Nevada’s booming legal marijuana business is seemingly on a collision course with the state’s legacy casino industry, despite efforts that began five years ago to keep the businesses separate.
Those intentions notwithstanding, the lines between the two are quickly evaporating.
Nevada Gaming Control members Terry Johnson, left, and Sandra Morgan (Jeff Scheid-Nevada Independent)
Nevada Gaming Control Board member Terry Johnson drafted the May 2014 industry notice that admonished gaming license-holders, and prospective license applicants, to stay away from the then-fledgling medical marijuana business due to continued federal enforcement of anti-drug laws.
Johnson, who is now the Control Board’s senior member, said Tuesday his primary concern had a three-part rationale; legality of the drug, possible asset forfeiture, and the need to protect casinos from violating federal money laundering laws, since banks are still not allowed to conduct marijuana transactions.
“I don’t anticipate any regulatory changes, but there are still difficult questions,” Johnson said.
Eleven states – including Washington D.C. – have legalized both recreational and medical marijuana, and another 22 states have legalized marijuana for medical purposes only. However, the substance is still viewed as illegal under federal law. Marijuana is considered a Schedule 1 drug, which means possession is a felony.
That remains the crux of the issue.
Under Nevada law, legal marijuana – both recreational and medical – can only be consumed in a private residence. That means its illegal for visitors to light up, snack on an edible, or partake in any of the other consumption methods inside one of Las Vegas’ 148,000 hotel rooms.
Technically.
Photo from the Essence Dispensary website
Marijuana dispensaries are now commonplace in both the tourism corridor and near off-Strip resorts, and marketing efforts toward Las Vegas’ 42 million annual visitors are increasing. The website for the Essence Dispensary highlights its location on Las Vegas Boulevard just north of SLS Las Vegas and across from the Strat Casino and Tower. It includes a photo of the neon green building in the shadow of the Strat.
Reef promotes its “flagship” dispensary “just blocks from the famous Vegas Strip,” which “makes it easier than ever to enhance your Vegas experience.”
The Apothecary Shoppe, meanwhile, is across West Flamingo Road from the Palms and next door to the Gold Coast.
You can understand the confusion.
Johnson said gaming regulators can’t tell the dispensaries how to advertise their products, and the Control Board has not brought any disciplinary actions against casinos for allowing customers to use marijuana.
“We have been approached by some gaming licensees who have asked for guidance in implementing policies,” he said.
The Las Vegas City Council last month voted to allow existing dispensary owners to operate marijuana consumption lounges and authorized a 1,000-foot buffer zone between gaming establishments and cannabis lounges. Meanwhile, a state bill to legalize marijuana lounges died in the current Nevada legislative session.
“The passing of the ordinance answers a huge question that everyone had, which is, if all these people are coming to town, where do they consume?” Essence Cannabis Dispensaries CEO Armen Yemenidjian told the Las Vegas Sun.
In Nevada, gaming and marijuana are each big business.
Casinos produced nearly $12 billion in gaming revenue in 2018, while marijuana dispensaries reported almost $425 million in revenue from recreational sales in the 12 months ending July 2018. Medical marijuana sales brought in another $105 million. By comparison, Nevada sportsbooks took in $301 million in revenues in 2018, a single year record.
Yemenidjian – son of former MGM Grand executive and Kirk Kerkorian confidant Alex Yemenidjian – has dabbled in both worlds. He resigned as vice president of casino marketing and casino operations at the Tropicana to co-own Integral Associates. The company, which operates the three Essence dispensaries and a pair of Nevada-based cultivation and processing facilities, was sold last year to Canadian Stock Exchange-listed Green Thumb Industries in a deal valued at $290 million. The younger Yemenidjian will be added to Green Thumb’s executive team, and his father will join the company’s board.
Another comparison? In 2016, Boyd Gaming Corp. bought the two Cannery Casinos in Las Vegas for $230 million.
Changes are afoot in Nevada. Assembly Bill 132, which prohibits denial of employment because of marijuana use, either recreationally or medically, could provide guidance to casinos in hiring non-licensed gaming employees.
Nevada Governor Steve Sisolak has proposed the state regulate marijuana like it does gaming, announcing plans in January to create a Cannabis Compliance Board. Nevada’s Legislative session ends June 3, and Sisolak spokeswoman Helen Kalla said in an email, “we anticipate the Cannabis Compliance Board bill to be introduced in the coming days.”
“For gaming policy makers, it’s been an evolving process,” Johnson said.
Howard Stutz is the executive editor of CDC Gaming. He can be reached at hstutz@cdcgamingreports.com. Follow @howardstutz on Twitter.
