Esteban, the drug lord at the end of the underground tunnel, Nancy's ultimate boss in her current drug trade, and the mayor of his town in Mexico (that's his cover job - mayor - I love it), has shown his interest in Nancy and spanking a few episodes ago. Nancy has not followed drug cartel protocol, and needs to be disciplined. When Nancy shows up by car (not tunnel) this time, to ask Esteban for her own supply of weed (which Guillermo has refused her), Esteban asks Nancy if she realizes she needs to be punished. Nancy says yes, and - he spanks her (on her panties, to be precise).
Nancy's reaction is the key to this important episode. She's surprised, and is sore afterwards, but clearly enjoyed the spanking. She's certainly not sore at Esteban, who comes through for her with the drugs.
A breakthrough episode in more ways than one, with Nancy for the first time this season regaining some power. And those photos that Judah long ago took of her, which Andy teased her about, and Shane and we now see, ain't bad either ...
See also: Showtime's Sassy Hour of Sin ... Weeds 4.3: Nancy by the Endless Sea ... Sitting Shiva on Weeds and Laughing: 4.4 ... Nancy Has Limits: 4.9 ... Shane and Two Girls: 4.10 ... Nancy Turns a Corner: 4.11 ... The First Bitter Fruit of Telling Till: 4.12