Neal Gidvani & Phillip Silvestri of Greenspoon Marder / Nevada write……

Over a decade after Nevadans voted to legal marijuana, the legislature finally took action clarifying the state’s cannabis policy. Senate Bill 374 (SB 374), enacted in 2013, closed the loop for marijuana patients by establishing a means for card-carrying marijuana patients to legally purchase marijuana throughout the state. This was a major step forward as experts agree Nevada’s cannabis industry has potential to one of the country’s largest because of Nevada’s reciprocity and the influx of almost 40 million tourists each year.

However, nearly a year to the day after Nevada’s first dispensary opened, Nevada’s Attorney General issued Opinion No. 2016-05 (“Opinion”) functionally eliminating a portion of Nevada’s potentially lucrative reciprocity market, which had been allowing medical patients from other states to purchase medical marijuana with a only physician’s recommendation. The Opinion informed dispensary operators that they had unknowingly been breaking the law for months.

The First Draft and the Introduction of Reciprocity

Nevadans, first in 1998 and then again in 2000, voted to amend the state Constitution to allow for the medical use of cannabis. The authorization allowed for use of medical marijuana by those persons identified in a state patient registry. Fifteen years later, Nevada SB374 was introduced to the legislature on March 18, 2013, the forty-third day of Nevada’s 2013 legislative session. Near the end of a long day in session, Senator Tick Segerblom, generally known as the founding father of Nevada’s medical marijuana industry, introduced a bill that would ultimately give Nevadans a legal means to purchase medical marijuana through state approved, licensed dispensaries. The bill was immediately referred to the Senate Committee on Judiciary (“SCJ”). Notably at this time, the bill did not allow for reciprocity of any kind.

The bill was first brought on for hearing in the SCJ on March 29, 2013. While debating the bill, one senator off-handedly asked, “[s]ince we have many tourists coming to the State, would we have reciprocity with other states for their residents with medical marijuana cards?” With that question, Nevada’s reciprocity statute began to take shape. This question apparently weighed on the minds of many other Senators and members of the public, as many individuals weighed in on the issue, notably without objection to the general concept of reciprocity. Indeed, the concept seemed vital for a state that thrives on tourism. As Senator Segerblom aptly noted, “[i]f a tourist with a medical marijuana card from California came to the State with marijuana in his or her possession and got stopped by the police, if he or she showed the card, the police would not be able to arrest the person if we recognize the card.”

In its discussion, the legislature never addressed the issue of a physician’s recommendation. In fact, it was rather clear that the legislators did not want to see marijuana doctors popping up issuing recommendations as they had in California. Senator Mark Hutchison, a Republican supporter of the bill, bluntly stated “[w]e will never be Venice Beach, California. People are walking down the boardwalk, being sucked into facilities where doctors write prescriptions for medical marijuana. California, to me, is a nightmare in terms of what we want to do.” The law was designed to allow the state to track medical marijuana, including the patients who consume it. A marijuana lobbyist noted “[p]atient reciprocity programs from state to state can include databases that could be accessed with the click of a mouse. At the facility, you could call up other state programs and inquire about registered patients. We have the technology to do this.” The key, therefore, appeared to be ensuring the validity of cards presented.

Reciprocity’s Evolution and the Current Provision

Nevada’s reciprocity provision was added to the bill, and appeared in the bill’s first amendment, on April 22, 2013. The amended bill “included a reciprocity provision whereby those who come to Nevada could purchase medical marijuana if their information is in a compatible database.” The idea behind this was “to create a database where the amount of medical marijuana recommended by the doctors can be tracked and stay within the limits set forth by law to ensure the medical marijuana card is active.” The legislature also wanted to “ensure the physician has the credentials to make the recommendation.” The policy was clear, however: “[a]s long as the database is compatible, patients could have reciprocity with other states or jurisdictions.”

The first proposed amendment, however, was simply unworkable, as the technology did not exist to properly administer the contemplated databases. Accordingly, the bill was amended again, dated June 2, 2013, and provided that “someone will bring their card to a medical marijuana dispensary, and the dispensary will have the obligation to ensure the person is who he says he is through an identification and verification process, and that person will then sign an affidavit that says he is the card holder and is entitled to this purchase, and that he will abide by the quantity limitations in Nevada.”

It appears that as time was running out in the session, legislatures overlooked the idea of physician’s recommendations. Nevada updated its reciprocity provision as a short-term solution to provide a system prior to the development of appropriate databases. The current provision expires on March 31, 2018. After that time, the database requirement will be the new standard. As it stands today, Nevada Revised Statute (NRS) 453A.364 provides that Nevada will recognize a “nonresident card” for purposes of reciprocity. A “nonresident card” is defined as the “functional equivalent of a registry identification card or letter of approval.” A registry identification card is Nevada’s version of a medical marijuana card, issued by the state, and traceable just like a driver’s license.

The Proliferation of Sales Based on Physician Recommendations

While Nevada requires registration with the state for all Nevada medical marijuana patients, it is not required by all states. In California, patients are permitted to purchase medical marijuana with either a physician’s recommendation or a state-issued medical marijuana card. In fact, as little as 5-10% of California’s estimated 1-2 million medical marijuana users currently possess a state-issued medical marijuana card. The official number of cards in California is approximately 100,000. As tourists began to come into southern Nevada from California, dispensaries initially allowed recommendation holders to purchase medical cannabis.

Dispensary owners likely believed this to be a permissible act based on an imperfect reading of the statute. Specifically, the owners likely read a combination of NRS 453A364(1)(b), which provides that “a physician [must] advise the person that the medical use of marijuana may mitigate the symptoms or effects of the person’s medical condition” and NRS 453A.364(3)(b)’s indication that a person may possess a functional equivalent of a “letter of approval”1 and on that basis began to allow purchases based on physician recommendations.

The Beginning of the End

Cannabis tourism businesses erupted once dispensaries opened in southern Nevada. The state took aim at one one of these companies, 420 Tours Las Vegas (“420”). 420 had been advertising that it would pick you up in a “luxury cannabis SUV” and allow you to “get legal on the way” to the dispensary. 420 would pick up a person, connect them with a California doctor via Skype in the SUV, and allow patrons to obtain a California medical marijuana recommendation in a matter of minutes. On April 12, 2016, the State advised that “[t]he 420 Tours website incorrectly implies that the recommendation and ID are the only requirement needed to legally purchase medical marijuana. The patient must possess a valid medical marijuana card issued by a State or County and a matching government issued identification card to purchase medical marijuana from a dispensary.”

While that policy statement appeared straightforward, the state continued in their statement and advised: “any dispensary discovered selling medical marijuana to individuals using such tour business who do not comply with Nevada law could be subject to the revocation of their registration certificate.” This statement muddied the waters and implied that recommendations may be permitted if the purchasers did not arrive via a medical marijuana tour bus. Thus, the practice continued.

The Attorney General Corrects any Misconceptions

On July 26, 2016, the Nevada Attorney General’s office (“AG”) issued Opinion 2016-05. The Opinion unequivocally states that California physician recommendations are not the functional equivalent to a Nevada registry identification card. The reasons for the decision were the same as that which had permeated the evolution of medical marijuana in Nevada: transparency through registration. Because Nevada requires registration, the Opinion concluded that those who have not gone through state registration similar to that of Nevada would not be permitted to purchase marijuana through the reciprocal recognition scheme.

The AG cited provisions of NRS 453A.3642 indicating that the card must be “issued” by a reciprocal jurisdiction. Given that a physician’s recommendation is not issued by any state, it therefore cannot meet the standard. Further the AG noted that “the Nevada Legislature expressly and unambiguously declined to adopt the California model of making a registry identification card optional… and in enacting the provisions of NRS 453A.364, the Legislature specifically declined to adhere to the California model as it may have otherwise pertained to nonresident purchasers of medical marijuana.”

On August 3, 2016, the Nevada Division of Public and Behavioral Health issued a Technical Bulletin that advised that they would not take enforcement action against dispensaries for violations that occurred prior to August 15, 2016. Interestingly, this created an eleven (11) day window where dispensaries could continue to operate with impunity (at least from an administrative standpoint) while knowingly violating an AG interpretation of Nevada law. At this point, however, those days are gone. Now Nevada dispensaries are only permitted to sell to patients who live in states that have registry programs, and to which the patient is registered.

Conclusion

In the end, the practice of selling to unregistered medical patients is now understood as a misinterpretation of Nevada law, which should have been avoided from the time the first dispensary opened. The practice was not contemplated by Nevada’s legislature, and quite to the contrary, appeared to frustrate those legislators who supported the bill. The incorrect interpretation existed for a year before being swiftly corrected by Nevada’s Attorney General. Now Nevada’s medical market will need to rely mainly on its own residents. With recreational use on the ballot in November, hopefully Nevada dispensaries will be able to survive through local demand.

1 It is interesting, if not important to note that SB374 as it was passed did not include any language indicting a “letter of approval” would be sufficient. This language was apparently added during enrollment and first appeared when the bill was codified.

2 In making its determination, the AG quoted the text from SB374 and also cited to NRS 453A.364. It appears that the additional language regarding a “letter of approval” was overlooked. This is likely moot, however, as it does not resolve the issue of physician recommendations not being issued by the governing state.

AUTHORS
Neal Gidvani & Phillip Silvestri
Greenspoon Marder / Nevada

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