High Sierra: How lawmakers could change Nevada marijuana policy

What will state lawmakers do to mold recreational marijuana law?

'The genie will not be put back'

Recreational marijuana is here to stay

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Nevada lawmakers need to come up laws to regulate the Silver State's recreational pot industry. Brian Duggan and Jenny Kane/RGJ

Tick Segerblom admits to smoking marijuana on occasion.

“When I go to Colorado or Washington, I have been known to try it,” says Segerblom, a Democratic state senator from Las Vegas.

One of the most vocal advocates in the Legislature for legalizing marijuana, the senator even has a strain of pot named after him — the Segerblom Haze, courtesy of a local cultivator.

Segerblom is the only lawmaker so far to propose new laws pertaining to marijuana for the upcoming legislative session. Drafts of his bills, seven so far, would address the legalization of recreational marijuana, expected to be a hot topic during the session that begins Feb. 6 and ends four months later.

While lawmakers cannot touch the law passed by voters in November for three years, they will be able to craft complementary laws during the session that will clarify the regulations surrounding marijuana consumption and distribution.

The new law allows Nevadans 21 and older to possess up to one ounce of recreational marijuana or one-eighth ounce of concentrate, but it is not legal to buy or sell recreational product yet. It is still illegal to smoke pot in public too.

“It’s going to make it – the genie will not be put back in the bottle. Marijuana is going to be legal in this century, and forever,” Segerblom said.

One of the first jobs Segerblom had was as a staffer under President Jimmy Carter, during which he said he realized that “reefer madness” was a lot of hype. He said that he used to smoke weed on the White House roof.

“(Carter’s) administration was on the verge of legalizing and decriminalizing marijuana. It’s not that bad, especially if you compare it to alcohol and cigarettes and oxycodone,” Segerblom said.

By fiscal year 2018, the state could bring in more than $17 million from a 15-percent wholesale tax and licensing fees, and an additional $29.5 million if Gov. Brian Sandoval's 10-percent retail tax moves forward. Additional money would be pulled in from the existing state and county sales tax rates.

Financial experts caution, though, that the industry and its effect on a state's economy can be unpredictable, especially in that first year. No one knows how much marijuana actually will sell.

While Segerblom is all in, the rest of the Legislature is not quite as gung-ho as the ganja-friendly politician. Other senators and members of the Assembly will weigh in, especially considering how many gray areas exist in the current measure.

"It's going to have an impact on emergency services, and the counties have no way to pick up extra funding for something like that," said Republican Assemblyman John Ellison of Elko, who is worried that youth will end up in the emergency room after experimenting with marijuana.

He is also concerned that petty crime will rise, and DUIs. A lot of the constituents who opposed legalization in the first place are concerned about the same matters. Statewide, about 45 percent of voters marked "no" to legalizing recreational marijuana.

"People better read that law because a few kids walked up to a cop and lit up a joint on New Year's (in Elko). You can guess where they went for the night," Ellison said.

Ellison represents several rural counties that are deeply concerned about marijuana, and he reiterated that local law enforcement will not turn a blind eye to those smoking marijuan in public.

During the session, lawmakers will have to carve out laws that make room for recreational marijuana in Nevada’s vice-friendly culture but also safeguard Nevadans.

First steps of legalization

From a federal standpoint, marijuana is still illegal. The U.S. Drug Enforcement Administration considers it a Schedule I drug. Schedule I means it is one of the drugs with the most potential for use in the country.

For marijuana, its status is a reflection of how accessible it is nationwide.

However, a 2013 document known as the Cole Memorandum maintains that if states pass legislation concerning marijuana, the federal government will respect such legislation, assuming it allows law enforcement and the Justice Department to focus its resources on more serious crimes.

In November, Nevada became one of eight states to take advantage of the memo by legalizing recreational marijuana, though it has permitted medical marijuana since 2000.

“The People of the State of Nevada find and declare that the cultivation and sale of marijuana should be taken from the domain of criminals and be regulated under a controlled system, where businesses will be taxed and the revenue will be dedicated to public education and the enforcement of the regulations of this act,” the new law reads.

The Department of Taxation must write all of the requirements for enforcing the law no later than Dec. 31 this year. Those requirements mainly address industry standards involving cultivation, production and distribution.

The Legislature -- made up of the Nevada State Assembly and the Senate -- will create other laws that will work with the existing one.

“The Legislature is most likely going to want to have (regulations) done by July 1," the beginning of the fiscal year, said Joe Brezny, former spokesman for the Coalition to Regulate Marijuana Like Alcohol. "That gives them time to approve language.

"If we don’t hit that, we’re doing the state a disservice because we’re losing out on half a year’s revenue and letting the black market thrive for that much longer,” Brezny said.

Brezny, who is no stranger to campaigning, started publicly pushing for legalization about three years ago. He realized marijuana legalization was something he cared about and wanted to promote after a U.S. Secret Service agent caught him smoking a joint while he was the Nevada campaign manager for Mitt Romney in 2008. He was lucky to keep his job at the time.

Once the regulations are in place, only licensed medical marijuana dispensaries for the first 18 months will be allowed to apply for the license to sell recreational marijuana, also referred to as retail and adult-use marijuana. Northern Nevada is already home to about a dozen medical marijuana dispensaries. Those dispensaries will continue to operate, selling only medical product, as the recreational marijuana industry finds its footing.

Industry executives will ultimately be in charge of the market prices, but the Department of Taxation will work with them to ensure the prices are lower than or at least competitive with black market prices.

Republican Assemblyman Ira Hansen of Sparks believes that the state will have a hard time smothering the black market as advocates suggest will happen.

"The illegal market hasn't changed (in Colorado)," Hansen said. "All the stuff you think would go down, it won't. DUIs have gone up in Colorado."

While Nevada is looking to Colorado and other states for guidance, lawmakers are hoping to learn from mistakes and do it better, staying ahead of the game.

One of Segerblom’s ideas is to take a note from Oregon and create an “Early Start” program, which would allow medical marijuana dispensaries to prepare for retail sales before the taxation department has its requirements finalized.

Until then, it's a sticky situation for those who want to smoke weed. Anyone 21 and older can possess recreational marijuana, but no one is allowed to buy or sell it.

Another option is to grow up to six plants, so long as a dispensary is not within 25 miles. Also, only 12 plants are allowed in a residence.

Medical marijuana cardholders still are allowed to purchase up to 2.5 ounces of marijuana from licensed medical marijuana dispensaries. For those without a card, Brezny advises, hold off.

“We’re in this gray area, but the official line I would tell people is: Don’t (buy from the black market) for the reason alone that you don’t know what you’re getting,” he said. “We waited this long. Just wait a few more months.”

Creating safeguards

There are still a lot of no-no’s when it comes to marijuana, and lawmakers will suggest more throughout the session.

Selling or giving marijuana to a minor is still a felony, driving under the influence of marijuana is a misdemeanor (the first time) and smoking in public can still warrant a fine of up to $600.

Going into the legislative session, probably the foremost priority for legislators is safety, especially for children and teens.

Gov. Brian Sandoval said he opposed legalization of marijuana because of his experiences as a judge.

“I think it’s bad for kids. I don’t think it ever has a good outcome,” Sandoval said, noting that many of the youth he encountered in court smoked marijuana.

Las Vegas Sen. Patricia Farley, nonpartisan, is writing a draft of a bill that would address concerns about edibles that are enticing to youth.

Edibles, food products that contain high doses of marijuana concentrate, would have product and packaging restrictions.

“We have a bill – it takes a lot of what we’ve learned from Colorado and Oregon. The production and cultivators have agreed to the terms. We won’t make any shapes of gummies, or cartoons. We won’t make and advertise products that would be desired by a child,” Farley said. “The packaging will be vanilla, no pretty writing or cartoons on it and it will be difficult for a child to open and it will be placed in a bag.”

Segerblom is also asking that the state review current DUI law, which prohibits operating a vehicle with any more than two nanograms of marijuana in the bloodstream.

The problem is: Most people have no clue how much two nanograms is, and law enforcement officials struggle to guide people on how much a nanogram equates to when it comes to consumption.

"One of the issues is it varies from person to person, everyone has a different tolerance," said Nevada Highway Patrol spokesman Trooper Dan Gordon just before New Year’s Eve, one of the highest DUI nights of the year. "It's not cut and clear for anyone. It varies. It depend on how much you smoke, what the content is — there are so many variables."

Although no politicians have put forth any solutions, issues that other states have encountered are banking for dispensaries, gun rights for marijuana users and how to keep tabs on purchases so that a person does not buy an ounce at one dispensary and then an additional ounce at another location the next day.

Capitalizing on marijuana

In July, the Marijuana Policy Group, a nonpartisan consultant group based in Denver, published a report forecasting the results of marijuana legalization in Nevada.

The policy group, which has acted as an adviser to the state of Colorado since it legalized marijuana in 2012, reminded Nevadans that the Silver State was not Colorado, which made $1 billion in 2016 alone off of its mainstream marijuana market.

The group estimated that by next year there will be demand for more than 101,000 pounds of marijuana in Nevada per year. That’s 51 tons of pot.

Most of the demand will be tourists, about 6.8 million of them, according to the group.

Segerblom believes one way to capitalize on that tourist population is to allow marijuana social clubs, and concert arenas and certain events the freedom to permit pot on the premises. While Segerblom said the response from casinos has been lukewarm, other venues have expressed interest at the idea.

"We can outsell Colorado on anything. We take addictive, cynical things and we sex them up and we say you can do it here. We’ve been doing it since Day One because no one wanted to come here so we had to," Segerblom said. "We specialize in addiction. You won’t get addicted if you come for a few days. You can go back to Arkansas and go to church."

The Marijuana Policy Group study also estimated that an additional 322,000 residents will buy retail marijuana, some of them former medical marijuana card holders. A slight shift is expected from medical marijuana patients, some of whom might prefer adult-use marijuana for cost reasons.

If all goes as planned, a lot of money could be coming in, but one of the most difficult and critical goals is to keep product prices below black market value, said Jacob Rowberry, a consultant with the Marijuana Policy Group.

Nevada will be competing with California, not to mention it is not the first -- but the eighth -- state to jump on the bandwagon, so the novelty is wearing off. Nevada is also more conservative and less populated than a state such as Colorado, Rowberry said.

“There’s a huge amount of speculation – you need to be skeptical. Marijuana is a very unique product, and lots of times firms or agencies are looking to other projects where they projected revenue, but there’s a lot of misinformation in this industry. There’s a lot of firms where they’re trying to generate interest in the industry,” he said.

By the numbers

Sandoval’s finance department has projected that over the next two years, Nevada will make more than $99 million from both its recreational and medical marijuana program.

The bulk of money from the recreational program will be from a 15-percent wholesale tax, applied at the cultivator’s level; the licensing fees and perhaps Sandoval's proposed 10-percent retail tax.

While the Governor's Office estimates fiscal 2018 could reel in $46.6 million, the following year could bring more. By fiscal 2019, the wholesale tax could bring in $17.1 million in revenue, and the potential 10-percent tax could bring in $39.8 million.

The revenue from the wholesale tax would be used to cover administrative costs for the recreational marijuana program, for which Sandoval has proposed $1.9 million a year. An additional $5 million would cover the costs incurred by local governments enforcing the new law. The remainder of funds would go towards Nevada public school projects.

“If there’s a buck to be made, someone’s going to make it," Segerblom said.

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