Incompetence and corruption in Nevada marijuana licensing was revealed in a weeks-long hearing before Clark County District Court Judge Elizabeth Gonzalez recently. In a dispute between marijuana companies and the state, Judge Gonzalez issued an injunction prohibiting businesses who won conditional state recreational licenses last December from opening dispensaries.
As of April 1, Nevada had 65 recreational marijuana stores. 62 of those stores are in two counties: Clark (49) and Washoe (13). In the 14 “rural” counties and Carson City there are only 3 stores — 2 in Carson and one in Nye County (Pahrump).
In “Findings of Fact” Judge Gonzalez revealed Nevada’s marijuana regulator, the Department of Taxation, failed to conduct background checks on applicants, hired untrained temporary employees who made no effort to verify applicant compliance with state regulations, and found a key employee was wined and dined by applicants for lucrative licenses. The marijuana industry’s unjustified and overblown claim of Nevada being the “Gold Standard” for marijuana oversight was discredited.
None of this should be a surprise. In passing marijuana legalization in November 2016, Nevada voters had been assured recreational sales would begin one year later, on January 1, 2018.
Yet Nevada stood alone among the states in an unprecedented rush to “Early Start” recreational sales beginning on July 1, 2017. That “Early Start” date was set unilaterally by Department of Taxation Executive Director Deonne Contine. It represented an “unholy alliance” between the marijuana industry and Nevada politicians. The “Early Start” program “bailed out” medical marijuana licensees who were losing money in exchange for state officials collecting a 10% retail tax on marijuana.
The wild ride to “Early Start” resulted in national embarrassment with a self-created “pot emergency” declared on July 6 — just five days later. One news outlet described the first 13 days of legalization as “total mayhem” contributed to by an understaffed Department of Taxation.
“Regulator” Contine left the Department of Taxation in January 2018 to work as a lawyer on behalf of marijuana industry clients. In June 2018, Contine ran unsuccessfully for State Assembly, her campaign fueled by marijuana industry contributors. In February, Contine resurfaced as Governor Steve Sisolak’s Department of Administration director.
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In August 2017 a Nevada Supreme Court decision found state law “shielded” the identities of marijuana license holders from public disclosue — they remained “confidential.” North Las Vegas officials denied the press and public any information on 52 marijuana licensees in their city.
The legal marijuana industry focused on electing Sisolak as governor in 2018. They spent more than $723,000 on his campaign, giving nearly eight times more money to Sisolak than they did to all 63 members of the legislature combined.
The contributions came as Sisolak plays a central role in regulating the marijuana industry. He will appoint five members of a new Cannabis Control Board modeled on the Nevada Gaming Control Board. His Cannabis Advisory Commission will take over pot regulation from the Department of Taxation.
Longtime Nevada journalist Jon Ralston opines that the Sisolak administration “has very little time to show the Department of Justice that Nevada can regulate an industry ripe for corruption by operators with a lot of money and political influence.”
The Trump administration has expressed willingness to enforce the “rule of law” on marijuana. Cannabis was reaffirmed in 2016 by the Obama administration as a Schedule 1 illegal “dangerous drug” under the federal Controlled Substances Act. It is Supreme Court “settled law” in 2005 (Gonzales v. Raich) that the Controlled Substances Act preempts state laws allowing marijuana use.
The Nevada Resort Association (NRA) recognizes the incompatibility of gaming and cannabis. The NRA identifies “flouting federal law” as a risk potential that could lead to the loss of gaming licenses or hefty fines. For that reason, they oppose marijuana consumption lounges in Nevada.
Nevada risks federal intervention unless marijuana regulation is fundamentally toughened.