Cannabis companies want to incentivize whistleblowers to reduce illegal market sales

13 April 2023

In an effort to suppress unlicensed sales, cannabis businesses are asking Nevada lawmakers to make trafficking more than an ounce of cannabis or the equivalent amount in cannabis concentrate punishable with a civil penalty of up to $10 million. Existing laws cap penalties at $50,000.

AB413 also seeks to financially incentivize property owners, billboard owners, consumers and others to become whistleblowers for the Cannabis Compliance Board (CCB), and to hold property owners liable for turning a blind eye to illegal operations. If the bill becomes law, an online portal would be created on the CCB website where information about illegal operations could be shared, including anonymous tips, and it would grant whistleblowers between 15 to 30 percent of the civil penalty if recovered.

“I believe that this legislation will allow us to achieve meaningful results without doubling down on the failed war on drugs,” said Chris Anderson of Sala Consulting, while presenting the bill Monday on behalf of Planet 13, Jardin Premium Cannabis Dispensary and RNBW cannabis. 

According to a 2020 illegal market report based on data from other cities, the Nevada Cannabis Association estimates that between 70 percent and 80 percent of cannabis sales in the state were from the unregulated market that year. Despite alleged illegal operations, licensed cannabis businesses reined in a record-breaking $1 billion in sales in 2020, but proponents of the bill said the numbers can be higher and the state would receive an estimated $614 million more in taxes if illegal sales were wiped out. 

Anderson said the bill would authorize the CCB to conduct investigations on unregulated operators similar to the investigations it already conducts of licensed operators, such as compiling evidence and presenting it to the attorney general’s office, which can assign civil penalties. The biggest difference is that investigations on unregulated operators would be discretionary and carried out in collaboration with law enforcement and designated CCB agents who can seize illegal cannabis products, money and weapons. 

According to Anderson and his co-presenter Robert Whiteley, a private investigator and retired Metro officer with a history of busting illegal cannabis operations, proponents primarily want to shut down large-scale operations such as cannabis “farmers markets” at warehouses or unlicensed dispensaries. Whiteley said illegal operators use billboards, social media, Instagram and Craigslist as well as business cards to sell cannabis.

AB413 was supported by the Nevada Cannabis Association, which Anderson said helped draft the policy, as well as Deep Roots Harvest, Moms Meds Management and Green Life Productions. The CCB estimates the cost to the state would be nearly $5 million for the biennium.

“We’re not talking about putting people in jail or people into the court systems, so the policy is civil in that regard,” Anderson said. “I do think it’s extremely important that we get dangerous products and the money that supports those products and those operations … off the street immediately.”

Assemblywoman Danielle Gallant (R-Las Vegas) said maybe if taxes were lowered that prices inside dispensaries could drop and compete with the unregulated market.

“I can’t help but to think we created this because of the tax structure,” she said.

But Anderson said illegal sales are more about convenience and sometimes connections to other drugs such as cocaine, noting that illegal cannabis is delivered to hotels on the Las Vegas Strip, while legal cannabis businesses are banned from doing that.

The post Cannabis companies want to incentivize whistleblowers to reduce illegal market sales appeared first on The Nevada Independent.

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