With Nevada’s medical marijuana industry on the steady rise, and with the potential for a recreational marijuana market come election time this fall, there are still some questions left unanswered for those in the industry.

Marijuana Businesses and Banking

One of the biggest question marks left (for all states that have legalized marijuana in some form) is what will happen with banking. As it stands now, using or cultivating marijuana is still illegal under federal law, and the FDIC, a federal agency, insures all nationwide financial institutions. Therefore, banks are refusing to hold accounts with businesses that participate in the marijuana market. The banks fear they are risking too much, such as administrative costs and penalties, if they allow banking opportunities with a federally illegal industry. This results in some business owners trying to hide their business purposes from the banks and in turn, causing banks to keep a close eye out for accounts that might filter into marijuana establishments.

The Problems with “Cash Only”

Because of the significant barriers between banks and marijuana establishments, many businesses have foregone trying to open bank accounts. So aside from the piles of cash collected every day, customers are also not able to use their credit or debit cards when purchasing the products. Yes, it is currently a cash-only business. This creates some major problems; from storing the money to carrying it on/off premises, both the business and the customers face security issues when handling large amounts of cash. Surrounding states, like California, Arizona, and Oregon, have already faced significant security threats such as armed robbery and theft.

Possible Marijuana Banking Solutions

While the industry still faces this problem on a day-to-day basis, government officials have begun addressing this problem in discussions and bill proposals. One bill, the Marijuana Business Access to Banking Act, was introduced a few years back. The bill would protect the bank-and-marijuana industry relationship in states where medical or recreational marijuana is legal, and prohibit penalization from the federal government. However, the bill has not yet been passed despite a fair amount of support from government officials across party lines (including Nevada’s own Senator Harry Reid, Senator Rand Paul, and Senator Bernie Sanders).

The House of Representatives passed a similar notion in 2014 that would prohibit the Treasury from penalizing banks. Additionally, the Department of Justice and the United States Treasury are both brainstorming new guidelines and regulations to help accommodate both federal law and state law regarding the marijuana establishment banking issue. The executive branch has also hinted that penalizing financial institutions for creating accounts for marijuana establishments is a low priority and they might be willing to look the other way. While these options sound promising, no option is concrete enough for banks to rely on and confidently know they will not be punished.

Nevada May Have the Answer

One of the best possible options comes from our home state. Nevada might become the first state to operate a system known as “thrift banking” for the marijuana industry, where small community banks will be privately operated and thus not insured by the FDIC. By doing so, marijuana businesses can circumvent the crippling fees and administrative issues that a federal insured would put on the industry. However, thrift banks will face their own obstacles. State regulations will govern the entities, and there will likely be costly fees, applications, rules, and requirements that the thrift banks must abide by. For example, the application requires an extensive investigation into the character, fitness, and financial standing of the applicants. Once approved, the thrift banks will have to follow numerous regulations and further the state’s objectives. Still, Nevada might pave the way for these groundbreaking institutions and help accommodate the marijuana industry until the federal government makes substantial changes.

So while banking remains an issue for the marijuana industry, there is some hope for the future. The growing industry is putting the necessary pressure on lawmakers to accommodate state’s banking needs, and government officials are responding by initiating discussions and introducing bills to the legislature. With more and more states legalizing medical and recreational marijuana, the safety issue can no longer be ignored. And while there is still a ways to go, we are at least moving in the right direction.




On a long car ride back from the soccer field this weekend, my son caught me a little off guard with some of his probing and challenging questions. Probably due to the fact that he was raised in a house with two lawyers, my son likes to think through and gather information and then likes to challenge people on their viewpoints. Others would say – he likes to argue.

So our talk went something like this:

“Mom, I saw a bunch of senators and other people on a YouTube commercial saying to vote Yes on 2. Oh and I saw you on one too, but not the one with the Senator. Why mommy are you wanting to legalize marijuana?”

To go from discussing what type of food we wanted for lunch to this, was a bit of whiplash, but I felt it important to discuss with my 9 year old why exactly I supported Question 2 – legalizing the adult use of marijuana. Here were the reasons I gave him:

Personal Freedom1. Personal freedom: I do not believe that the government should tell me what I can or cannot do with my body when it harms no one else. I do not believe that the government should be able to tell us what substances we can or cannot use. With my son I gave examples of how I think it is wrong for governments to tell women how many children they can have or to tell someone that they must have a baby. I also discussed how I think that someone should be able to eat or consume any substance they want to put in their bodies. If it doesn’t hurt others, in my opinion, it is our personal choice and the government should not be involved.


marijuana chalkboard2. For our schools. The public schools in Nevada are ranked 48 out 50 in the country. Our schools need money so that they can provide a better education to our students. I want my children to get the best education possible, and for that reason I support Question 2.


Alcohol regulation3. Regulation works. I told my son that in Nevada most kids will be offered marijuana between the ages of 9-11 (which spanned a whole other conversation with my 9 year old) and that is because it is unregulated. I truly believe that regulation works. Look at alcohol. Children between 9-11 are not offered alcohol and that is because it is regulated and you must show an ID to purchase it. Will it be instantaneous that marijuana will be off the streets and out of the black market? No, but I do believe it will work and I think it is worth the effort to regulate marijuana and make this safe substance accessible to adults while also making it less accessible to our children.

My son intently listened to my reasons and seemed to understand what I was saying. He said he liked the idea of the schools getting more money because his school needs more books in the library. But then he decided to push a little further:

“My counselor said that marijuana is a drug. She also said that people can get addicted to drugs by trying things just one time. Do you really want people addicted to marijuana?”

I then explained to him that while I do not believe that marijuana is addictive, I do understand and agree that there is a small percentage of people in the world that are prone to addiction. That yes those people can become addicted to something if they just try it one time. And that even with these type of people in mind, I would support Question 2. Why? Because regulation works. It will make it more difficult to buy the product off the black market and it will ensure that the product that is purchased is safer because it will be tested.

In the end I explained to my son that while Question 2 is talking about whether adults should be legally allowed to purchase marijuana or not, the reason I support Question 2 is all about children. I support it because I want my children and all our children to be able to make their own choices as adults, I want them to have access to better schools and I want children safe. Getting unregulated marijuana off our streets will do just that.

vote to regulate marijuanaTherefore, I ask you to stand with me and Vote Yes on Question 2.


An often over-looked area of Nevada law is the formation of businesses. However, if you are looking to start a business in Nevada, it is important to know the difference between the types of business entities. Nevada recognizes several types of businesses, including S-Corporations, C-Corporations, and Limited Liability Companies. If this sounds like a foreign language, keep reading.

For starters, Nevada businesses can be either C-Corporations or S-Corporations registered through the Nevada Secretary of State. Don’t worry; neither of these options must be determined at the formation of the business. When you first charter your corporation, it will automatically be labeled a C-Corporation. If you take no action, it will remain at the C level. Your corporation becomes an S-Corporation in Nevada when you file a form with the IRS. The form, named Form 2553, can be filed at any time. The business can revert back to a C-Corporation by filing another request with the IRS, but then may not again change back to an S-Corporation for a minimum of 5 years.


As the designated default corporation, C-Corporations are formed after filing the appropriate forms with the Secretary of State. These required documents include the “Articles of Incorporation”, and includes other information such as the business name and the name of registered agents.

C-Corporations are often favored in that there is the ability to become a publicly traded business, essentially giving way to unlimited growth potential. The Corporation can grow as big as it needs to. However, perhaps the most important detail to keep in mind is a C-Corporation is treated as a separate entity. Since it is a separate entity, the Corporation itself is taxed, and the shareholders are privately taxed. This “double” taxation is the main reason many businesses choose to become an S-Corporation and can be important for liability protection.


In Nevada, an S-Corporation treats the corporation and the shareholders as two different entities. This means that instead of the corporation filing its own income tax return, the individual shareholders instead claim their share on personal tax returns. This individual tax return includes the corporations calculated profits and losses.

S-Corporations have generally the same registry requirements through the Secretary of State as C-Corporations. However, the two may differ in requirements regarding registered agents, employee compensation limitations, employee benefits, size, and the type of business activity allowed, to name a few. These seemingly minor differences between the two types of Nevada corporations can have major consequences. Therefore, you should consult with an attorney to ensure accurate filing and formation.

Limited Liability Companies

If your business does not seem to fit in one of the above categories, Nevada also recognizes the formation of Limited Liability Companies, commonly referred to as LLCs. As the name implies, an LLC provides limited liability and protection for the business owner, and personal assets are protected from legal action against the business (with some exceptions). Like a corporation in Nevada, you can create an LLC by filing the LLC Articles of Organization with the Secretary of State. The process may also require the business name (including the LLC language), business practice, and registered agents.

An LLC most resembles an S-Corporation in that an LLC includes the “pass through” taxation that an S-Corporation has. This means an LLC is also eligible to allow the partners to claim their profits and losses on an individual tax return rather than a corporate tax return. Unlike S or C-Corporations, the biggest disadvantage of an LLC is the limited growth potential. An LLC cannot sell shares or grow beyond its capacity. However, an LLC can transfer interest within the company instead.

Business formation in Nevada is a niche area of the law that requires time, effort, and an attention to detail. If you have any questions about Nevada’s business laws, please do not hesitate to contact Connor & Connor PLLC today. You may contact one of the attorneys through e-mail at info@connorpllc.com or by phone at (702) 750-9139, or visit www.connorpllc.com. You may also visit the firm’s Facebook page at https://www.facebook.com/ConnorConnorPllc or follow the firm on twitter at https://www.twitter.com/Connor_pllc