Department of Taxation asks lawmakers for permit to enforce cannabis excise tax; bill would tie tax compliance to CCB licensing

CARSON CITY — The Nevada Department of Taxation presented Senate Bill 41 to the Assembly Committee on Revenue on May 13, proposing a new ‘‘cannabis excise tax permit’’ to strengthen collection of wholesale and retail cannabis excise taxes and to coordinate enforcement with the Cannabis Compliance Board (CCB).

Under current law, the department collects cannabis excise taxes but has limited authority to prevent a licensed cannabis business from operating and accumulating additional excise tax liability between annual license renewals. SB41 would require persons who sell cannabis or cannabis products to obtain both a seller’s permit (for sales tax) and a cannabis excise tax permit (for excise tax) from the Department of Taxation before the CCB may issue or renew a license.

Why it matters: testimony from the department said some cannabis businesses have entered payment plans with the department to renew licensing with the CCB and then defaulted, leaving sizeable unpaid excise tax liabilities. The proposed permit would let the department suspend or seek revocation of the permit after a structured notice, cure and appeal process; CCB would suspend the corresponding cannabis license once the department’s final decision is delivered to the board.

Key provisions and process

Department witnesses explained the current tax structure and the bill’s mechanics: Nevada’s law imposes a wholesale cannabis excise tax (described in testimony as 15% of fair market value at wholesale) and a retail excise tax (described in testimony as 10% of retail sales price); retail sales are also subject to sales tax where applicable. SB41 would require the Department of Taxation to issue a cannabis excise tax permit for each place of business, issue the permit within 15 days of application at no fee, and provide a written explanation of excise tax obligations.

If the department identifies a tax deficiency, it must provide notice and a 30‑day opportunity to cure the deficiency by payment or by establishing a payment plan (or curing a default). If the deficiency is not cured, the department will issue a notice of hearing; the bill requires that hearing to occur no later than 30 days after notice (with one possible 30‑day continuance for cause). After the administrative hearing the department issues a written decision within 30 days; the permit holder then has 30 days to appeal to the Nevada Tax Commission. The Tax Commission is to consider appeals at its next public meeting and issue a written decision within 30 days. Once the department’s or the Tax Commission’s decision is final, the CCB is to suspend the corresponding cannabis license the day the final decision was issued; the board would reinstate the license immediately upon confirmation of tax compliance.

Department testimony and data

Shelley Hughes, executive director of the Department of Taxation, and Chief Deputy Yvonne Navaras Goodson said the department currently administers the excise tax but lacks a permit analogous to a seller’s permit for excise tax. Goodson presented department statistics: 251 registered cannabis tax accounts, 61 compliant, 78 noncompliant, and 12 registered but nonoperating. Department staff said the department’s intent is to use the cannabis excise tax permit as a last‑resort collection tool, not as a first step to put businesses out of operation, and that the bill contains multiple opportunities to come into compliance before suspension or revocation is finalized.

Agency coordination, due process and timing

Members asked about due process and coordination with CCB. Goodson said the bill mirrors existing Department of Taxation procedures for other taxes, including appeal rights to an administrative law judge and to the Nevada Tax Commission, followed by judicial review. James Humb, executive director of the Cannabis Compliance Board, testified in neutral and said CCB will continue to work closely with the department as the permit requirement is implemented and renewals proceed.

The department requested an effective date of January 1, 2027, to coincide with planned deployment of the department’s new tax system (referred to as the Mint system) and to give existing licensees more than a year to become compliant and obtain the new permit.

Questions and open items

Committee members sought confirmation the permit would be issued at no cost (department said no fee), whether existing licensees must obtain the permit ahead of renewal (department pointed to section 15 requiring existing licensees to be compliant by 01/01/2027), and how transfer-of‑interest transactions would handle outstanding tax liabilities (department said it can secure proceeds in escrow or pursue successor liability as in existing practice). Lawmakers also raised concerns from cultivators about wholesalers not receiving payment; department staff said the statute places excise‑tax obligation on cultivators and that alternative statutory approaches could be considered by the Legislature.

Outcome

The committee held the hearing, took questions and testimony, and closed the hearing on SB41. No committee vote occurred during the hearing; department and CCB representatives said they will continue coordination on implementation details.