In Nevada, cannabis distribution is subject to rigorous oversight by the Cannabis Compliance Board (CCB), which enforces licensing, tracking, and tax regulations. When distributors breach compliance, the CCB and state laws outline a tiered enforcement framework designed to safeguard public health, ensure tax correctness, and uphold traceability from seed to sale.
Investigations and Referrals
The Cannabis Compliance Board initiates investigations through inspections, audits, and compliance reviews. Serious violations may prompt involvement by the Nevada Attorney General’s Office. Investigation findings are reviewed by the full Board, which then decides on enforcement action.
Categories of Violations
Under Nevada Cannabis Compliance Regulations (“NCCR”) 4, violations fall into five categories based on their severity:
- Category I: Most serious, including falsifying documents, unlicensed operations, diversion, tax evasion, or obstructing inspections. These may result in fines up to $90,000 for a first offense and license revocation for repeated offenses.
- Category II: Threats to public health, such as unauthorized minors on-site or accidental false reporting. Penalties include up to $25,000 fines and license suspensions; repeat offenses can lead to license revocation.
- Category III: Less severe but still concerning infractions, like record-keeping failures or improper packaging. Fines escalate from $10,000 for initial violations to $90,000 and suspension for repeat offenses, with revocation possible after multiple violations.
- Category IV: Missteps like advertising breaches, poor sanitation, or equipment issues. Fines start at $5,000 and can rise to $80,000, with suspensions up to 30 days or revocation after multiple offenses.
- Category V: Minor administrative failures—late reporting or minor signage infractions. Initially met with warnings, escalating to fines of up to $2,500, and repeated issues can lead to heavier fines.
Sanctions Imposed
Consequences vary widely and can include:
- Civil Penalties: Per violation, assessments can hit $90,000. The Board weighs factors like violation severity, financial benefit, business size, compliance history, remedy efforts, and impact on operations.
- Suspension/Revocation: Licenses or agent cards may be suspended temporarily or revoked for up to 10 years, depending on the violation category and frequency.
- Summary Suspension: In urgent cases presenting immediate threats to public safety, the Executive Director can enact immediate license suspension pending formal proceedings.
High-Profile Enforcement Cases
Notable examples illustrate the CCB’s enforcement muscle:
- CW Nevada had its licenses revoked and paid $1.25 million after the Board found untracked inventory, evidence tampering, and other compliance failures.
- In 2020, another Las Vegas distributor was fined $1.25 million, with six licenses suspended for keeping off-the-books inventory and evading employee wages.
- Infractions like expired employee IDs and security log failures led to fines up to $255,000 and losses of operating permits for Nevada Medical Group and Silver State Cultivation.
Due Process and Appeals
Licensees receive formal complaints listing violations, potential penalties, and hearing procedures. They have 20 days to answer or file for judicial review. After hearings, the Board issues a final order within 30 days, with all findings and decisions made publicly available.
Key Takeaways
Nevada’s cannabis regulators employ a transparent, tiered approach to enforcement:
- Investigations & Categorization – Violations are assessed under NCCR-Tiered categories.
- Graduated Penalties – Ranging from warnings to license revocation and steep fines.
- High-Profile Penalties – Large-scale fines and revocations signal zero tolerance.
- Legal Safeguards – Licensees have procedural rights and appeal mechanisms.
This structure not only deters non-compliance but underlines Nevada’s dedication to safe, transparent, and accountable cannabis distribution.