1. The State Treasurer shall create a pilot program for the establishment of one or more closed-loop payment processing systems that enable cannabis establishments, medical cannabis establishments, consumers and holders of registry identification cards or letters of approval to engage in financial transactions in a safe and efficient manner.

2. A closed-loop payment processing system established under the pilot program must be designed to achieve the following purposes:

(a) Reducing the risk to the safety and welfare of the public posed by the holding, distribution and transportation of large sums of cash;

(b) Providing cannabis establishments and medical cannabis establishments with a safe, secure and convenient method of paying state and local taxes;

(c) Providing the State and local governments with a safe, secure and convenient method of collecting taxes imposed on cannabis establishments and medical cannabis establishments;

(d) Providing transparency into financial transactions related to cannabis establishments and medical cannabis establishments;

(e) Preventing revenue from the sale of cannabis from going to criminal enterprises, gangs and drug cartels;

(f) Preventing cannabis from being diverted across state lines;

(g) Preventing the distribution of cannabis to minors; and

(h) Preventing lawful financial transactions relating to cannabis from being used as a cover or pretext for the trafficking of controlled substances or other unlawful activities.

3. A closed-loop payment processing system established under the pilot program must allow a cannabis establishment, medical cannabis establishment, consumer or holder of a registry identification card or a letter of approval to utilize accounts created by the State and must include, without limitation, the following capabilities:

(a) The keeping of records in real time;

(b) A business-to-business payment system;

(c) A method in which to authenticate the identities of consumers and holders of a registry identification card or letter of approval;

(d) A method in which to initiate transactions by means of a secure mobile application or a physical card; and

(e) A method which allows the State or a local government to collect tax revenue associated with a transaction made utilizing the closed-loop payment processing system.

4. The State Treasurer shall adopt regulations necessary to carry out the pilot program. Such regulations must not require a cannabis establishment, medical cannabis establishment, consumer or holder of a registry identification card or letter of approval to participate in the pilot program.

5. The State Treasurer may adopt regulations establishing a schedule of fees for participation in the pilot program. The fees must be sufficient to cover the costs of administering the pilot program.

6. Financial information and any other information specifically relating to a person who utilizes a closed-loop payment processing system is confidential and privileged to the same extent that such information would be confidential and privileged pursuant to NRS 360.255. The State Treasurer, a vendor in which the State Treasurer contracts and any other person involved in the establishment or operation of a closed-loop payment processing system shall not disclose any such information.

7. The State Treasurer shall prepare a detailed plan for the establishment of a closed-loop payment processing system under the pilot program created pursuant to subsection 1 and present the plan to the Interim Finance Committee for its review and approval. The plan must identify the vendor with whom the State Treasurer intends to contract. The State Treasurer shall not commence the operation of a closed-loop payment processing system until the Interim Finance Committee approves the plan prepared pursuant to this subsection.

8. On or before December 1, 2020, and every 6 months thereafter, the State Treasurer shall submit to the Director of the Legislative Counsel Bureau for transmittal to the Legislature, if the Legislature is in session, or to the Legislative Commission, if the Legislature is not in session, a report concerning the pilot program. The report must include, without limitation, a description of the status and results of the pilot program and recommendations for legislation to facilitate the improvement or expansion of the pilot program.

9. Except as otherwise provided in subsection 7, at least one closed-loop payment processing system established under the pilot program must begin operating not later than July 1, 2020.

10. As used in this section:

(a) “Cannabis” has the meaning ascribed to it in NRS 678A.085.

(b) “Cannabis establishment” has the meaning ascribed to it in NRS 678A.095.

(c) “Closed-loop payment processing system” means a cashless system established by the State Treasurer pursuant to this section to monitor and facilitate the financial transactions of cannabis establishments, medical cannabis establishments, consumers and holders of registry identification cards or letters of approval.

(d) “Letter of approval” has the meaning ascribed to it in NRS 678C.070.

(e) “Medical cannabis establishment” has the meaning ascribed to it in NRS 678A.180.

(f) “Registry identification card” has the meaning ascribed to it in NRS 678C.080.

(Added to NRS by 2019, 2508, effective July 1, 2020)