FOR IMMEDIATE RELEASE

Contact: Riana Durrett, Esq.

riana@nvdispense.com
(702) 782-4180
March 18, 2019

Nevada Dispensary Association Response to the Performance Audit of the

Department of Taxation Marijuana Regulation and Enforcement

The issues regarding the accuracy of the data in Nevada’s seed-to-sale tracking
system (METRC) and the ability of the Department of Taxation to analyze and
independently verify the data are of great interest to the Nevada Dispensary
Association. A secure and well-regulated system to provide safe products to
Nevada’s medical marijuana patients and adult marijuana consumers are of
paramount importance to our members.

Audit determinations regarding sale of high-potency products were based on a

comparison laboratory batch reports in METRC, not based on an audit of actual
product sales or re-testing of labeled retail products. The audit report highlights
identifies that METRC tracking from laboratory to sale needs improvement. It should
not be interpreted to mean that actual improper sales are occurring at significant
frequency in licensed dispensaries or that establishments are misrepresenting sales.
Nevada Dispensary Association member dispensaries are vigilant to only sell tested,
clearly labeled and legally appropriate products to customers and will work with
regulators to ensure accurate documentation of sales in accordance with Nevada
laws and regulations.

Additionally, the analysis regarding a potential $500,000 tax liability was based on a
scenario where all METRC data inconsistencies during the first months of the adult-
use program were actual lost, taxable product. It was noted by auditors at the
Governor’s Advisory Panel for Creating a Nevada Cannabis Compliance Board on
March 15 that no theft or diversion to the illegal market was found as a part of the
Performance Audit. Inaccurate entry, confusion over batching and tagging during the
program’s rollout and destruction of unusable marijuana are likely responsible to a
vast majority of the discrepancy between Department of Taxation sales data and
METRC data.

One Nevada Dispensary Association Board Member and General Counsel for Reef
dispensary, Brett Scolari, commented on the report, saying “METRC is effective for
preventing diversion, but I don’t know that it will ever be the best tool for calculating
taxable sales.” The President of the Nevada Dispensary Association, Tisha Black,
Esq. stated “I look forward to providing support to the Department of Taxation in
their efforts to meet the thirteen (13) recommendations identified in the Report and
to the necessary efforts to increase enforcement of the extensive rules already on
the books.”

In the past, Nevada Dispensary Association requested METRC provide additional

training in Nevada in order to promote accuracy, experience, and uniformity in seed-
to-sale tracking. The Association has implemented an education program which
reaches many establishments in the State and would pay for the costs of the
training. Nevada Dispensary Association was able to work with METRC on one
occasion, in order to host these trainings, but licensees would greatly benefit from
more in-person training from METRC as well as working groups with METRC that
could ensure METRC’s software is complying with Nevada specific regulations and
requirements. The Association will continue to work with regulators, policymakers
and law enforcement to offer training and other resources in order to promote a
culture of compliance and professionalism.

According to the Audit Report, there are instances of sales of medical marijuana to
non-medical marijuana patients. It is possible that these were instances of failures to
properly designate the sale as a medical sale rather than an intentional violation of
the regulations. The Nevada Dispensary Association supports and will actively
pursue improvements in this area, including additional training and a proposed
amendment to Senate Bill 238 that would require designation of the sale as medical
or non-medical at the point of sale.

Nevada Dispensary Association members are committed to working with regulators

to ensure METRC data is accurate and independently verifiable. The Nevada
Dispensary Association is actively working with legislative leaders to develop
measures aimed at prioritized enforcement, a more efficient and effective regulatory
framework, and greater public education that will address some of the issues raised
by the audit report.