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Best of Howard Stutz

Gaming Guru

Howard Stutz

Medical pot sales by gaming licensees? Nevada commission just says no

23 May 2014

Here’s the latest word for Nevada gaming licensees who want to plunge into the state’s new medical marijuana marketplace: The answer is still no.

The Nevada Gaming Commission voted Thursday to uphold the state Gaming Control Board’s edict earlier this month that keeps anyone with a gaming license from investing in or owning a medical marijuana dispensary or growing the plant for use in the budding industry.

In a May 6 industry notice, the Control Board said license holders should stay away from state-sanctioned medical pot because the federal government still views distribution, possession and sale of the drug as a crime. The control board warned even potential gaming license applicants to stay away from the pot trade.

Thursday’s vote affirming that notice was 2-0 — three of the five commission members, all lawyers, recused themselves because members of their law firms represent clients with medical marijuana interests.

The flat rejection followed impassioned testimony from a stream of attorneys, elected officials and a gaming license holder during a 90-minute hearing. They all made the same argument: Nevada gaming license holders would make the best medical marijuana moguls because they have already been thoroughly investigated by gaming regulators.

“A gaming license is hard to earn and it’s hard to keep. We need to comply with regulations in order to keep that license,” said M Resort CEO Anthony Marnell III, who owns 71 percent of Clear River LLC, an applicant for a Clark County medical marijuana license. “We are the most vetted people in Nevada. Nobody is more qualified than a Nevada gaming licensee.”

Marnell said he spoke as an individual, not as CEO of M Resort or as an employee of Penn National Gaming and its affiliate company, Gaming and Leisure Partners.

Gaming Commissioner Tony Alamo Jr., who is a physician, said he “100 percent supports the use of medical marijuana as a drug of last resort.”

But as a gaming regulator, he said, it’s a different equation.

“I 100 percent agree with the board’s stance,” Alamo said. “We can not blur lines. The board did the right thing.”

Alamo and Commissioner Randolph Townsend voted to affirm the control board’s notice. Commission Chairman Peter Bernhard and commissioners Joe Brown and John Moran Jr. participated in the hearing but didn’t vote.

The commission did ask Control Board Chairman A.G. Burnett if his board wants to rewrite its notice, and was told it does not.

“I do not have a flavor to work on this any further,” Burnett said. “The board notice is well written and clear.”

Gaming Control Board member Terry Johnson wrote the industry notice now posted to the agency’s website. He, along with Burnett and board member Shawn Reid, said it would tarnish the gaming industry if federal prosecutors were to slap a Nevada gaming licensee with a felony for distributing marijuana.

“Accordingly, 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,” Johnson wrote. “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.”

Clark County became the first jurisdiction in Southern Nevada to accept applications for marijuana-related businesses after approving regulations in March.

Clark County Commission Chairman Steve Sisolak on Thursday told the gaming commission his agency needs to “fully understand the requirements and prohibitions established” by the control board.

He said he worries that gaming licensees who simply lease real estate to medical marijuana businesses could jeopardize their licenses.

He told the gaming panel that many of the county’s 80 applicants for medical marijuana licenses also hold either restricted or non-restricted gaming licenses — which he considers a plus.

“I put a silver star on every one of the people applying for medical marijuana license who have a Nevada gaming license because they have been vetted,” Sisolak said.

Outgoing Assembly Majority Leader William Horne, who is an attorney, said understanding the rules is important in granting someone a medical marijuana license. Horne, who is running for District Court Judge, said the Legislature was concerned about the “caliber of people” who will be licensed to handle medical marijuana.

“Gaming people are the most vetted,” Horne said.

Medical marijuana has been legal in Nevada since 2000 but only last year the Legislature enacted a law to as many as 66 medical marijuana outlets statewide. Counties will determine specific rules for their location and operation.

Distributing medical marijuana is under a county-by-county framework.

Clark County has approved plans for 18 locations while the city of Las Vegas plans 12.