Is the identity of a medical marijuana establishment business license holder confidential?

medical marijuana

City of Sparks vs. Reno Newspapers, Inc.  (Nev. Supreme Ct. – Aug. 3, 2017)

Persons seeking to operate medical marijuana establishments (MMEs) must register with the Department of Health and Human Services’ Division of Public and Behavioral Health (Division), NRS 453A.322(1), and, if located in a jurisdiction so requiring, obtain a business license, NRS 453A.326(3). Reno Newspapers, Inc., which owns and operates the Reno Gazette-Journal (RGJ), a daily newspaper, asked the City of Sparks to disclose copies of the business licenses of persons operating MMEs in the City. In response, the City produced the business licenses, but redacted the licensees’ identities from the documents. The RGJ demanded unredacted copies of the business licenses, and the City denied the subsequent request.

Thereafter, the RGJ filed a petition for a writ of mandamus in the district court to compel the City to disclose the redacted information. The district court held that the petition was procedurally proper and concluded that the City had a duty under the Nevada Public Records Act to disclose the identities of the business license holders, which duty was not exempted by NAC 453A.714’s confidentiality provision, granted the petition. The City appealed.

The Nevada Supreme Court noted that generally, the Nevada Public Records Act (NPRA) requires disclosure of all public records generated by government entities. The Court also concluded that the plain language of NRS 453A.370(5) was sufficiently definite in granting the Division authority to create laws relating to confidentiality, and NAC 453A.714 was adopted accordingly.

The City argued that NAC 453A.714 expressly and unequivocally prohibits disclosure of the identity and identifying information of MME business license holders because (1) the license holders are persons who “deliver” services under NRS Chapter 453A, as that term is statutorily defined; and (2) when NRS 453A.370 was enacted in 2013, the Nevada Legislature intended to expand the grant of confidentiality beyond the existing medical-marijuana-related confidentiality statutes.

The Court explained that NAC 453A.714(1) (2014) prohibits disclosure of “the name or any other identifying information of any person who facilitates or delivers services pursuant to this chapter or chapter 453A of NRS.” The term “[d]elivers” under NRS Chapter 453A “has the meaning ascribed to it in NRS 453.051” and “means the actual, constructive or attempted transfer from one person to another of a controlled substance, whether or not there is an agency relationship.” NRS 453A.060. A “[m]edical marijuana establishment” is defined as either: (1) “[a]n independent testing laboratory;” (2) “[a] cultivation facility;” (3) “[a] facility for the production of edible marijuana products or marijuana-infused products;” or (4) “[a] medical marijuana dispensary.” NRS 453A.116. Of the four types of MMEs, three of them engage in the act of delivering marijuana as part of their statutory functions, with the exception of “testing laboratories” under NRS 453A.368. Although NRS 453A.368 does not use the term “delivers,” the Court indicated that testing laboratories clearly engage in “the actual, constructive or attempted transfer from one person to another of a controlled substance” to test marijuana. Thus, the Court concluded that all MMEs “deliver” under NAC 453A.714 as part of their statutorily prescribed functions.

The Court further noted that the term “constructive transfer” under NRS 453.051 incorporates MME business license holders pursuant to the nature of their business activities. Although the term “constructive transfer” is not defined under NAC Chapter 453A, NRS Chapter 453A, or Nevada caselaw, Black’s Law Dictionary defines a “constructive transfer” as la] delivery of an item—esp. a controlled substance—by someone other than the owner but at the owner’s direction.” Therefore, the Court determined that an MME business license holder necessarily engages in the act of delivering when instructing the MME on the transfer of controlled substances and, thus, is included under NAC 453A.714’s grant of confidentiality for “any person who. . . delivers services.” NAC 453A.714.

The RGJ countered that the term “delivers” is used in conjunction with the term “services,” and the exact phrase “delivers services” is defined in neither NRS Chapter 453A nor NAC Chapter 453A. However, the Court noted that applying a common sense reading of the term “services” in conjunction with the term “delivers” as defined under NRS Chapter 453A, one can logically infer that “services” refers to the acts of producing and distributing medical marijuana, which is the title of the subsection governing the statutes to which the regulation applies. See NRS 453A.320-.344; NAC 453A.300-.720. As all MME business license holders are engaged in the acts of producing or distributing medical marijuana, the Court concluded that the term “delivers” includes the activities of MME business license holders.

The Court also noted that during the enactment of NRS 453A.370 in 2013, the Nevada Legislature could have referenced or relied on the language of the two existing confidentiality statutes under NRS Chapter 453A, but it chose not to do so. See D.R. Horton, Inc. v. Eighth Judicial Dist. Court, 125 Nev. 449, 456, 215 P.3d 697, 702 (2009) (“This court also assumes that, when enacting a statute, the Legislature is aware of related statutes.”). The Court concluded that the Nevada Legislature intended to expand the grant of confidentiality beyond the then-existing medical marijuana-related statutes to include the identifying information of MME business license holders.

Thus, the Court concluded that (1) NRS 453A.370(5) confers on the Division power to withhold identifying information of certain persons; and (2) the identifying information of MME business license holders has been expressly and unequivocally deemed confidential under NAC 453A.714 and, thus, is exempt from disclosure. Accordingly, the Court reversed the district court’s order granting the RGJ’s writ mandating disclosure.

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