Nevada Tax Commission delegates to chairman authority to negotiate settlements with marijuana companies

CARSON CITY, Nev. — The Nevada Tax Commission has voted to give its chairman the authority to negotiate settlements on behalf of state marijuana regulators, with the agreements going before the full commission for final approval.

Chairman James DeVolld said on Monday that he thinks his new duties will deal with major litigation between the state and marijuana businesses that argued they were unfairly denied potentially lucrative dispensary licenses.

A trial on that matter is scheduled for April. DeVolld said he doesn't think his new work will deal with smaller settlements with individual marijuana companies such as a recent one in which a testing lab paid $70,000 to resolve allegations of regulatory violations.

“I wouldn't be comfortable doing anything with the ongoing issues — you know, if somebody has done something incorrectly or not, according to the regulations,” DeVolld said in an interview after the meeting. “That should go to the full tax commission, not just to me.”

Commissioners also opted not to give DeVolld power to promulgate emergency regulations. He said he didn't think it was a good idea for one person to develop those on their own.

Melanie Young, executive director of the Nevada Department of Taxation that has regulatory oversight of the legal marijuana industry, declined to say what prompted the move to delegate authority on settlements, with her lawyer citing attorney-client privilege. Young will be assisting with the settlement negotiations.

Will Adler, a lobbyist who is active on marijuana issues, said the board's involvement might improve the processes of a marijuana regulatory system that has been criticized for being opaque.

“The more participation with the tax commission the better, if it's done in a public format,” he said. “If it doesn't add to any increased transparency or public inclusion, I don't think it will be much better.”

The process of approving settlements for regulatory violations within the marijuana industry came under fire on transparency grounds at a February tax commission meeting in which a penalty for a marijuana testing lab was finalized. Other labs complained that the past history of discipline against the lab should have increased the penalty and led to a revocation.

Young said she was not aware of past discipline issues, and said disciplinary action was confidential until final. The department did not answer written follow-up questions about the lab's past discipline.

Taxation officials are also facing complex litigation from dispensaries that did not win additional licenses for retail storefronts. One dispensary owner who is involved in litigation, David Goldwater of Inyo Fine Cannabis Dispensary, applauded the move to establish a point person to work on a settlement.

“It's good to see the commission taking an active role in settling these suits,” Goldwater said.

While Tax Commissioner Francine Lipman asked whether the arrangement would run afoul of open meeting laws, Deputy Attorney General Rosalie Bordelove said state law allows delegation of settlement duties to the chairman.

She noted that it can be difficult to wrap up settlements within the time constraints of court cases and convene commissioners with meetings relatively far apart on the calendar.

DeVolld said his goal was to move settlements forward and avoid further legal costs to the state.

“You've got various parties that are associated with this and I think sometimes that's hard to come up with an agreement,” DeVolld said. “The alternative is everybody goes to court and spends a bunch of money to do that so I think we're just trying to shortcut that … I think that's part of my job is to try and save taxpayers money.”

The Nevada Independent is a 501(c)3 nonprofit news organization. The following people or entities mentioned in this article are financial supporters of the Independent: David Goldwater - $4,750; Francine Lipman - $102.56; and Inyo Fine Cannabis - $2,500.