Nevada Gaming Commission Gets Serious Against Marijuana, Again

When the Nevada Gaming Control Board (the “Board”) warned gaming licensees (and anyone who’s ever even applied for a gaming license) not to participate in Nevada’s rapidly emerging medical marijuana industry, they meant what they said.

Just last week, the Board sanctioned its first gaming licensee, Nevada Gaming Partners, after it sought to provide slot machines to Crab Corner, a Las Vegas restaurant. Crab Corner applied to the Board for a limited gaming license to have Nevada Gaming Partners manage its five slot machines, but the Board unanimously rejected Crab Corner’s application with a strong directive to find another slot operator.

Why?

Because the wife of one of the owners of Nevada Gaming Partners owns a small percentage of a medical marijuana business recently awarded one of Clark County’s eighteen dispensary licenses.

Nevada Gaming Control Board Chairman A.G. Burnett said that splitting the two business interests between husband and wife was not enough separation to forestall the Board’s ruling essentially banning Nevada Gaming Partners from participating in the gaming industry. Burnett also said that the Board’s ruling was intended to “send a message” to the state’s casino industry.

The Board bases its “separation” memo and this recent decision on the fact that cannabis, medicinal or not, is still a federal crime. Specifically, that memo states that:

… unless the federal law is changed, the board does not believe investment or other involvement in a medical marijuana facility or establishment by a person who has received a gaming approval or applied for a gaming approval is consistent with the effective regulation of gaming. Further, the Board believes that any such investment or involvement by gaming licensees or applicants would tend to reflect discredit upon gaming in the State of Nevada.

The Board apparently believes that co-mingling gaming and cannabis has the potential not only to cause a legal melee with the Federal government, but that it also could reflect poorly on the morality of the gaming industry as a whole.

So, what’s the takeaway here? If you’re in the gaming business in Nevada, you’re playing with fire if you are participating in owning, managing, or even renting to a medical marijuana establishment, either directly or indirectly.  In virtually all of the states in which we have been involved on licensing matters (including now, Nevada), our cannabis lawyers have seen regulators take strong stands against anyone who is perceived as trying to get around the rules by seeking to do indirectly what is prohibited directly. For that reason our general advice to our Nevada clients is that mixing gambling and cannabis is too big a gamble.