Tag Archives: Department of Taxation

Nevada Lab License Suspended Amid Potency Results Investigation

By Aaron G. Biros
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Back in September, Nevada officials announced a state-wide investigation into how products with high levels of yeast and mold were sold in dispensaries and alleged that labs could possibly be manipulating potency numbers on certificates of analysis. Then in late November, regulators suspended the license for Certified Ag Labs, a cannabis testing laboratory based in Sparks, Nevada.

Nevada regulators issued a press release alleging that products tested at Certified Ag Labs “may be labeled incorrectly and could contain a different level of THC than what is listed on product packaging.” Randy Gardner, a managing member at Certified Ag Labs told the Las Vegas Review-Journal that investigators showed up to his lab in October twice to collect samples for follow up tests.

On November 18, a state notice posted on the door of the lab read, “Registration and License Suspended,” according to the Las Vegas Review-Journal.

After that, Gardner fired back. In a statement sent out shortly after, Gardner said they were accused of lying about THC test results to the Department of Taxation (the agency that regulates cannabis in Nevada).

“The state’s decision to suspend and potentially revoke our license came without warning,” says Gardner’s statement. “This accusation is as baseless as it is appalling, as we have been completely transparent with the state at all times. We take this matter very seriously, and based on my over 30 years of laboratory experience we believe these allegations unconscionable at best.”

“The state came in for their audit then came back and suspended our license without us having a chance to further clarify or refute their findings,” the statement reads. “We hope the state appreciates that a business and its employees’ livelihoods and reputations are at stake. We are pursuing our options and all legal and equitable redress will be on the table.”

The Department of Taxation, which isn’t releasing any more information currently, says they found “inaccurate and misleading” potency test results, once they tested the samples collected from Certified Ag Labs.

This isn’t the first time Nevada regulators have suspended lab testing licenses. When Nevada legalized adult use sales and the market became operational back in 2017, the state suspended a lab’s license in September of that year. Then in late 2017, Certified Ag Labs and another lab had their licenses suspended for “not following proper lab procedures and good laboratory practices,” according to Stephanie Klapstein, spokeswoman for the Department of Taxation. Those licenses were reinstated in January of 2018.

Nevada Testing Lab Licenses Suspended, Then Reinstated

By Aaron G. Biros
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When Nevada legalized adult use sales this past summer, the market exploded and undoubtedly flooded licensed testing labs with samples to get products on shelves. In August, roughly a month after the start of adult use sales, a Las Vegas cannabis-testing lab, G3 Labs, had their license suspended for an unknown compliance issue.

“We can’t disclose the details of the suspension, including anything about penalties,” said Klapstein. “Under NRS 360.255, the information is confidential.”Then in late December, the Nevada Department of Taxation, one of the bodies tasked with regulating the state’s industry, announced in an email they suspended two more cannabis testing lab licenses. Certified Ag Lab in Sparks, Nevada and Cannex Nevada, LLC, in Las Vegas (also known as RSR Analytical Laboratories) both had their licenses suspended on December 22 and December 26 respectively.

Stephanie Klapstein, spokeswoman for the Department of Taxation, told the Reno Gazette Journal that both of those labs were not following proper protocols. “During separate, routine inspections, Department inspectors discovered that these two labs were not following proper lab procedures and good laboratory practices,” says Klapstein. “Their licenses were suspended until those deficiencies were corrected.”

According to the Reno Gazette Journal, both of those labs had their licenses reinstated and have since resumed normal business. During their license suspension, the labs were not allowed to operate and the department directed licensed cannabis businesses to submit samples to other labs. The department also directed the suspended labs in the email to coordinate with their clients who had samples in for testing; to either have their samples transferred to a different lab or a new sample taken for another lab to test. They did note that no product recalls were deemed necessary because of the suspension.

In that same email, the department directed licensed cannabis businesses to state-licensed labs in good standing, including 374 Labs, ACE Analytical Laboratory, DB Labs, Digipath Labs, MM Lab and NV CANN Lab. But on the department’s website, it says there are 11 licensed testing labs.

Back in September when we reported on the first lab license suspension, Klapstein told CIJ that under state law they couldn’t discuss any reasons behind why they suspended licenses. “We can’t disclose the details of the suspension, including anything about penalties,” said Klapstein. “Under NRS 360.255, the information is confidential.”

Because of that confidentiality, there are a number of questions left unanswered: With three lab licenses suspended in the first six months of the Nevada’s adult use market being open, how are testing labs keeping up with the market’s pace? What did those suspended labs do wrong? Do the regulations adequately protect public health and safety?

Nevada Rec Sales Launch Makes a Big Splash

By Aaron G. Biros
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On July 1st, dispensaries in Nevada began recreational cannabis sales, where thousands flocked to retail shops on opening day throughout the state. In Las Vegas, 38 dispensaries were flooded with customers in long lines, with waits up to three hours, according to the Las Vegas Sun. Nevada joins four other states, Oregon, Colorado, Washington and Alaska, in legal recreational cannabis sales.

38 dispensaries are open for rec sales in Las Vegas
Photo: David Stanley

Another article on the Las Vegas Sun claims the state did a total of $3 million in total rec cannabis sales in the first four days of it being legal. Over the next six months, it is estimated the state will do $30 million in total cannabis sales. According to that article, that generated roughly $500,000 in tax revenue for the state in those first days.

An article in the Reno Gazette Journal quotes Nevada Dispensary Association Executive Director Riana Durrett as estimating roughly $1 million in tax revenue for the state in the first four days. The four dispensaries in Reno that are open for recreational cannabis sales reaped hundreds of thousands of dollars within a few days, according to Will Adler, executive director of the Sierra Cannabis Coalition.

Blum, a dispensary with locations in Las Vegas and Reno, owned by Terra Tech, did roughly $100,000 in revenue on the first day at their Reno location, according to the Reno Gazette Journal. On Friday, July 7th, after a week of record sales, the state acknowledged there might be a shortage of cannabis, with growers unable to meet market demands. In an email sent on Friday, the Nevada Department of Taxation announced Governor Brian Sandoval endorses a ‘statement of emergency’, giving officials the ability to consider more applicants for distribution licenses, according to the Reno Gazette Journal. “Based on reports of adult-use marijuana sales already far exceeding the industry’s expectations at the state’s 47 licensed retail marijuana stores, and the reality that many stores are running out of inventory, the Department must address the lack of distributors immediately,” says Department spokeswoman Stephanie Klapstein. “Some establishments report the need for delivery within the next several days,” says Klapstein. Nevada legalized recreational cannabis on Election Day in 2016, when voters approved Ballot Question 2.

Election Day last year also yielded legal recreational cannabis in Maine, Massachusetts and California, all of which are expected to roll out regulations and implement recreational sales in 2018. Given Nevada’s massive numbers in sales and tax revenue in the first week, many anticipate high opening day sales revenue numbers in Maine, Massachusetts and California.