IN WITNESS WHEREOF​, I have set my hand and caused the Great Seal of the State of Nevada to be
affixed at the State Capitol in Carson City, this 25​th​ Day of January, in the year two thousand nineteen.
 _______________________________________
Governor Steve Sisolak

_______________________________________
Secretary of State

_______________________________________
Deputy Secretary of State

[1]​ ​See​ Nevada Revised Statutes Chapter 463.0129.

[2]​ ​See id.
[3]​ ​See​ ​id.
[4]​ ​See​ Memorandum from Thomas W. Cole, Deputy Att’y Gen., U.S. Dep’t of Justice, to All U.S.
Attorneys (Feb. 14, 2014), [hereinafter Cole Memo] (outlining federal civil and criminal enforcement
priorities for cannabis-related violations of the federal Controlled Substances Act in State’s with legal and
regulatory mechanisms regulating cannabis). While Attorney General Jeff Sessions rescinded the Cole
Memo in January of 2018, the logic of the Cole Memo as a federal law enforcement resource allocation
guide remains instructive.

[5]​ ​See​ Robert D. Faiss and Gregory R. Gemignani. “Nevada Gaming Statutes: Their Evolution and
History,” Occasional Paper Series 10. Las Vegas: Center for Gaming Research, University Libraries,
University of Nevada Las Vegas, 2011.
[6]​ ​See id.
[7]​ ​See id.
[8]​ ​See id.
[9]​ ​See id.
[10]​ ​See​ Memorandum from Monty Wilkinson, Deputy Att’y Gen., U.S. Dep’t of Justice, to All
U.S. Attorneys and Certain U.S. Dep’t of Justice Staff (Oct. 28, 2014), [hereinafter, Wilkinson
Memo] (outlining U.S. Dep’t of Justice policy regarding cannabis issues in Indian country). The
Wilkinson Memo cites extensively to the Cole Memo, which was rescinded; still, as with the
principles governing resource allocation contained in the Cole Memo, similar notions, as they
apply to Indian country, contained in the Wilkinson Memo, though it does not constitute law or
even necessarily current policy, are instructive.