©2020 Clark County Bar Association. The content on this page was originally published in the “Cannabis Law” issue of Communiqué* (April 2020). This issue features content written by members of Nevada’s legal community including:
- “The Cannabis Compliance Board” By Jennifer Roberts, Esq.
- “Nevada Prohibits Pre-Employment Discrimination for Marijuana Use” By Bridget Kelly, Esq.– CCBA CLE Article #8 [see note below]
- “It’s “Safe” to Assume That Politics Will Delay the Marijuana Industry’s Access to Financial Institutions” By James A. Kohl, Esq.
- “Summaries from 3-2-20” by Joe Tommasino
Additional content may be found in the full-color issue of the publication (print and PDF versions), including:
- CCBA President’s Message: “CCBA’s 40 Year Club of 2020” by Mariteresa Rivera-Rogers
- View from the Bench: “Offering CLE for Pro Bono to Increase Access to Justice” By Chief Justice Kristina Pickering
- Pro Bono Corner “Retired and Semi-Retired Attorneys Make a Huge Difference for Pro Bono Clients” By Noah Malgeri, Esq.
- Bar Activities
- Member Moves
- New Members
- The Marketplace
Special thanks to the following businesses for their support of Communiqué* (April 2020):
- Advanced Resolution Management
- Aldrich Law Firm
- Ara Shirinian Mediation
- Bank of Nevada
- Dickinson Wright PLLC
- Ghandi Deeter Blackham
- Holley Driggs
- Jason D. Mills & Associates
- Jason P. Stoffel-Candidate for Family Court Dept. T
- Las Vegas Legal Video
- Lawrence C. Hill & Associates
- Legal Wings, Inc.
- Lewis Roca Rothgerber Christie LLP
- Maricar “Rica” Andrade-Candidate for Family Court Dept. Y
- Marquis Aurbach Coffing
- Nevada Digital Forensics
- Phil Aurbach
- Portraits to You
- Reisman Sorokac
- Roberts Stoffel Family Law Group
- State Bar of Nevada
- Welt Law
The Cannabis Compliance Board
By Jennifer Roberts, Esq.
At the time of this writing, Governor Steve Sisolak has appointed three of five members of the Cannabis Compliance Board (“Board”). The Board was created pursuant to NRS 678A.360 created during the 2019 legislative session. The law was prompted by one of the first initiatives Governor Sisolak undertook in his administration. Twenty days after taking office, Governor Sisolak created the Advisory Panel for Creation of a Cannabis Compliance Board.
The purpose for the Advisory Panel was to provide guidance and recommendations for creating the law that established the Board and the mechanisms to oversee and regulate the existing medical and recreational cannabis industries. Although cannabis regulation already rested within the Department of Taxation, the Governor wanted to model the new Board after another Nevada state agency that was housed within the Department of Taxation at one time–the Nevada Gaming Control Board.
When Nevada first legalized gambling in 1931, tax and regulation of the industry was conducted by local sheriff’s departments. In order to capture some of the revenue from gambling, the Nevada Tax Commission was given state regulatory responsibility over the gambling industry. Seeing a need to combat organized crime, especially under threat by the federal government of the FBI raiding Nevada casinos, the Nevada Gaming Control Board was established as an arm of the Nevada Tax Commission. Four years later, the Nevada Gaming Commission was established and the Gaming Control Board became a companion agency to the Gaming Commission to provide robust regulation of an industry with a notorious history.
To follow a similar trajectory and have an agency dedicated to vigorous regulation of a growing industry in Nevada, the Cannabis Compliance Board is tasked to conduct thorough reviews of those seeking a license to operate in the industry, to conduct audits that ensure that industry members are properly paying taxes to the state, and to perform enforcement activities that could result in discipline against licensees who are not abiding by regulation.
While the Cannabis Compliance Board is a new agency, there is existing precedent for how a privileged industry can be properly regulated in Nevada.
Jennifer Roberts, Esq. is currently in Nashville helping set up sports gaming regulation in the State of Tennessee. She continues to maintain her own boutique law firm, Roberts Gaming Law, Ltd. Her legal practice focuses on federal, state, and local liquor laws; land use and zoning; business licensing and compliance; and regulatory and administrative law. She served as a member of the Advisory Panel for Creation of a Cannabis Compliance Board.
CCBA CLE Article #8:
“Nevada Prohibits Pre-Employment Discrimination for Marijuana Use”
By Bridget Kelly, Esq.
Note in regards to CCBA Article #8: The Clark County Bar Association (CCBA) offers 1.0 general Continuing Legal Education (CLE) Credit (for 2020) to Nevada lawyers who read the article, complete the accompanying test, and make payment to Clark County Bar Association, PO Box 657 Las Vegas, NV 89125, and per the offer described in the print and PDF versions of the April 2020 issue of Communiqué (see pages 20-25 of https://www.clarkcountybar.org/wp-content/uploads/2020-4-Communique-32-pages-final-web.pdf). CCBA is an Accredited Provider with the NV CLE Board.
On January 1, 2020, Nevada became the first state to prohibit discrimination against prospective employees for testing positive for marijuana on a pre-employment drug screening (Glasser, N. et al., “Nevada Becomes First State to Prohibit Rejection of Applicants Testing Positive for Marijuana,” The National Law Review, July 1, 2019. https://www.natlawreview.com/article/nevada-becomes-first-state-to-prohibit-rejection-applicants-testing-positive). With the progressive legalization of medical then recreational marijuana, Nevada law has developed corresponding protections for law-abiding users in the workplace. However, these protections are not limitless and employers must balance state and federal requirements with overriding safety concerns.
Discriminatory Disqualification Prohibited
Assembly Bill 132 (2019) amended NRS Chapter 613 to generally prohibit any Nevada employer from failing to or refusing to hire a prospective employee due to the presence of marijuana on a screening test. Two of the bill’s sponsors, Assemblywoman Dina Neal (District 7) and Assemblyman Edgar Flores (District 28), stated AB132 was proposed out of concern for law-abiding marijuana users’ automatic disqualification from employment opportunities (Minutes of the Assembly Committee on Commerce and Labor, February 20, 2019, “Assembly Minutes”).
The legalization of recreational marijuana in Nevada in 2017 created a disconnect between prospective employees’ legal activities and employers’ “drug-free” expectations. Marijuana is now essentially on par with alcohol, yet applicants are much less likely to test positive or be disqualified for the presence of alcohol on a screening test compared with marijuana. As detectable levels of marijuana can remain in the system for thirty days or more, compared with hours or days for alcohol, marijuana users have been at a distinct disadvantage when applying for jobs which test for such substances as a condition of employment.
According to Assemblywoman Neal, “We are currently in the weird position of saying that one group of individuals is not worthy because they smoke marijuana, but at the same time somebody could be drunk as a skunk last week and still have a job. What is the difference?” (Assembly Minutes, p. 16.)
As Assemblyman Flores stated, AB132 “is only meant to address that individual who says I did not know that a requirement for your job was that I could not smoke marijuana. I smoked it last month. Allow me to go through the interview process and once we form that employee/employer relationship, if you do not want me to drink, smoke, or anything else, I will do that.” (Assembly Minutes, p. 27.)
Assembly Bill 132, codified as NRS 613.132, also affects drug screens required within 30 days of employment. Employees who fail such a test have the right to submit an additional screening test in rebuttal, at the employee’s expense, which the employer must accept and consider appropriately.
Employer Autonomy Over Workplace Conditions and Job Requirements
The pre-employment discrimination protections of NRS 613.132 do not apply to applicants for positions that, in the determination of the employer, could adversely affect the safety of others. Specifically, the law excludes firefighters, emergency medical technicians, and drivers of motor vehicles subject to federal or state screening tests. The protections also do not apply to the extent they are inconsistent or conflict with provisions of an employment contract, collective bargaining agreement, or federal law; nor do they apply to positions funded by federal grants.
Although NRS 613.132 extends protection of legal substance use to the pre-employment stage, it does nothing to limit an employer’s discipline or termination of an employee who is impaired on the job. Employers may still implement drug-free workplace policies and employees may face adverse action for violations. As Assemblywoman Neal stated, “[AB132] deals only with what happens when a recreational user who smokes only on the weekend is looking for employment. It does not deal with what happens in the workplace. If you get caught smoking on the job, you are going to be fired. If you violate any of the workplace safety rules, you will be fired . . . . [Using marijuana] is as legal as being drunk, but nobody is saying you can go to work drunk.” (Senate Minutes, p. 6; Assembly Minutes, p. 7.)
Accommodating Employees’ Private Use of Legal Substances
Since 1991, it has been unlawful to fail or refuse to hire a prospective employee, or discharge or discriminate against an existing employee, for engaging in the lawful use of any product during non-working hours and outside the employer’s premises (NRS 613.333). While this law was enacted primarily to protect tobacco users from discrimination in the workplace, it had since been interpreted to protect users of medical marijuana since its legalization in 2001 (Minutes of the Senate Committee on Commerce and Labor, May 10, 2019, “Senate Minutes,” p. 10; (Minutes of the Senate Committee on Commerce and Labor, May 29, 1991, p. 12).
However, NRS 613.333 did not address applicant disqualification for failing a pre-employment drug screen. Employers could choose whether or not to screen applicants for marijuana, and make hiring results based upon those results.
With the growing legalization of both medical and recreational marijuana across the United States, employers have found it increasingly difficult to maintain a marijuana-free workforce. Caesars Entertainment had voluntarily stopped pre-employment marijuana screening in 2018, in order to find qualified workers (Velota, R., “Caesars no longer screening job applicants for marijuana use,” Las Vegas Review-Journal, May 7, 2018 https://www.reviewjournal.com/business/casinos-gaming/caesars-no-longer-screening-job-applicants-for-marijuana-use/).
According to Thoran Towler, CEO of the Nevada Association of Employers, approximately half of the associations’ over 400 members had already stopped pre-employment screenings for marijuana as of June 2019 (Nevada Association of Employers, “Nevada Firms Barred from Using Marijuana Test to Reject Job Seekers,” June 18, 2019 https://www.nevadaemployers.org/nevada-firms-barred-from-using-marijuana-test-to-reject-job-seekers/). Senator James A. Settelmeyer noted that in Washoe County, employers “ran out of employees, and many [employers] quit testing because they just cannot find anyone to work who can pass a drug test.” (Senate Minutes, p.12.)
It’s “Safe” to Assume That Politics Will Delay the Marijuana Industry’s Access to Financial Institutions
By James A. Kohl, Esq.
In 2015, I wrote an article for the Communiqué outlining the problems faced by the marijuana industry because it was blocked from access to financial institutions. The fundamental problem the industry faced was twofold. First, under federal law, marijuana remains illegal and remains a Schedule I drug pursuant to the federal Controlled Substance Act. 28 U.S.C. § 801 et. seq. Second, financial institutions are prohibited from accepting funds that were derived from criminal activities. As a result, the Federal Reserve remains unwilling to approve a master account for financial institutions that service medical marijuana clients. A master account allows a financial institution to deposit money into a Federal Reserve branch which is converted into an electronic credit. The institution can then transfer money between banks, using the primary nine-digit routing transit number.
In the past five years, Americans have become open to the cultivation, manufacturing, and sale of marijuana products. Even though marijuana is legal in 11 states for adults over the age of 21, and legal for medical use in 33 states, banks remain unwilling to accept funds that are derived from marijuana operations for fear of punitive regulatory action. In interviews with representatives from a local bank and a nationally associated bank, they both expressed that they remain strongly averse to accepting funds from marijuana businesses notwithstanding state regulations permitting them. Additionally, both institutions stated that they audit accounts that are suspected to be related to regulated marijuana businesses. If the audits determine that the accounts are associated with regulated marijuana businesses, they close the accounts and return the funds. Neither financial institution were opposed to taking the money per se. For them, the math is simple; deposits from regulated marijuana businesses are a mere fraction of the total deposits they control. They are not willing to risk federal discipline and possible prosecution for such a relatively small amount of funds.
As a result, marijuana businesses are literally sitting on piles of cash. The problem is not limited to companies that are directly involved in the cultivation, processing, or sale of marijuana. Financial institutions refuse to accept funds from service providers of state-sanctioned marijuana businesses. The accounts of lawyers, plumbers, landlords, etc. have been closed and returned to their owners because they have accepted funds from regulated marijuana businesses.
To alleviate the problem, on March 7, 2019, Representative Ed Perlmutter (D-CO) introduced the Secure and Fair Enforcement (SAFE) Banking Act. SAFE will stop federal banking regulators from punishing financial institutions that provide banking services to state-regulated marijuana businesses and their related providers. Under this bill, federal regulators will not be allowed to do the following: (1) terminate or limit deposit insurance on the grounds that the financial institution provides services to state-regulated marijuana businesses; (2) prohibit or discourage financial institutions from providing financial services to state-regulated marijuana businesses; (3) recommend or encourage financial institutions to not offer banking services to account holders that are affiliated with state-regulated marijuana businesses; (4) discipline or take adverse action related to a loan that was made to individuals on the sole basis that the individual owns a regulated marijuana business, or leases real estate or equipment to a regulated marijuana business; or (5) penalize financial institutions that chose to provide financial services to regulated marijuana businesses or their providers.
SAFE quickly gained support in the House, and on September 25, 2019, the bill was passed. There are currently 206 members of the House of Representatives who have cosponsored the bill. Almost one half of House Republicans voted to enact SAFE. When the House passed the bill, it appeared that relief was on the horizon for state-regulated marijuana businesses and their providers.
Pundits were hopeful that SAFE would make it through the Senate when Mike Crapo (R-ID), the Senate Banking Committee Chairman, stated that he would put the bill up for a Committee vote in September. That proved to be false hope, as Senator Crapo has not called for a vote and appears to be unlikely to do so anytime in the near future.
On December 18, 2019, Senator Crapo published a laundry list of concerns about SAFE. He stated, “I remain firmly opposed to efforts to legalize marijuana on the federal level, and I am opposed to legalization in the state of Idaho.” Senator Crapo further stated that he was concerned that SAFE did not address the level of THC in marijuana, marketing to children, the lack of research on the effects of marijuana, and the need to prevent criminals from laundering their money into the financial system via the marijuana industry. Senator Crapo wants a full referendum on marijuana as opposed to passing SAFE to ensure the denial of access to regulated marijuana business to financial institutions.
According to a Pew Research Center Survey published in November 2019, two thirds of Americans favor legalization of marijuana in some form. Idaho, however, remains firmly opposed to legalizing marijuana. Senator Crapo’s holdup of SAFE illustrates the old axiom that all politics are local. Until marijuana is removed from Schedule I or SAFE is passed by the Senate and signed into law, Nevada’s regulated marijuana businesses will remain caught in the middle of politics.
James A. Kohl is an attorney, mediator, and arbitrator who has practiced in all phases of commercial litigation for over 20 years. He handles a variety of cases in multiple industries and fields, and advises business owners in the creation, acquisition, and disposition of entities and real estate. firstname.lastname@example.org.
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