Tax Department flags $15.4 million in unpaid wholesale cannabis taxes; proposes permit to speed collections

The Nevada Department of Taxation told the Assembly Committee on Revenue it is carrying about $15,400,000 in outstanding wholesale cannabis tax receivables and proposed a new cannabis tax permit that would let the department suspend operations of noncompliant businesses.

The issue emerged during a joint presentation from the Nevada Cannabis Compliance Board and the Department of Taxation. "By requiring cannabis businesses to obtain a cannabis tax permit from the Department of Taxation to operate in Nevada, the department could have a role in protecting the state's revenue outside of the annual renewal process with CCB," said Shelley Hughes, executive director of the Department of Taxation.

Why it matters: wholesale excise tax revenue helps fund the Cannabis Compliance Board's operations and — after local distributions — flows to the State Education Fund. Department officials said late or unpaid wholesale taxes can accumulate even when a license is renewed, producing unpaid liabilities the state has difficulty collecting without additional administrative authority.

Key facts and figures presented

- Outstanding receivables: "outstanding accounts receivable through quarter 1 of FY 25 is about 15,400,000 in the wholesale cannabis tax and for the retail cannabis tax for that same quarter, was $672,800," said Erica Scott, economist, Department of Taxation.

- Fiscal year 2024 totals reported by the Department of Taxation: $43,737,147 in wholesale cannabis tax revenue; $76,800,162 in retail cannabis tax revenue; and $829,225,194 in taxable sales reported by adult-use and medical retail stores.

- Licenses and workforce: the Cannabis Compliance Board reported 387 operational medical and adult-use licenses statewide, with about 20,000+ active agent cards covering roughly 14,500+ individuals; Clark County accounts for the largest share of licenses.

Regulatory changes and enforcement proposals

Department of Taxation staff described a bill they plan to present to the committee, Senate Bill 41, that would require a cannabis tax permit issued by the Department. Under the proposal explained by Yvonne Navaras Goodson, chief deputy executive director of the Department of Taxation, the department could suspend or revoke the tax permit through an administrative hearing if a business does not meet its tax obligations. A CCB license would be automatically suspended if the department revokes or suspends that tax permit; compliance would result in lifting the suspension.

Goodson summarized CCB's parallel regulatory changes: the Cannabis Compliance Board is proposing to re-categorize a range of tax-related violations into a new streamlined "category 7" with lower penalties and civil fines for many failures to timely file or pay, reserving revocation for only the most serious cases. She described the proposed penalty structure as including escalating written warnings, civil penalties between $1,500 and $10,000 for early repeat violations, and higher penalties plus short suspensions for seventh or subsequent violations, but not automatic revocation for unpaid tax obligations under the new category.

Fair market value and tax calculation methodology

Erica Scott described the Department's methodology for the wholesale (cultivation) excise tax fair market value. Taxation calculates fair market value quarterly using non-affiliate wholesale transfer data reported in Metrc (the state's seed-to-sale tracking system), removes outliers and non-arm's-length transactions, and uses the median standardized price by category. Scott said the department moved from semiannual to quarterly calculations beginning Jan. 1, 2024, and aims to publish updated rates mid-month prior to each effective date.

Questions from committee members and agency responses

Committee members pressed agencies about the scale and causes of the unpaid liabilities and enforcement options. Assemblymember Quilon noted the unpaid balance and emphasized the fiscal consequence: "That's revenue that needs to go, obviously, into our state's education fund," he said.

Assemblymember Gallant asked about civil penalties and enforcement revenues; CCB staff said civil penalties collected do not cover the agency's operating budget and provided historical complaint-and-penalty counts for 2022–2024. CCB Executive Director James Humm, who led the board presentation, described the board's structure and regulatory responsibilities and said the agency is focused on public safety and creating stability for industry participants.

Illicit market, consumption lounges, and operational notes

Both agencies told the committee they are tracking illicit-market activity and synthetic cannabinoid products sold outside the regulated market; the CCB said it is partnering with the Department of Public Safety and local jurisdictions and has used portable testing labs in enforcement work. The CCB also reported issuing two new licenses in a White Pine County licensing round and continues to process consumption-lounge applications.

What the agencies said they will do next

- The Department of Taxation will present SB41 to the committee later in the session as a tool to improve collections and allow administrative suspension or revocation of tax permits that underpin CCB licensing.

- The Cannabis Compliance Board is advancing regulatory revisions that reclassify many tax-related violations into a lower penalty category while keeping pathways to escalate for repeat or serious noncompliance.

Ending note

Committee members asked the agencies for more data, including aging detail on accounts receivable and information on license transfers or receiverships tied to tax debt; both agencies agreed to provide additional records on request. The Committee recessed after public comment and closed the hearing.