K&H Blog

Our Digest of the Department of Taxation’s FAQ for Marijuana Establishments

Advisory

The Department of Taxation delivered an FAQ about the rules and regulations for the incorporation of retail or Recreational cannabis sales, so here it is, fun sized just for you!

 

Sales on the consumer side:

We all know that adults 21 and older can purchase cannabis from licensed dispensaries now, what they need is a valid ID to prove their age. With proof of age these consumers can buy up to 1oz of flower per transaction or 1/8th of concentrate. Legally that is all they can possess. Medical patients no longer have the old purchasing limit. The max they can purchase at any location in a given transaction is the same as recreational consumers except medical cardholders can still possess up to 2.5oz.

Sales on the retail side:

Any marijuana or marijuana containing products that meet the emergency regulations released on June 26th that are currently in a dispensary’s inventory are good to sell to recreational customers from July 1 on. Anything that doesn’t meet those regulations can only be sold to medical patients.

After July 1, 2017, any cannabis that is purchased by a dual license holding dispensary from a medical only license holding cultivator or manufacturer has to be sold exclusively to medical patients. An agreement between the cultivator and the dispensaries need s to exist and dispensaries need to keep records on this inventory to show regulatory compliance. Enforcement action will be taken by the Department of Taxation if an audit shows a license holder is not in compliance.

Distribution:

The subject of numerous articles about the Nevada cannabis market is distribution. A distributor must transport all Cannabis that is intended for retail/recreational sale; this means any cannabis that is not transported through the use of a distributor can only be sold as medical.

If there are no distributors then only medical marijuana can be transported through existing methods, and only medical marijuana can be sold.

Cannabis that is purchased and transported as medical marijuana cannot be sold as retail/recreational without risking enforcement action from the Department of Taxation, including risking having your license revoked.

Taxes:

Starting July 1, 2017, marijuana will be taxed in the following way: There is a 15% excise tax on the first wholesale sale (calculated on the Fair Market Value); and a10% retail excise tax on the sale price when sold as retail/recreational marijuana. “The tax is imposed on the sales price. The sales price does not include cash discounts allowed and taken on sales.”(Department of Taxation FAQ) 
Marijuana or products sold to a patient cardholder are not subject to this 10% excise tax. This tax is based on the price before sales tax.

The 15% excise tax is not retroactive, so items sold by cultivators prior to July 1 will not be subject to the excise 15 % tax.

Under this new tax structure, only cultivators and retail stores will file and pay marijuana taxes. The Department of Taxation will “automatically convert cultivators’ tax accounts from Medical Marijuana Tax (MMT) to Wholesale Marijuana Tax (WMT). A cultivator will need to file a WMT return monthly, even if filing a “zero” return (i.e. even if there is no tax liability).

The Department will establish Retail Marijuana Tax (RMT) accounts for retail stores, who will also need to file and pay a RMT return monthly. All other licensees will have their MMT accounts removed, and will not be required to file and pay marijuana taxes.

The establishments must also file a monthly sales tax return that includes both the sales for adult-use and the sales to patient cardholders. Establishments that do not file each of the required returns – even if they do not owe tax – will receive delinquency notices from the Department.

A reminder about packaging and labeling:

We covered this in a previous post here http://khconsultingnv.com/packaging-labeling-edibles/. All products must meet these standards for retail/recreational sale as of July 1, they must meet these standards for medical marijuana by October 1, 2017.

Licensing information:

If you have a conditional approval letter that expired on June 30, but you don’t have your local zoning approval you can’t operate until the Department issues your unconditional license. You should receive this after your approval from the locality is received and your completed application if confirmed.

(Source: Department of Taxation FAQ for Marijuana Establishments 2017)

Leave a Reply