The enactment of business licensing fees associated with medical marijuana facilities is considered a "Rule," therefore, a Business Impact Statement is required pursuant to NRS 237. A small business impact statement questionnaire, seeking input regarding the potential impact of the proposed rules and regulations, was prepared and sent to: all members of the Nevada Division of Public and Behavioral Health’s medical marijuana List Serve, which contains 1702 recipients; the Department of Taxation’s list of interested persons (over 100 recipients); and to the Reno, Sparks, Northern Nevada Chamber of Commerce. The questionnaire was also sent to those parties who submitted formal applications to the City of Sparks for the operation of a medical marijuana establishment. Staff received six responses.

The proposed amendment adds a new Chapter 5.80, entitled “Medical Marijuana Establishments,” to provide for the licensing requirements and establishment of fees to operate Medical Marijuana Establishments including testing laboratories, cultivation facilities, production facilities, and dispensaries, which are registered and permitted by the State of Nevada under NRS Chapter 453A.

The City is proposing the following licensing fees:

"Medical marijuana independent testing laboratories shall pay license fees in accordance with Section 5.12.100 of the Sparks Municipal Code.  License fees for all other medical marijuana establishments shall be paid as follows:

A.   For medical marijuana cultivation, a base fee of $3,000.00 per year plus, for each quarter based on the establishment’s gross receipts for the previous quarter, an additional $1.00 for each $1,000.00 in gross receipts (or portion thereof) in excess of $10,000.00 dollars.

B.   For a medical marijuana facility for the production of edible marijuana products or marijuana-infused products, a base fee of $3,000.00 per year plus, for each quarter based on the establishment’s gross receipts for the previous quarter, an additional $1.00 for each $1,000.00 in gross receipts (or portion thereof) in excess shall be $10,000.00 dollars.

C.   For a medical marijuana dispensary, a base fee of $5,000.00 per year plus, for each quarter based on the establishment’s gross receipts for the previous quarter, an additional $5.00 for each $1,000.00 in gross receipts (or portion thereof) in excess of $10,000.00 dollars.

D. For self-cultivation, self-growing or self-production of medical marijuana, the person must register annually with the City of Sparks. There is no fee associated with the required registration."

Attached to the staff report is a table which compares the fees of other jurisdictions throughout the state.  Clark County, City of Las Vegas, City of Henderson, and City of North Las Vegas each propose an applicaiton fee, while Washoe County and the Cities of Sparks and Reno do not.  Sparks, Las Vegas, and Henderson each have annual licensing fees and an annual sales fee based on gross receipts.  Reno has a sales fee of $5,000 per quarter ($20,000 annually) .  As can be seen from the attached table, Sparks' proposed fee structure is similar to other jurisdictions in the state.

Because this is an emerging industry in the State of Nevada, it is unclear what service demands the industry will require.  The proposed business license fees are intended to offset the costs associated with the regulation and oversight of this new industry, including increased business license activity, code enforcement activity and police activity.  However, it is unknown whether the proposed fees will cover all costs associated with these activities.

The proposed amendment to Sparks Municipal Code Title 5 does not impose a direct and significant economic burden upon a business, nor does it directly restrict the formation, operation or expansion of a business.  The proposed ordinance complements the strict regulatory structure set forth in Nevada Revised Statutes and ensures the health, safety and general welfare of the citizens of the city is protected.  The fees imposed for the application and licensing of medical marijuana establishments are necessary to, at least partially, recover costs associated with the regulation and oversight of this industry.

Staff recommends acceptance of the Business Impact Statement and enter a finding, in complaince with NRS 237.080 and .090, that the Business Impact Statement was properly prepared and the proposed Ordinances do not impose a impose a direct and significant economic burden upon a business nor directly restrict the formation, operation or expansion of a business.

The City Council may choose to not accept the Business Impact Statement and provide further direction to staff.

I move to accept the Business Impact Statement and find the Business Impact Statement was properly prepared and the adoption of the Ordinance, amending Sparks Municipal Code Title 5, does not impose a direct and significant economic burden upon a business nor directly restrict the formation, operation or expansion of a business.