On August 24, 2017, the Nevada Gaming Commission
("Commission") engaged in a "Policy Discussion"
regarding "Marijuana and the Gaming Industry." Spurred by
what has become a flood of questions from gaming licensees
regarding their responsibilities in the recreational marijuana era
in Nevada, the Commission hoped to provide some clarity and
guidance for gaming licensees regarding the issues of third-party
events and business associations.
Commission Chairman Alamo made clear at the outset that this was
not a forum in which the Commission would be rule-making, but that
it would just be a discussion of current law, as it applies to
certain issues that have been raised by licensees.
Before delving into specific issues, however, Chairman Alamo also
made a general statement about his view as to what the
Commission's policy regarding marijuana should be, which is
that: "On one hand you have the gaming industry and on the
other hand you have the marijuana industry and the two shall not
meet" because marijuana is still a Schedule 1 drug under
federal law and licensees must comply with federal laws. He pointed
to Nevada Gaming Commission Regulation 5.011 –which provides
grounds for disciplinary action for licensees, including the broad
category of actions that "would reflect or tend to reflect
discredit upon the State of Nevada or the gaming
industry."
A survey by Chairman Alamo of his fellow Commissioners'
opinions on that statement elicited a general consensus from the
Commission that involvement with marijuana was an unsuitable method
of operation for Nevada gaming licensees. Along with fears of
discrediting Nevada's gaming industry, the Commissioners voiced
concern that the federal government may take a stronger interest in
Nevada's gaming industry if the state appears unconcerned about
marijuana use or promotion on gaming properties.
How this sentiment by the Commission will be put into effect in the
form of disciplinary actions brought by Nevada's gaming
regulators is yet to be seen. However, the discussion that followed
provides some hints.
The discussion focused on three issues:
- Events on the premises of a licensed gaming establishment that cater to or promote the use, sale, cultivation or distribution of marijuana.
- Contracting with or maintaining a business relationship with an individual or entity engaged in the sale, cultivation or distribution of marijuana, including vendors and landlord/tenant relationships.
- Licensees receiving financing from or providing financing to an individual, entity or establishment that sells, cultivates or distributes marijuana.
These three issues are but the tip of the iceberg, and Chairman
Alamo recognized that with the statement that there will be future
questions the Commission will look at that will require more
nuance, and that these three issues seemed to present a good
starting point for the discussion.
On the first issue – whether gaming licensees can allow on
their premises events or conferences that promote the resale,
cultivation or use of marijuana – a few points were made
clear. One was that the Commission wants to have a "level
playing field" for all licensees, and to not penalize those
licensees who err on the side of caution in not allowing such
events and lose out on revenue to another licensee down the road
who books the marijuana conference. The Commission members, again,
made it clear they were not setting policy and did not say that
licensees could not host a marijuana-related conference or event.
However, it was made clear that to do so would put a licensee at
risk of disciplinary action. This risk was made clearer by the
sentiment expressed by Chairman Alamo, who stated that the only way
to get parity and stability between a licensee that abides by the
law and the one down the street that doesn't do so is to
"file a complaint" so that the gaming regulators can act
upon it.
Nevada Gaming Control Board ("Board") Chairman Burnett,
seeking to put a finer point on the question, asked the Commission
if having a marijuana convention would be seen as an embarrassment
for Nevada's gaming industry. Commission Member Fuetsch
responded that she believed that having a marijuana convention
would "be the wrong thing to do and have an impact on the
gaming industry if it's held at a casino." Commission
Member Townsend responded: "No, no and no ... There is no
upside to a handful of dollars over a weekend than there is to the
downside of the damage it can do to the integrity of the industry
and the State."
Chairman Alamo condensed the discussion of the second and third
questions, which are a licensee contracting with or engaging in
business with someone in the marijuana business, including in the
landlord/tenant context, and a licensee providing funding for or
receiving financing from a marijuana industry company. Both
Chairman Alamo and Commission Member Pro were, as Chairman Alamo
said, "crystal clear" on the final two issues –
saying "no" to both of them and suggesting that licensees
should "follow the money" and should not "go there
in any way, shape or form."
It remains less than crystal clear, however, what exactly this all
means for licensees in practice. Commission Member Moran, for
example, raised questions that cannot be easily answered, including
if hotel rooms in casino resorts are private or public, whether
children of gaming licensees may be allowed to be in the
state-legal marijuana business and if a licensee comes into
possession of money they learn came from marijuana business
proceeds, should they not accept it?
Board Member Johnson said it best when he made the statement
"that marijuana use violates federal law is not the end of the
story" and expressed that Nevada's gaming regulators must
balance that concern with the will of the people in Nevada and our
state's legislature in voting for medical and recreational
marijuana to be authorized in Nevada. But this, alas, will not be
an easy path for Nevada's gaming regulators to walk. There are
many gray areas and countervailing rights and laws (reasonable
expectation of privacy for guests in hotel rooms or the freedom of
speech when it comes to events on gaming premises, for example)
that must be considered. And, of course, there are issues of
practicality – such as how much can you expect each gaming
licensee to know about every customer and business partner and how
far should licensees be expected to go to police marijuana use on
their premises – that also must play into the creation of any
good policy. For now, however, gaming licensees at least have more
information than they did before regarding how Nevada's gaming
regulators may approach these policy issues going forward. If in
doubt, "just say no."
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.