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Financial Services Law Insights and Observations

Nevada authorizes pilot program for marijuana banking

State Issues State Legislation State Regulators Medical Marijuana

State Issues

On June 5, the Nevada governor signed AB 466, requiring the State Treasurer to create a pilot program, authorized to operate from October 1, 2019 through June 30, 2023, for the establishment of one or more closed-loop payment processing systems that enable certain persons to engage in financial transactions relating to marijuana.

The closed-loop payment processing system established under the pilot program must be designed to, among other things: (i) provide marijuana establishments and medical marijuana establishments a safe, secure and convenient method of paying state and local taxes; (ii) prevent revenue from the sale of marijuana from going to criminal enterprises, gangs and drug cartels, and; (iii) prevent lawful financial transactions relating to marijuana from being used as a cover or pretext for unlawful activities. The bill requires the State Treasurer to adopt regulations to carry out the pilot program and requires that the State Treasurer submit a report concerning the pilot program on or before December 1, 2020, and every 6 months thereafter.

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