Cannabis Compliance Board lifts moratorium, levies $1.25M fine in first meeting

Nevada’s Cannabis Compliance Board released the moratorium on license transfers imposed in October by Gov. Steve Sisolak after Lev Parnas and Igor Fruman, associates of Rudy Giuliani, allegedly attempted to buy their way into the state’s industry via campaign contributions.  

The two contributed to then-gubernatorial candidate Adam Laxalt, a Republican who lost to Sisolak, and to Wes Duncan, a Republican who lost his bid for Attorney General.  

“Concerns about who is interested in entering this privileged industry will always remain,” Executive Director Tyler Klimas said in response to Current’s inquiry as to what had come from the moratorium and whether an investigation revealed any irregularities. “Throughout the extended review period, the Cannabis Compliance Board worked to revamp its investigations division, putting in place procedures and beginning to more appropriately vet those interested in participating in Nevada’s cannabis industry.

“With the CCB now fully established and regulations adopted that allow for a stricter approach to background checks and licensing, there is confidence that the right structure and tools are in place to adequately address any past, present and future concerns,” Klimas said.

Klimas said the board could act on as many as 20 percent of backlogged license transfer requests at its August 25 meeting.  

The CCB also voted to approve a disciplinary settlement with CW Nevada, LLC, which was in bankruptcy and is currently in the hands of a state court receiver.  The company, which failed to pay sales taxes, sold unapproved products, and was growing untagged plants, according to regulators, agreed to pay a civil penalty of $1.25 million, pay back taxes of $1.5 million, relinquish six licenses and sell eight others. 

A court-appointed receiver said creditor claims against CW Nevada totaled more than $206 million.  The receiver allowed $31.5 million in claims to proceed, including more than $1 million owed to employees.  

CCB member Dennis Neilander abstained from voting on the CW Nevada, LLC settlement. 

As the Current reported in February, Neilander, the former chairman of the Nevada Gaming Control Board,  is of counsel to Kaempfer Crowell, a law firm that has represented CW Nevada. Neilander noted he has no pecuniary interest in the firm. 

His colleague at Kaempfer Crowell, Jennifer Lazovich, is also a licensed owner of CW Nevada, LLC. Neilander did not mention that potential conflict.  

Assembly Bill 533, passed by the 2019 Nevada Legislature, prohibits a member of the CCB from being “pecuniarily interested in any business or organization holding a license under this title or doing business with any person or organization holding a license or registration card under this title.”

“Being this is our first meeting, I want this thing to be clean,” Neilander said.  “Out of an abundance of caution, I’m going to go ahead and abstain.”

This story has been updated with comment from CCB Executive Director Tyler Klimas.