Nevada Tax Commission approves settlements with two marijuana companies

The Nevada Tax Commission has approved two settlements with marijuana companies accused of not keeping accurate records and, in one case, yielding THC levels that were 9-10 percent higher than what an independent re-test yielded.

The approvals came Feb. 13 during a teleconference meeting of the commission members. The items were initially listed on the consent agenda, meaning they were not supposed to be open for discussion, but were later pulled for comments from commission members.

Taxation officials' complaint against Sparks-based Certified Ag Labs said the testing laboratory provided measurements of THC, the chemical in marijuana that creates a “high,” that were elevated from what they were when they were re-tested.

The complaint also alleged a list of additional regulatory violations, including failure to maintain surveillance and alarm systems, “unintentionally destroying or concealing evidence” by failing to keep a failed sample for at least 30 days, failure to destroy waste marijuana and failure to properly maintain data in the state's seed-to-sale tracking system.

In all, the penalties for the violations would have totaled $107,500. But the laboratory is admitting no liability, and agreed to a settlement of $70,000. It also served a suspension and was closed for 30 days this winter.

Proprietors of other labs argued in public comment that the state should have been harsher on the lab and revoked its license. Dr. Bruce Burnett, who founded a different cannabis testing lab, argued that the state's penalty “makes a mockery” of the regulations set by lawmakers.

Questions remain about the status of the lab's past discipline, with some critics arguing any past discipline against the lab should have increased the penalty approved Feb. 13.

The Nevada Department of Taxation and the lab itself said in 2018 that the lab had been suspended, but agency director Melanie Young said after the meeting on Feb. 13 that she wasn't aware of that violation.

State officials said during the meeting that the settlement with Certified Ag Labs was not “progressive discipline” — in other words, a harsher penalty because of previous violations.

Laura Jacobsen, who represented the lab, said she couldn't say whether the lab had come to a settlement in the past and deferred to the attorney general on whether past disciplinary action was confidential. Young said that under new law passed in 2019, disciplinary action is confidential until it is final.

The department didn't immediately respond to written questions Feb. 13 seeking clarity on the lab's record.

Jacobsen said the lab categorically denied it misrepresented results and was prepared to litigate the issue if the settlement fell through. She argued that other labs commenting on the case have a vested interest in putting Certified Ag Labs out of business.

Apart from the Certified Ag Labs case, commissioners also approved a settlement with Lone Mountain. The company was accused of failing to keep accurate records in the statewide seed-to-sale tracking system, failure to maintain records of waste product, and failure to notify the state that employees had been terminated.

Without admitting liability, Lone Mountain agreed to pay a settlement of $17,500.