Sisolak issues guidance on 'non-essential' business shutdown amid questions, confusion from local governments and industry

Gov. Steve Sisolak’s request Tuesday night for all nonessential businesses in the state, including casinos, to close their doors for 30 days in order to avoid further spread of the novel coronavirus has been met with some confusion over what is and isn’t an “essential” business.

Businesses of all stripes began to grapple with Sisolak’s unprecedented announcement last night asking most businesses in the state to close, with some beginning to shut their doors around noon while others either continued operating in an unclear environment — workers at the Tesla Gigafactory outside of Reno reported to work on Wednesday, while construction at Allegiant Stadium continues to go forward and several marijuana dispensaries in Las Vegas said were operating.

On Wednesday afternoon, Sisolak’s office released a five-page “Risk Mitigation Initiative” giving more details on the statewide shutdown, including what constitutes an essential and nonessential business.

The guidance lists 20 essential services and sectors, several of which were not mentioned by the governor Tuesday night. Some examples include trash collection, veterinarian services and pet stores, laundromats and dry cleaners, and auto repair services. It also makes an exception for “essential stays” in places such as hotels, commercial lodging, dormitories, shelters and homeless encampments.

The document, however, notes that the essential services may not necessarily be limited to the ones listed. 

The list on nonessential services and sectors was also updated, and includes the following businesses:

  • Strip clubs and brothels
  • Casinos
  • Concert venues, arenas, auditoriums and stadiums
  • Large conference rooms, meeting halls and cafeterias
  • Recreation and athletic facilities, including community and recreation centers, gyms, health clubs, fitness centers, yoga, barre and spin facilities 
  • Beauty and personal care facilities, including barber shops, beauty, tanning, waxing, hair and nail salons and spas
  • Retail facilities, including shopping malls with the exemption of pharmacy or other health care facilities

The guidance also reiterates the temporary ban on dine-in facilities for restaurants and bars, but allows for continued carry-out, delivery and drive-through services while following social distancing protocols.

“No dine-in at food establishments should be allowed until further notice,” it states. “This also includes food courts, coffee shops, catered events, clubs, bowling alleys, and other similar venues in which people congregate for the consumption of food.”

The guidance also sheds some light on the fate of the marijuana industry, stating that all licensed cannabis stores and medical dispensaries may remain open, as long as they adhere to social distancing requirements for customers and employees. The state encourages consumers to use delivery services and to not congregate in stores. 

For those with lingering questions, the guidance essentially asks people and businesses to use common sense. 

“The goal of this initiative is to protect the health and safety of Nevadans by preventing people coming together unnecessarily, where people who have the infection can easily spread it to others,” the document states. “Ask yourself this question: ‘Where do people get within 6 feet of other individuals for an extended period of time?’ — then avoid those areas.”

The federal Centers for Disease Control and Prevention and public health agencies around the state have strongly recommended that all individuals work or engage in schooling from home if possible, avoid social gathering in groups of 10 or more people, avoid discretionary travel and to avoid eating or drinking in restaurants, bars and food courts. Health authorities also recommend avoiding close contact (within 6 feet) of any other person, as the virus is transferred through respiratory droplets that can easily spread between people in close proximity.

Local governments around the state took different approaches to the governor’s remarks and guidance — City of Las Vegas Mayor Carolyn Goodman pushed back on the order and said she would ask Sisolak to shorten the length of the shutdown, while officials in Washoe County gathered Wednesday to reiterate the governor’s message and urge closure of “non-essential” businesses. 

On the other end of the spectrum, Reno officials sent out a notice late Wednesday saying they have authority to enforce the moratorium through fines of up to $1,000 a day, suspension or revocation of a business license, or a misdemeanor citation.

"The City of Reno is requesting and hoping that this current crisis can be addressed in collaboration with all our residents and business owners," officials said in a statement. "The City of Reno has no desire to take enforcement action on businesses."

Outside of licensed gambling entities — which under an order from the state’s Gaming Control Board were required to shut down all operations at midnight on Tuesday — all of Sisolak’s comments on business closures were prefaced by the word “should” and not a clear and direct mandate to close down. 

Still, uncertainty exists. Washoe County Commission Chair Bob Lucey said prior to the release of the guidance that some “professional services” would be allowed to continue operating and that the governor’s order was directed as businesses where large numbers of people congregate, such as bars, nightclubs and restaurants. But he said that more specifics would need to come from the governor’s office.

“Until we have that distinctive understanding from his office, we can’t really answer that specifically,” he said.

Businesses mentioned by the governor as “non-essential” include restaurants, bars, pubs, wineries, breweries, coffee shops, gyms, shopping malls and salons, though restaurants will still be able to offer drive-through, curbside takeout and delivery services to their customers. 

Essential businesses mentioned by the governor that can remain open include grocery stores, pharmacies, drug and convenience stores, banks and financial institutions, hardware stores, truck stops and truck service centers, daycares, businesses that provide services to disadvantaged populations and gas stations, as well as police, fire, transit and health care services.

A tweet by Reno City Councilman Devon Reese, now deleted, implied that the governor’s comments were meant to exclude professional offices, including lawyers, doctors, accountants and REALTORS, as long as their desks were arranged to ensure maximum safety to workers.

Other industries have relayed messages internally after speaking with the governor’s office. The Nevada Chapter of the Associated General Contractors said in an internal email that many construction industry stakeholders participated in a call with the governor’s office on Tuesday and that they would be “considered an essential industry and will continue with business as usual.”

A variety of Las Vegas restaurants were advertising modified policies on Instagram. Businesses including Daniel’s Coffee and More said it switched to a takeout model, while vegan restaurant Vegenation said it had narrowed its scope from two restaurants to just a downtown location and then, only for takeout and delivery.

Graffiti Bao was offering a 30 percent discount for service industry professionals while 595 Craft and Kitchen offered 50 percent off for people who were furloughed or laid off. Metro Pizza advertised “no contact” service that included online ordering and payment by card, with pizzas delivered outside the door and drivers washing hands before and after delivery.

Marijuana dispensaries said they were taking Sisolak’s order to heart but noted that in other states, such businesses are being allowed to stay open. Those jurisdictions include New York, Pennsylvania, New Jersey, Illinois, Michigan, Maryland, Washington, Oregon and various localities in California and Colorado. San Francisco had closed dispensaries but reversed that decision.  

"The Nevada Dispensary Association and its members are working with regulators to implement any and all directives from the Cannabis Compliance Board and Governor Sisolak. Public safety and maximizing social distancing is the utmost priority,” said Riana Durrett, executive director of the Nevada Dispensary Association. “Many jurisdictions in the United States are allowing dispensaries to remain open given their role in providing medicine.”

The Las Vegas Chamber saw an uptick in calls from business owners starting Monday, and that trend only intensified after the governor’s announcement Tuesday night, said Cara Clarke, the organization’s vice president for communications.

The business organization is awaiting more clarity from the governor’s office about its definition of an essential business. In other words, “What are the types of businesses, processes, things that we need to make sure that we can keep the essential services running?” she said during an interview Wednesday morning.

Still, Clarke said the Vegas Chamber thinks the governor made “quite clear” that businesses such as casinos, theaters, gyms and malls should not be open. She hopes other businesses pondering what to do carefully consider whether they would be helping or hurting the community by remaining open.

“What we’re trying to do is prevent large groups that don’t necessarily need to be doing that,” she said. “I think that’s the intention and the spirit of this.”

The Vegas Chamber also held a teleconference Tuesday with U.S. Small Business Administration District Director Joseph Amato about disaster-assistance loans for businesses and nonprofits. 

Jacob Solis contributed to this report. Updated at 1:24 p.m. to add additional details. Updated at 5 p.m. to add statement from city of Reno.

NV Health Response COVID19 (1) by Riley Snyder on Scribd

As industry faces more scrutiny, one-third of positions within Marijuana Enforcement Division remain unfilled

Marijuana in containers

Amid calls for state regulators to crack down on bad actors in the marijuana business, regulators are dealing with their own hurdles — a staff shortage.

Information provided to The Nevada Independent by the Nevada Department of Taxation on Tuesday shows about one-third of the positions within the state’s Marijuana Enforcement Division — 17 out of 52 roles — are vacant. That includes four vacancies among five Level 2 Compliance/Audit Investigator positions, and six vacancies in the role of Level 2 Marijuana Program Inspector, out of 10 possible positions.

Will Adler, executive director of the marijuana testing lab association Scientists for Consumer Safety, called last week for action against labs that appear to be fudging results on the levels of THC within the products they test. When informed about the division’s staffing statistics, he called the situation “brutal” and said he doubted the agency could pull off the crackdown he envisioned in its current state.

“I don’t think it can, because it does need to staff up and it does need that for an effective unit,” he said. “The Marijuana Enforcement Division is facing extreme pressure on all fronts.”

State officials, however, said that much of the shortage can be chalked up to the fact that new positions started coming on the books in October — a division that included 44 positions earlier this year will have funding for 60 by January. And the state is in the final stages of hiring people for many of the new roles. 

"The Department continues to work towards the transition to the Cannabis Compliance Board including recruiting and onboarding over twenty new staff members to join the agency. The hiring process began in October and will continue through next year as authorized by the budget bill to support implementing AB 533," the department said in a statement late Tuesday, referring to the bill implementing the new board. "The Department looks forward to filling these positions with the most capable and qualified individuals to help usher in a new era of cannabis oversight in Nevada."

Marijuana enforcement officials are charged with checking each licensee in-person once a year, and there are currently more than 900 final and conditional licenses in the state.

Employee tasks also include vetting changes of ownership in an industry that is rapidly consolidating — there were 136 ownership change requests in fiscal year 2018, although Gov. Steve Sisolak recently called for a freeze on license transfers. 

They must do background checks on applicants for “agent cards” that authorize a person to work in the industry (there were nearly 12,000 active cards as of early this year, and all require annual renewal), and approve all proposed advertising designs for compliance with the law (there were more than 8,000 advertising and packaging designs up for review in fiscal year 2018).

On top of those routine tasks, the department is also responsible for investigating alleged misconduct. Concerns about the industry’s vulnerability to crime intensified this fall after an indictment accused businessmen with ties to Russia and Eastern Europe of making illegal campaign contributions in an attempt to manipulate the licensing process. 

And beyond that, the division faced a dozen or so lawsuits over its latest round of dispensary licensing, in which 61 businesses were given permission to open retail marijuana stores after more than 460 applications were submitted. Businesses that didn’t win the coveted licenses have alleged the state created an unfair playing field.

“They really did have, and still do have, a huge day-to-day, slug-it-through workload without any problems,” Adler said.

A copy of the Marijuana Enforcement Division's organizational chart from February 2019, before lawmakers authorized additional positions. The state did not provide a current organizational chart. Courtesy Nevada Department of Taxation.

The list of vacancies is as follows:

  • Three of eight “Auditor 2” positions are vacant. Auditors’ responsibilities include: 
    • Verifying agent cards for all owners, officers, board members and employees
    • Ensuring businesses have valid licensing
    • Reconciling inventory with data reported to state
    • Assuring proper sanitation
    • Ensuring employees are properly trained
    • Ensuring all taxes are paid
    • Checking security protocols
    • Assuring minors are kept away from the business
  • The only “Revenue Officer 2” position is vacant. That position is within the division’s fiscal unit.
  • The only “Management Analyst 1” position is vacant. That position is within the compliance and audit unit.
  • The only “IT Technician 4” position is vacant.
  • Six of 10 “Marijuana Program Inspector 2” positions are vacant. Those employees’ tasks include:
    • Inspecting grow facilities for disease, odor control efforts, visibility from outdoors, and proper sampling of product for lab testing
    • Inspecting production facilities in the same manner that local health departments check restaurant kitchens, including for sanitation and prevention of cross-contamination
    • Inspecting labs for methodologies, testing equipment and sample retention
    • Inspecting stores for state-approved packaging, consumer warnings, no public consumption, adherence to sell limits and age verification practices
  • Four of five “Compliance/Audit Investigator 2” positions are vacant. Investigators are assigned more complex, lengthier investigations into:
    • Employee theft
    • Manipulation of marijuana potency data
    • Sales to minors
    • Operating without a license
    • Illegal use of a pesticide
    • Buying or selling marijuana illegally from out-of-state
  • One of nine "Administrative Assistant 2" positions is vacant.

Industry representatives acknowledged that the whole system is in flux as it transitions from regulation by the taxation department to a forthcoming Cannabis Compliance Board. Funding is not kicking in fully until mid-2020.

“The entire program is in transition because oversight is being transferred to a new body, the Cannabis Compliance Board,” said Riana Durrett, executive director of the Nevada Dispensary Association. “For the industry’s part, they have been through two changes in regulatory bodies and know it requires a lot of cooperation and education on the intricacies of the cannabis industry.”

Adler said the division was doing "monumental" work considering its workload but said there may be troubles in getting the division the funds it needs fast enough.

“I do feel the more funding and support we can give those staff, the better,” he said. “We can see their need is great. What they need is more support.”

Betting on cannabis: Gaming heavyweights shape marijuana industry, even as regulators hold the two worlds apart

Planet 13 Cannabis Dispensary at night

When Anthony Marnell III initially sought to be majority owner of a Nevada medical marijuana company in 2014, he came with an impressive résumé — he was the CEO of the billion-dollar M Resort, his family had built and run the Rio for its illustrious first decade and his father’s construction company had a hand in some of the most iconic casinos on the Strip, including the Wynn, Bellagio and Mirage. 

But the Nevada Gaming Control Board put the kibosh on his plan on May 6, 2014, issuing an edict that gaming licensees must have no investment or involvement in the nascent cannabis industry. It was somewhat puzzling for executives in Nevada’s largest industry, who argued that they live and breathe compliance measures to retain the privilege of working in gaming — an industry that has overcome its unsavory past and moved to the respected mainstream in large part because of the rigor of state regulation. 

Casinos must ensure minors and card cheats stay out and report any suspected money laundering to the federal government. Prospective licensees go through a vetting process that might best be described as invasive — it includes online and in-person background checks, meetings with gaming regulators in other jurisdictions and a review of all investments, bankruptcies, real estate and even flight logs.

“There is nobody that I can think of that is more qualified to operate what I see as a very highly regulated industry other than a gaming licensee,” Marnell told the Nevada Gaming Commission in 2014. “We are the most investigated, vetted people in the state of Nevada. I have held several security clearances at the federal level … and none of them were as strenuous or as difficult or as thorough as the Nevada Gaming Control Board's process.”

In the end, Marnell withdrew his marijuana plans to stay in gaming, and regulators have not budged on their bright line. But the casino sector has still left its mark on the cannabis industry — its veterans are filling out the leadership teams of marijuana companies, and its regulatory regime is the model that the state hopes to emulate for cannabis.

State records released this spring through SB32 show several former casino executives, casino developers and restaurateurs with a presence inside of casinos as marijuana company owners and board members, along with some who appear to be currently employed by gaming companies. It speaks to the cash and business acumen required to succeed in the marijuana world, where the lack of traditional banking infrastructure has limited access into the industry, and the appeal of a new industry to entrepreneurs and risk-takers who want to get in on the ground floor.

“It has all kinds of upward possibilities. Gaming has become very white shoe,” said Tisha Black, an attorney and president of the Nevada Dispensary Association whose father, developer and former casino executive Randy Black, took over at the Clear River marijuana company when Marnell stepped back. 

But the presence of gaming-affiliated players is also indicative of their success in staying on the good side of a strict regulatory structure.

In 2014, when Gov. Steve Sisolak was making zoning and licensing decisions as then-chair of the Clark County Commission, he said he “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.”

Relative to out-of-state applicants, he said, those in the Nevada gaming business are less likely to be fly-by-night characters or flight risks should trouble arise. Black agrees. 

“Where you see those guys that were pillars of the community — in my mind it makes sense that they were some of the original licenses, because they’re a known commodity, they have roots here,” she said.

Veterans of gaming are also attractive additions to ownership teams because of their experience in a more mature industry. 

“You see the people who used to be in gaming bring their influence, and pretty much when they say this is how you do it in gaming, everyone listens,” said Riana Durrett, executive director of the Nevada Dispensary Association. “If they were previously in gaming or they had gaming clients, that’s very influential.”

Early morning photo of the I-15 near the Las Vegas Strip

The Las Vegas Strip as seen Monday, April 10, 2017 while traffic travels near Interstate 15 and Russell Road. Photo by Jeff Scheid.

The great divide

Since the 2014 edict, there have been little more than baby steps in allowing overlap between gaming interests and pot.

Early on, regulators cracked down on people who straddle both industries, blocking slot route operator Nevada Gaming Partners from serving a restaurant in 2014 because the wife of the owner had a minority stake in a medical marijuana company GB Sciences. Regulators said that even if the couple’s businesses were separate enough to satisfy legal requirements, it wasn’t enough to satisfy "the spirit of the notice."

“When the notice was sent out to the industry in 2014 that said you can’t play in both sandboxes, most everyone took that to heart,” said Jennifer Roberts, former associate director of UNLV’s International Center for Gaming Regulation and a lawyer for Nevada Gaming Partners at the time. 

Other gaming licensees acknowledged that they needed to choose between one industry or the other. 

  • Troy Herbst had a 10 percent stake in The Clinic, a marijuana company, and was also a partner in slot route operator JETT gaming. The slot route was a gaming venture for Jerry Herbst, who had already grown the gas station empire Terrible Herbst. Troy’s brother, Tim Herbst, told gaming regulators in 2014 that he would divest from gaming if he won a license, according to the Las Vegas Review-Journal. “We’re not going to do anything to disappoint this commission,” Tim Herbst said. Troy Herbst does not have a stake in the industry as of August 2019.
  • Brian Greenspun, publisher of the Las Vegas Sun, gave up his interests in Greenspun Gaming LLC and G.C. Investments — which are partial owners of casinos — to family members as he took an ownership role in Integral Associates, the parent company of Essence dispensaries. He has also recently withdrawn from the marijuana industry and is no longer listed as an owner.

The bright line between the two industries was reinforced through the work of the Nevada Gaming Policy Committee, a group that included then-Gov. Brian Sandoval. The panel’s 2017 workshop on the topic outlined myriad reasons why casinos can’t be landlords for cannabis businesses, accept marijuana money, or in any way be affiliated with the substance.

Because marijuana is still considered a Schedule I controlled substance by the federal government, even basic actions by a financial institution — a category that includes casinos — can run afoul of federal law. Potential crimes include possessing any kind of equipment needed to produce or sell marijuana, using a phone or email to facilitate any operation of a marijuana business, leasing or otherwise controlling the property where marijuana is cultivated or sold; reinvesting the proceeds of a marijuana business into any other business, and any financial transaction at all that involves more than $10,000 in proceeds from a marijuana business.

Interacting with an illegal industry could mean steep fines, asset forfeiture and prison sentences. Those risks have kept casinos out of cannabis, and regulators holding a line. 

“I think that gaming, because they’re now big corporate companies — they can’t. It’s brackish water for them,” Black said. “I understand the state’s concerns and its desires to protect gaming because that’s billions of dollars for the state, not only in jobs but in taxes.”

Gaming provides about three quarters of a billion dollars in tax revenue to Nevada’s general fund each year, about ten times the amount that cannabis does. The tourism industry overall — including direct, indirect and induced jobs — is responsible for about 450,000 jobs in the state.

Multinational casinos must get national and international funding that runs through the federal Securities and Exchange Commission, Black said, so dabbling in the marijuana world “could put me in direct opposition with the regulators who regulate me and the institutions that capitalize me.” 

Regulators have made some efforts to clear up ambiguities. In 2018, they moved to allow the development of a tavern on property owned by a landlord who also had contracts with players in the marijuana industry. In 2017, they approved plans for an applicant who is a card-carrying medical marijuana user to expand a gaming business, and members have called for a “balanced approach” as new areas of conflict emerge.

“A regulatory framework that balances the myriad interests by carefully examining whether and to what degree gaming regulatory policy objectives are actually implicated would inure to the benefit of all involved,” Gaming Control Board member Terry Johnson wrote last fall in Nevada Gaming Lawyer magazine. “And protecting the crucial role of gaming to the Nevada economy while respecting the expressed will of Nevada voters need not be mutually exclusive.”

But gray areas persist. A review of state records by The Nevada Independent shows at least four people newly listed as owners and board members of marijuana companies as of August who appear to be current employees of gaming companies or married to licensees, but the Gaming Control Board declined to comment on whether those people are running afoul of the bright line.

“As Nevada statutes and circumstances regarding marijuana change and evolve, the Board often engages in discussions with licensees to identify solutions that will ensure they are in compliance with our gaming laws and regulations and those would be confidential under NRS 463.120,” the board said in a statement. 

Another argument regulators made against mixing gaming and cannabis is that it would reflect discredit on the industry. But even five years ago, lawyers were calling that idea outdated, pointing to polls that showed a vast swath of the public in favor of at least medical marijuana if not recreational (that number is now 91 percent, according to the Pew Research Center).

“All of what we are seeing now is the public opinion is pretty clearly in favor of medical marijuana,” Reno attorney Matthew Woodhead, who was listed as a minority owner on Clear River’s original medical marijuana application, told regulators in 2014. “So the concept of reflecting discredit, to the extent it does involve public opinion, seems public opinion is on our side.”

Buyers outside marijuana dispensary

Hundreds of people line up to purchase recreational marijuana in Nevada at Reef Dispensaries on Saturday, July 1, 2017. Photo by Jeff Scheid.

Physical divide

In spite of growing public support for marijuana, Nevada is arguably becoming even more conservative in separating marijuana and gaming. This legislative session, lawmakers passed a law banning marijuana dispensaries within 1,500 feet of a gaming establishment — a buffer larger than the one voters approved between schools and dispensaries.

It was an outgrowth of a dispensary ban the Las Vegas Strip resort corridor already had, and the number mirrors the distance that Clark County escort and outcall entertainment services must be from homes, schools and places of worship. The distance also reflects the separation that pawn shops must have from the resort corridor. 

In testimony to lawmakers this May, casino companies with locations in outlying areas separate from the Las Vegas Strip argued for the same buffer on the basis that it “would level the playing field, and would protect Nevada's largest industry.”

“It exacerbates guest and employee issues that we have,” Erin McMullen, a lobbyist for Boyd Gaming, said about dispensaries and casinos being in close proximity. “We have children at a number of our properties. A lot of our properties have movie theaters, bowling alleys, and we host many student sporting events.” 

It had the support of the Nevada Resort Association, the influential lobbying group representing many of the largest casinos.

“We supported the 1,500 foot buffer because it separates an incompatible land use to nonrestricted [gaming licensees],” said Virginia Valentine, head of the association. “It gives us the protection we need to comply with the federal law.”

The advent of the policy has forced at least one marijuana company — Essence, coincidentally owned by former casino executives — to stand down, scrap plans to build on a lot they had already purchased across from the Peppermill casino in Reno and look for property elsewhere.

Although the approval of the buffer seemed to suggest that the marijuana industry got pushed around by its older brother gaming, Durrett notes that her association wasn’t fighting the measure, and nor were schools or other classes of buildings fighting for a larger buffer than they already had. 

“We had no position on it because it impacted members differently,” she said.

The measure potentially foiled the plans of those who wanted to move closer to casinos or sell their license to a company that did, but those who were grandfathered into the zone or would be unable to move may have been happy to keep the competition out of that zone. 

“I don’t think there should be a mass migration anywhere, whether it’s the gaming corridor or not," Durrett said.

But questions remain about the rationale for the buffer. Longtime Clark County Commissioner Chris Giunchigliani , who served on Sisolak’s advisory panel for the future Cannabis Compliance Board, contended there hasn’t been enough explanation for it.

“There may be some very legitimate reasons,” she said. “Let’s have that discussion out in the open. What was it tied to?”

She suspects that future business considerations are at play. If federal prohibitions on marijuana go away, casinos could eventually house dispensaries, and it would be problematic to have competition too close.

“In politics, for people that say they’re free enterprise individual, it’s always about how to stop your competition,” she said. “I’ve never found an ordinance or regulation or state law that hasn’t been advanced in order to accomplish that.”

Buyers outside marijuana dispensary

Customers play baccarat at the Lucky Dragon hotel-casino on Wednesday, March 8, 2017. The 203-room, Asian-themed property opened last November. Photo by Jeff Scheid.

The future

The marijuana industry is continuing to take cues from the gaming industry, which faced the same specter of a federal crackdown decades ago before building what it calls the “gold standard” of gaming regulation.

“We were under threat of federal government basically raiding our casinos and shutting them down because of organized crimes. We had to take regulation to prevent that,” Roberts said.

The state is specifically modeling its forthcoming Cannabis Compliance Board off the Gaming Control Board. Dispensaries also hope to implement some of gaming's best practices.

One of the things cannabis companies want to emulate is a policy called “minimum internal control standards.” That’s an effort to standardize certain staffing levels for accountants, recordkeeping software and other procedures to make it easier for auditors and inspectors to spot deficiencies. 

“I think from the beginning it was always viewed as an aspirational goal,” Durrett said. “Not everything is analogous and comparable between the industry so some things you can’t follow the gaming model, but anywhere you can … It’s the best way to avoid federal interference.”

In spite of the divides on the books, observers say it’s also time to be honest about the fact that with marijuana use legal in Nevada, there's undoubtedly overlap such as tourists partaking in casinos. Giunchigliani said that for the safety of consumers, and to prepare for the future, there should be open conversation about how the two industries should coexist.

“I think everybody is playing a big game if they think that people are not smoking in their hotel rooms,” she said. “It’s legal, it’s not going away, they’re not going away, so how do you make it work for the customer as well as for their concerns in regard to the feds.”

Buyers outside marijuana dispensary

Pedestrians pass Essence Cannabis Dispensary on Las Vegas Blvd. on Friday, Dec. 6, 2019. (Jeff Scheid/Nevada Independent)

The players

The list of owners and board members in Nevada’s marijuana industry is checkered with the names of former casino executives and others in the hospitality and entertainment sector, including strip club owners and restaurateurs. Below are some of the most notable.

Armen Yemenidjian is the co-owner of Integral Associates, widely known as Essence Cannabis Dispensary. He gave up his gaming license and roles as a former executive at the Tropicana casino in Las Vegas when he decided to transition into the cannabis market. 

Beyond the three open dispensaries it has in Nevada, Essence had the highest-scoring application in all eight of the competitive jurisdictions to which it applied in 2018, winning eight additional dispensary licenses. The company’s sale to multistate operator Green Thumb Industries for $290 million closed this year.

Arguably one of the most successful players in the Nevada cannabis industry, Armen was joined by his father Alejandro “Alex” Yemenidjian, who served as president of MGM Resorts from 1995 to 1999, CEO of the company from 1999 to 2005, and CEO of the Tropicana from 2009 to 2015. He joined the Green Thumb Industries board this summer. 

Tony Marnell II owns the Marnell Companies that did construction on some of the biggest resort properties in Las Vegas, and he also served as CEO of the Rio casino for its first few years. He and his son, Tony Marnell III, initially appeared on medical marijuana license applications in 2014 as owners but then dropped off.

Strip club owners have a presence in the form of Jamal Keshmiri, whose Reno-area strip club empire included the flagship Wild Orchid Gentleman’s Club that’s been a target for the city. Keshmiri also owns Ben’s Fine Wine and Spirits, which has six liquor store locations in Reno and Carson City, and is an owner with HSH Lyon LLC and High Sierra Holistics LLC. He has coached track at Reno High School and was a former track star himself.

In Southern Nevada, Peter Feinstein, a partner at Sapphire Las Vegas strip club, was a board member at Nevada Group Wellness for purposes of an unsuccessful license application. Feinstein said he thinks he was sought out to be on the board because, as holder of a privileged license for the strip club and alcohol permits, “I have a long history of being in a regulated industry.” 

Several members of the bar and culinary industry are marijuana company owners. Howard Starr, an owner at Las Vegas Natural Caregivers LLC, is has been a co-owner of the Numb bar and frozen cocktail lounges at Caesars Palace and Harrah’s casino, as well as Chil’m at the Tropicana casino. He said he has since left the industry.

Michael Frey is an owner with BBMC LLC and Naturex LLC, but has owned cigar venues including Casa Fuente at The Forum Shops of Caesars Palace, the Montecristo Cigar Bar and a kiosk store at New York New York casino. He is the stepson of Las Vegas developer Irwin Molasky.

His brother, Robert Frey, is an owner at Caliente Development Company, BBMC LLC, and Naturex. He was CEO and co-founder or Pure Management Group, which at one time owned a large portfolio of nightclubs including the famous but since-closed Pure and the Pussycat Dolls Lounge at Caesars Palace, as well as Coyote Ugly in New York-New York. Earlier this year, the Frey brothers sued their partners in the marijuana business for $125 million, alleging they filed applications for dispensary licenses without them and ended up winning 11 licenses — more than any other applicant.

Restaurateurs Michael Morton and Jenna Morton is an owner with Acres cannabis, but is also the co-founder of Morton Group, which operates La Cave Wine & Food Hideaway inside Wynn Las Vegas, CRUSH inside MGM Grand and La Comida in Downtown Las Vegas. 

Robert “Randy” Black, the real estate developer and owner of Black Gaming, is an owner with Clear River LLC. He divested his gaming interests, which included three resorts in Mesquite, after they were hard-hit by the recession. His daughter, Tisha Black, is the president of the Nevada Dispensary Association.

Steven Nightingale, an owner at WSCC Inc., is a former operator of the Cal-Nevada Club in Reno and also an author and philanthropist. He told the Reno Gazette-Journal he went into the marijuana business because his late friend Joe Crowley, former president of UNR, was so persuasive.

Gary Primm is an owner at Deep Roots Medical but made his fortune from the Prima Donna Resorts, which was sold to MGM Grand Inc. in 1998 for $612 million. His stepbrother Roger Primm is also involved in the same marijuana company, which has at least one dispensary open in Nevada already and won five additional licenses in 2018.

Former president of Grand Sierra Resort Steven Rosen is an owner at THC Nevada LLC and THC Productions LLC. 

“I was a casino executive for over thirty-five years, which is a highly regulated industry,” he told members of the Nevada Tax Commission in January 2018. “I appreciate regulations and I understand they are there to protect the industry.”

Nevada Bar has not sanctioned any lawyers for involvement in marijuana industry

Front view of the Nevada State Court building

In spite of a stern warning in 2017 that participating in the marijuana industry could bring Bar discipline, no lawyers have lost their Nevada law license in the last three years because they had a stake in a business that is still illegal at the federal level.

The Nevada Bar confirmed last week that it has not disciplined anyone in the industry since issuing the warning. And in a sign of the times, a newly formed Cannabis Section of the Bar held its first meet-and-greet event Thursday evening — just a few years after a proposal for a similar marijuana lawyer-focused group was denied. 

“Since 2017, the Office of Bar Counsel has not prosecuted or received complaints against an attorney in the marijuana industry,” said Daniel Hooge, bar counsel with the Nevada Bar. “We have sent some attorneys through our diversion program for professional substance abuse treatment. But none used marijuana exclusively or worked in the industry.”

A Nevada Independent analysis of ownership data made public by the state indicates that there are at least 68 lawyers among the nearly 1,400 owners and board members who applied for or received recreational marijuana licenses in Nevada. That’s not counting the attorneys who assist and advise marijuana companies, but are not personally invested in the business.

The lack of Bar discipline is in contrast to fears expressed in 2016 that lawyers who had an ownership stake in the industry might lose their license — or have to liquidate major investments — because of their involvement with marijuana.

Attorney Gary Schnitzer told the Las Vegas Sun in 2016 that he feared the Bar would strip him of his license or force him to divest after he had spent six figures investing in Oasis Medical Cannabis dispensary. Supreme Court and Bar officials told the Sun at the time that that a range of sanctions were on the table depending on the severity of the misconduct. 

Several lawyers filed letters with the Supreme Court urging justices not to force them to choose between the two fields, which could potentially jeopardize lawyers’ livelihoods.

Ultimately, in 2017, the Supreme Court adopted somewhat ambiguous language saying that participating in the industry “may result in federal prosecution and trigger discipline proceedings under SCR 111,” a section of Supreme Court rules addressing attorneys convicted of crimes.

There has never been a formal proclamation from the Bar or Supreme Court giving a clear blessing to investment in the industry. But neither has a feared crackdown materialized, and lawyers are increasingly public about their participation.

Ed Bernstein, a prominent Nevada lawyer who has an ownership stake in Paradise Wellness Center LLC, said he thinks attorneys “may have overreacted when the Supreme Court wanted to look at this out of a concern that they would be reaching further than they should.”

“I thought it was just a very subtle reminder — ‘hey, we know it’s legal here, it’s not legal there, so if there’s a problem we may have to deal with it later,’” he said. “The world is changing very quickly and I think the Supreme Court is on board with some of those changes.”

Tisha Black, who is an attorney, president of the Nevada Dispensary Association and a board member at marijuana company Clear River LLC, said the growing number of lawyers who are advising cannabis clients or are personally involved has come as the federal government has legalized cannabis derivative hemp, and as marijuana use has become more accepted. Pew Research last week reported record-high levels of public support for marijuana legalization, with only 8 percent of Americans supporting a prohibition of both medical and recreational marijuana. 

Black said she started advising people early on how to get into the marijuana business because many of her clients were businesspeople pummelled by the recession who were looking for new opportunities; she felt it was the right thing to do. Few other fields need a lawyer as much as the cannabis industry, she said, because of the ongoing conflict between state and federal rules.

She said she saw that lawyers in other states with legal marijuana were not losing their licenses. And she thinks that absent clarity from higher ups, Nevada lawyers just started getting in because the sky hasn’t fallen.  

Early on, “there were a lot of people that were like ‘I can’t do it,’” said Black. “And then … it’s like if your parent says don’t play outside after dark and you’re like ‘I’m going to do it,’ and you don’t get in trouble, pretty soon all your siblings start coming out.”

Many former elected officials and public employees have made their way to the marijuana industry

The interior of the Nevada Legislature

Nevada’s system of regulating marijuana was born in the halls of the Legislature. So perhaps it isn’t surprising that many who wander those halls, sit through hours of hearings to develop a regulatory structure and stay current on the latest twists and turns of cannabis law wind up involved in the industry themselves.

Records released through SB32 this spring reveal a number of former lawmakers and lobbyists on the list of owners and board members of marijuana companies. Among them are two who reached speaker, the highest post in the Assembly, but had become lobbyists by the time the Legislature authorized dispensaries.

“The experience that former elected officials, former lawmakers, former bureaucrats have with state agencies and how they operate, I think is helpful in advising and moving things forward in a way that is actually appropriate for our state,” said Democratic former Assembly Speaker Richard Perkins, who served in the Legislature from 1992 to 2006.

Nevada shifted from having the Department of Health and Human Services oversee dispensaries to the Department of Taxation in 2017. Understanding the differences between those two agencies was an important skill, he said.

John Oceguera, also a former speaker who left the Legislature after the 2011 session, is a board member with Las Vegas Wellness and Compassion LLC and represented 11 different cannabis companies in the 2019 legislative session. He said he thinks the company sought him out as a board member because of his knowledge in the regulatory arena and his public safety background as a firefighter.

There are also former mayors and council members whose skill sets could be helpful in navigating local government approvals. Municipalities have the power to enact moratoriums and approve local permits for individual businesses, so the fate of a business can sometimes hang on how well its leaders navigate local government politics and processes.

“You want people on your team to help you in the guidance through the rough water, and cannabis is a rough industry,” said Rebecca Gasca, a lobbyist and owner with Wendovera LLC. “So you want to rely on people who know how to get you where you want to go. They have the compass. They’re the compass holders. You’re the boat. And you trust them. And it makes sense because you haven’t been in their shoes.”

Also on the list are at least three people with intimate knowledge of marijuana regulation — one is Deonne Contine, who until February 2018 headed the Department of Taxation that oversees marijuana businesses. Although she is listed as a board member for Sierra Well, she says she was never a bonafide board member and was listed as a potential secretary while working as a private sector lawyer on Sierra Well’s unsuccessful applications for five dispensary licenses in 2018.

Reporting from the Nevada Current suggests there may have been a lapse in communication about Contine’s status that resulted in her name still being on a list that says it’s current through Aug. 1, 2019. She says that had the company won a dispensary license, it would still need to update its records and confirm bona fide board members.

Critics have questioned the propriety of Contine being involved in the industry at all because of her close ties to the regulation-development process. But Contine, who served as head of the Department of Administration in Gov. Steve Sisolak’s cabinet until her abrupt resignation last week, insists that she’s not running afoul of ethics law that calls for a “cooling-off” period for former public employees.

“No. I was working as a lawyer in the private sector and was thinking about issues that were active at the department (in any area) and if there were any conflicts related to my private sector legal work,” she said in an email to The Nevada Independent.

She added that she is no longer interested in working in the private sector and hopes to someday return to the public sector.

“I have spent much of my life dedicated to public service and ultimately realized rather quickly after working as a lawyer in the private sector for a few months that I am more suited to making sure systems and processes run smoothly and my heart is in public service and policy,” she said.

Below are some notable names in the political realm who are leaders in the cannabis industry.

Mynt dispensary in Reno

Mynt dispensary in Reno is seen on Nov. 9, 2019. Photo by Mark Hernandez.

Several former state legislators have a stake in the industry, including David Goldwater, an owner at Inyo Fine Cannabis Dispensary LLC. He is a former Democratic member of the Assembly and now a lobbyist.

Former Assemblywoman Lucy Flores, a Democrat who ran an unsuccessful bid for Congress in 2016, is a board member at GreenMart of Nevada.

Then there’s Sandra Tiffany, an owner at GWGA LLC and a former Republican state senator who served 14 years in the Legislature. She’s a businesswoman who established a nuclear medicine image processing company and worked at a large computer-aided design and engineering firm.

One-term Republican Assembly member Scott Sibley, an owner at Nevada Holistic Medicine LLC, is a real estate broker and a reporter with Nevada Legal News, a subscription-based website that publishes news stories, public notices and other public records.

Mark James is an owner with LVMC C&P LLC and LVMC LLC. He served in the Legislature from 1992 to 2002, and on the Clark County Commission from 2003 to 2007. In 1995, James wrote Nevada's "Truth in Sentencing Law," reducing the possibility that prisoners could get early release. He also authored Nevada's "Megan's Law" to notify the community when a sex offender has been released from prison. His time as CEO of Frias cab company was marked by a contentious breach of contract lawsuit. He is now is CEO of Integrity Vehicle Solutions, which developed the Ride Genie app that allows passengers to hail cabs.

Former Assemblyman Chad Christensen, a Republican who served from 2002 to 2010 and ran an unsuccessful bid for U.S. Senate in 2010, is an owner with Fidelis Holdings. He told the Las Vegas Review-Journal in 2014 that although he is a member of The Church of Jesus Christ of Latter-day Saints, which opposes the use of marijuana except for medicinal use, he became a supporter of medical marijuana after seeing his wife’s friend suffer from using prescription painkillers.

Josh Griffin, a former owner with Livfree Wellness LLC who has since left the industry, served as a Republican member of the Assembly in 2003 and is a lobbyist whose clients in the 2019 session included the City of Reno, City of Elko and casino companies MGM Resorts and Eldorado Resorts (casino companies are strictly prohibited from involvement in the marijuana industry). He is the son of Jeff Griffin, who served as Reno’s mayor for eight years.

High-ranking legislative leaders on the rolls include Oceguera, a former owner at Exhale Brands Nevada II LLC and current board member at Las Vegas Wellness and Compassion LLC. He is a lobbyist and the former speaker of the Assembly who ran unsuccessful bids for Congress in 2012 and 2016.

And then there is Perkins, an owner at Nevada Holistic Medicine LLC and Nevada Natural Medicines LLC and the former Speaker of the Assembly. He worked as a police officer starting in 1984 before becoming chief of police in Henderson and retiring in 2008. He is now president and chief lobbyist for The Perkins Company, a firm whose clients include Newmont Mining and the City of Henderson.

Perkins said he’s long supported medicinal marijuana after his stepson battled cancer in the early 1990s. But coming around to support recreational marijuana was a longer evolution. After conversations with narcotics officers, he has come to believe that marijuana is not a gateway drug when it’s brought out of the shadows and isn’t only available through criminal activity.

Family members of political figures include Ross Goodman, an owner with Paradise Wellness Center LLC. He is a criminal defense attorney and the son of Las Vegas Mayor Carolyn Goodman and former Mayor Oscar Goodman.

Mayor Carolyn Goodman has been known to abstain from marijuana-related policy discussions, such as a debate about cannabis consumption lounges in the city, because of her son’s involvement.

Mynt dispensary in Reno

Las Vegas Mayor Carolyn Goodman and her husband, former mayor Oscar Goodman, ride in a pink Cadillac during the annual Veterans Day parade in downtown Las Vegas on Sunday, Nov. 11, 2018. (Daniel Clark/The Nevada Independent)

On the other end of the state, Catherine Cashell-Mannikko, daughter of former lieutenant governor and Reno Mayor Bob Cashell, is an owner at Livfree Wellness. She told the Reno Gazette-Journal she got into the business because medical cannabis has helped her daughters, and as an investment opportunity.

John Griffin is a former owner at Livfree Wellness LLC who said in 2014 that his father had relied on medical marijuana to alleviate the symptoms of Parkinson’s disease. Griffin is a lobbyist whose clients include casino companies.

Lori Rogich, a Las Vegas-based attorney, is a former officer with Deep Roots Medical LLC. She is married to Sig Rogich, a Republican political consultant, the founder of prominent advertising and lobbying firm R&R Partners, and a former U.S. ambassador to his native Iceland.

In 2014, the revelation that Sig Rogich was a minority owner in a marijuana company was one of the most surprising that came out of a license application period in Clark County. Rogich was a senior White House adviser to President George H.W. Bush from 1989 to 1992 and also advised President Ronald Reagan, who in 1980 said marijuana “is probably the most dangerous drug in the United States.”

"It was 30 years ago, a lot has changed," Sig Rogich said in 2014.

Former local government figures include Larry Scheffler, an owner at MM Development Company Inc. He is a former councilman for Henderson who founded the commercial printing company Las Vegas Color Graphics, Inc. in 1978. He also has served as a commissioner on six major commissions in Southern Nevada government. 

His business partner Robert Groesbeck, an owner at MM Development Company Inc, served as the mayor for the City of Henderson from 1993 to 1997. He has practiced law for more than 25 years. 

Mynt dispensary in Reno

The Nevada Legislature as seen on June 4, 2019. (David Calvert/The Nevada Independent)

Lobbyists who have a stake in the industry include John Sande III, an owner at Nuleaf. He’s an attorney at the firm Fennemore Craig, and previously was chairman of First Independent Bank of Nevada. He played football for four years at Stanford.

Legislative observers may remember Rebecca Gasca for her past work as a lobbyist for the ACLU of Nevada. She is now CEO at the lobbying firm Pistil + Stigma, which helps businesses navigate the cannabis regulatory process, and is an owner at Wendovera LLC.

Other lobbyists include Tia Dietz, who works with government affairs firm The Griffin Company and was a registered lobbyist in 2017, and Piper Overstreet-White, who was a lobbyist for Uber in 2018. Both are board members at Livfree Wellness. 

Amy Ayoub, an officer with Deep Roots Medical LLC, is a former political fundraiser and public speaking coach.

Two lobbyists for Barrick Gold are part owners of a marijuana company. Judith “Be-Be” Adams is an owner with HSH Lyon LLC (High Sierra Holistics), as is Sean Gamble, who also lobbies for a coalition of Boys and Girls Clubs.

Serial participants on state boards round out some of the ownership. Luther Mack, an owner at Nevada Wellness Center LLC, was a longtime operator of McDonald’s and Popeyes franchises. Previously, he held positions in several state government agencies, served on the Nevada State Athletic Commission for 13 years, served as the chair of the University of Nevada, Reno Foundation and on the board of Boyd Gaming. 

He said he got into the marijuana world as a business opportunity, but also appreciated the benefits he found when using CBD cream for muscle soreness after workouts, and finds many former athletes are customers at his business.

Tisha Black, a Republican who ran unsuccessfully in 2018 for the Clark County Commission seat held by Justin Jones, is a board member at Clear River LLC. She is a lawyer in Las Vegas, and the founding partner at the Black & Lobello law firm. After years of involvement in the state’s medical marijuana program, developing regulations and helping companies file applications for their marijuana business licenses, she took the helm as president of the Nevada Dispensary Association in 2019. 

Former state employees who are now involved in the industry include Chad Westom, a board member at Forever Green LLC who was previously the bureau chief of the Nevada Division of Public and Behavioral Health until October 2017, according to his LinkedIn profile. As such, he oversaw the state’s medical marijuana program before it was transferred to the Department of Taxation.

On the website for his company, Westom touts that experience to potential clients, saying “built Nevada’s first-ever marijuana regulatory structure from 2013 through 2017, and oversaw the licensing and opening of all of Nevada’s marijuana establishments.”

Lisa Vick, who works as a compliance officer and board member at Clark Natural Medicinal Solutions, notes on her LinkedIn profile that she was an auditor with the Nevada Department of Taxation until February 2018. In that job, she said she would “audit all inventory and procedures for Dispensaries, production, cultivation, and laboratories for medical and recreational marijuana in the State of Nevada.”

Jodie Snyder, Riley Snyder, Michaela Chesin, Taylor Avery, Trey Arline and Zach Murray contributed research to this project.

Law and profits: Marijuana industry flush with lawyers, in spite of Bar’s warnings

Woman holding money at dispensary

There are scores of standout names among the well over 1,000 owners and officers of marijuana businesses that have sought or won licenses in Nevada.

There are former high-ranking state lawmakers, philanthropists who sit on the boards of prominent charities and real estate developers who have left their fingerprints on casinos and shopping plazas throughout the state. There are well-known lawyers and judges and former law enforcement officers.

The mix reflects the high bar that Nevada officials set for entering a heavily regulated market for a substance that still remains illegal on the federal level. Among other things, business entities seeking a medical marijuana license in 2014 were required to have at least $250,000 in liquid assets and enough resources to cover a year of operations.

Below are some of the more recognizable lawyers and community pillars who are, or have been, involved in the state’s marijuana business. Look out for coming installments of “The Cannabis Files” for more notable names from The Nevada Independent’s ownership analysis.

Mynt dispensary in Reno

Mynt dispensary in Reno is seen on Nov. 9, 2019. Photo by Mark Hernandez.

LAWYERS

State records show that at least 60 people who are owners or board members of marijuana companies that sought licenses in Nevada are lawyers. That’s not counting the many lawyers who do not have a personal stake in the business but serve cannabis clients, including in the numerous lawsuits swirling over the latest state dispensary licensing round.

It’s indicative of the complexity of running a marijuana business.

“The marijuana industry, more than nearly any other industry, requires thoughtful and strict compliance,” explained Bob Groesbeck, an attorney and co-owner of the Planet 13 Dispensary who formerly served as mayor of Henderson. “Attorneys have, by necessity, been involved [in] every step of the process.”

But the widespread involvement of attorneys wasn’t — and still isn’t — clear-cut, considering marijuana remains illegal at the federal level. After Nevada lawmakers authorized medical marijuana dispensaries in 2013, lawyers wondered whether conduct even distantly related to cannabis might run afoul of Nevada lawyers’ Rule of Professional Conduct 1.2, which prohibits assisting a client in conduct that violates the law.

The federal-state conflict raised questions among local government attorneys about whether advising on sprinkler safety requirements in grow houses or the distance between a fire hydrant and a dispensary might be considered abetting actions that are federally illegal. Then-Las Vegas City Councilman Bob Coffin told the Nevada Supreme Court in 2014 that some local governments were going without legal counsel or hiring out-of-state lawyers because of the ethical ambiguity.

"I hope you will approve or modify this, that I may have legal counsel as a representative of the public," Coffin told the court, according to The Associated Press.

In May 2014, the Nevada Supreme Court adopted a policy of allowing lawyers to advise clients on marijuana issues if the conduct was legal under state law. 

But advising a marijuana client is one thing; owning part of a marijuana business is another. That conflict came to the fore in 2016, when the state Bar asked the Nevada Supreme Court to adopt new language saying that participating personally in the marijuana industry “may result in federal prosecution and trigger discipline proceedings under SCR 111.”

Some owner-lawyers told the Las Vegas Sun they feared that the state would force all attorneys to either give up their law license or divest of their ownership in the marijuana industry, selling their stake potentially below market value. They also expressed frustration that the issue had not been resolved years earlier, before some got involved in the cannabis business in the first place.

The Nevada Dispensary Association urged a softer approach, arguing that “ownership in a [medical marijuana enterprise] does not ‘reflect upon the attorney’s honesty, trustworthiness, or fitness to practice law.’” Lawyer Eva Segerblom argued the policy would “be a direct interference with one’s right to earn a living.” Groesbeck, who wrote that he was proud of both his work as a lawyer and someone helping sick people access marijuana, asked the court to reject “draconian” rules on the matter.

“I do not believe I should be forced to throw away a law license that I have held and honored for over a quarter century simply because I have chosen to operate under a privileged license issued by the state,” he said.

In an order dated Feb. 10, 2017, the Nevada Supreme Court updated its Rules of Professional Conduct with the language, in spite of two justices suggesting wording that would offer more qualifications on the possibility of discipline.

“Because use, possession, and distribution of marijuana in any form still violates federal law, attorneys are advised that engaging in such conduct may result in federal prosecution and trigger discipline proceedings under SCR 111,” the current rule says. 

But the warning doesn’t appear to have triggered the disciplinary crackdown some feared, and many lawyers are upfront about their participation as owners in the industry, affirming the value that attorneys provide to the business.

Others have a less positive view of lawyer involvement. Steve Pacitti, an owner with Medical Cannabis Healing LLC, said his background is in working with businesses to ensure they have a viable corporate structure.

He thinks many attorneys who don’t have a corporate law background have migrated to the cannabis space because they see it as more lucrative and may be giving out bad advice that could lead to troubles down the road.

“The majority of lawyers got into the space opportunistically,” he said. “Because of poor structure and oversight, in addition to the incredibly poor and unrealistic statutory and regulatory framework around the industry, I anticipate a tremendous amount of litigation within many marijuana companies as investors find they are not being fairly treated by the operators.”

Here are some of the many lawyers who have applied for a license or have an ownership interest in a marijuana business:

Edward Bernstein, an owner with Silver State Wellness LLC and Paradise Wellness Center LLC, is a prominent Las Vegas-based attorney, philanthropist and television host known for his tagline “Enough Said, Call Ed.”

Several marijuana company owners are judges. James Bixler is an owner with Southern Nevada Growers Inc. who served as a judge in Las Vegas Justice Court and the Eighth Judicial District Court since 1980. While he retired in 2015, he became a senior judge who still presides over some cases. 

Neil Beller is a former owner with NCMM LLC, a cultivation company that unsuccessfully sought a retail dispensary license last year. He is a board member of New Horizons School, and is active at the synagogue Temple Ner Tamid, according to his website. He has also been a deputy district attorney and an alternate municipal judge.

Among the other lawyers are Michael Cristalli, a board member of Qualcan LLC. A lawyer with Gentile, Cristalli, Miller, Armeni, Savarese PLLC, his firm plays a prominent role in a case challenging the Nevada Department of Taxation’s distribution of 61 dispensary licenses issued in December 2018. The legal fight is still ongoing.

Then there’s Pacitti, an owner at Medical Cannabis Healing LLC and a Las Vegas lawyer. He specializes in negotiating and preparing trademark, copyright and rights of publicity licensing agreements for high-profile clients such as Shaquille O’Neal, Hulk Hogan and Andre Agassi. He negotiates celebrity appearances for various nightclubs and was instrumental in finalizing agreements with Mariah Carey, Nick Lachey, and others. He also represents world champion boxers. 

Parking space marked for Thrive Dispensary

A parking space outside the future Thrive Dispensary in Reno on Sept. 27, 2019. Photo by David Calvert.

COMMUNITY PILLARS

A reputable name was an important piece of winning approval before local government boards, and helped add legitimacy to an industry that was just emerging from the shadows. 

In 2014, applicants were asked to share with the state previous experience they had working in nonprofits or businesses, as well as past community involvement and a resume listing educational achievements. And they were evaluated on the amount of taxes or financial contributions the owners and board members made to the state over the last five years.

It was a system that favored wealthy and well-connected members of the community, although some of the “old guard” have stepped back from key roles in their companies and passed on responsibility to marijuana industry experts seeking to create multi-state, publicly traded chains.

Among the marijuana owners who are heavily involved in nonprofits in the community are:

Robert Ellis, who was previously an owner at Tryke Companies and is now a board member at Gravitas Henderson. Ellis owns R&S Investment Properties and is a prominent philanthropist who has been known to donate $200,000 in Christmas gifts to Southern Nevada children in a single holiday season. He and his wife have an elementary school in Henderson named in their honor, and were named “Distinguished Nevadans” by the NSHE Board of Regents in 2015.

Peter Guzman, a real estate broker and president of the Las Vegas Latin Chamber of Commerce, is a board member with Deep Root Medical LLC. Guzman said that because he knew who was leading the group — Gary Primm, who has an extensive background in the gaming industry — he didn’t have hesitation about getting into the marijuana industry.

Guzman is not the only member of the group to have ties to the industry — former Latin Chamber President Otto Merida is an owner at Nevada Holistic Medicine LLC. 

Norberto Madrigal, a vice president of the Latin Chamber affiliated with Lunas, a family-owned construction cleanup company, is an owner with Herbal Choice Inc.

Other philanthropists round out the ranks of marijuana owners. Phillip Peckman, CEO of Peckman Capital Corporation, is an owner with Thrive Cannabis Marketplace. He’s been on the board of the Council for a Better Nevada, a group of community leaders that advocates on education and other policy issues, and is a supporter of The Smith Center for the Performing Arts.

Julie Murray, who is also an owner at Thrive, is the head of philanthropy consulting firm Moonridge Group, and helped found the Las Vegas-based Three Square Food Bank.

Jody Ghanem, an owner at Wellness Connection of Nevada LLC, previously owned Radio City Pizza in downtown Las Vegas and is the development director at the Cleveland Clinic’s Lou Ruvo Center for Brain Health in downtown Las Vegas. She is a former Rockette and came to Las Vegas in 1979 after being hired by Liberace. She was previously an advisory board member at The Smith Center for the Performing Arts.

Her late husband, Dr. Elias Ghanem, was known as a doctor to the stars including Elvis Presley and was chairman of the Nevada State Athletic Commission, where he played a role in revoking Mike Tyson’s license to box after he bit Evander Holyfield’s ear.

Look out for the next installment of “The Cannabis Files” — a look at the politicians, gaming executives and developers involved in the industry. If you missed the kickoff, check out “Growing Pains,” an overview of the issues that have put Nevada’s cannabis industry at a crossroads.

Jodie Snyder, Riley Snyder, Michaela Chesin, Taylor Avery, Trey Arline and Zach Murray contributed research to this project.

Vaping-related illness found in Nevada; Trump proposes ban on flavored e-liquids

Bottles of e-liquids on a display shelf

President Donald Trump is proposing a ban on flavored e-cigarettes as the death toll from vaping-related illness has jumped to six

The first confirmed case in Nevada is a person under the age of 18 in Clark County, who was hospitalized with symptoms of pulmonary illness linked to vaping. The patient has been released from the hospital and is recovering.  

“It’s a new problem.  It’s a problem nobody really thought about too much a few years ago, and it’s called “vaping” — especially vaping as it pertains to innocent children,” Trump said Wednesday, when he first mentioned his plan to ban flavored e-liquids.

The Nevada Vaping Association, which represents vape shops, is urging the president to reconsider. 

Banning flavors will simply drive millions of Americans back to smoking,” said Alex Mazzola, president of the Nevada Vaping Association. “President Trump needs to understand the difference between manufactured nicotine-based products intended to be vaporized that have not been [linked to] the recent fatalities which are very different from homemade marijuana-based THC or cannabinoids products that have. A blanket ban of flavors won’t result in homemade marijuana-based THC or cannabinoids products coming off the market.”

 In one recent study of the illness in Wisconsin and Illinois, about 84 percent of cases of vaping-related illness involved the use of THC, the active ingredient in marijuana. The Nevada Dispensary Association, Nevada’s primary cannabis industry trade association, responded to the reported vaping illnesses on Thursday.

“As the Center for Disease Control’s (CDC) investigation is ongoing, the NDA affirms its ongoing commitment to promoting best practices and maintaining public health and safety as the industry’s first priority,” the association said in a statement.

Nevada cannabis industry breaks $100 million mark in annual tax payments

A cannabis bud in a gloved hand

Nevada’s cannabis industry has broken a record for tax contributions — more than $100 million in revenue has been collected from dispensaries, cultivators, laboratories and producers in the fiscal year that just ended. 

Marijuana tax contributions have increased by 33 percent year over year, from $74.7 million paid last fiscal year to $99.18 million in the 2019 fiscal year, with another $10 million fees on top of that. The Nevada Dispensary Association announced the milestone in a press release on Tuesday, along with a warning that the state should not take the strong collections for granted.

“Significant changes in the market or regulatory framework could impact tax collection,” said Riana Durrett, the group’s director. “The illegal market continues to deprive the state of funds that could be going to education.”

Divvying up marijuana revenue has been a hot topic for policymakers in recent years. The cannabis industry is subject to four types of taxes and fees — a 10 percent excise tax, a 15 percent wholesale tax, sales tax and licensing fees.

In fiscal year 2018, actual revenue of $69.8 million exceeded, by 40 percent, what the state had predicted for that fiscal year. And for the next two years, the state is projecting more than $100 million per year in marijuana tax collections.   

A major sticking point has been whether the revenue ends up in the state’s education account. Although the state collected nearly $70 million in excise and wholesale taxes in the first year recreational sales were legal, just over $27 million of revenue was deposited in the Distributive School Account, the state’s main education account. 

During the 2017 legislative session, decisions on an education funding model did not go as planned, leading lawmakers to shuffle marijuana excise tax revenue into the state’s Rainy Day Fund reserve account instead of directly to education. Schools did not lose money in the transaction because lawmakers backfilled the education money with general funds, but the diversion has been a source of confusion.

In May, the Legislature passed a bill that would somewhat rectify the 2017 diversion to the Rainy Day Fund by sending excise tax revenue directly to the Distributive School Account. That is expected to add $120 million to the education account over two years.

Forthcoming Cannabis Compliance Board is one of many changes lawmakers may bring to marijuana industry

A few years ago, marijuana businesses were wondering if they would even survive the legislative session without some sort of political crackdown.

These days, the industry in Nevada faces some steep challenges, including the lack of banking services and some serious questions — raised in numerous lawsuits — that the state’s process for distributing conditional licenses was unfair. But there are no existential threats in 2019 from lawmakers, who have baked the proceeds of marijuana taxes into their budgets and rolled out a bounty of other bills seeking to help the industry.

“Marijuana used to be heroin in Nevada back in 2013. It was very difficult to talk to any elected official about the issue,” said Will Adler, a lobbyist who has represented marijuana clients. “It's no longer a question of is marijuana in Nevada? It is. The question is how do we use the tax dollars that come in and how do we regulate to make sure it stays the best in the nation.”

This session, bills emerged to send proceeds to an education account, authorize limited-purpose banks to handle the marijuana industry’s finances and ease the path forward for consumption lounges. But chief among the nearly 20 cannabis-related bills introduced this session is a forthcoming measure from Gov. Steve Sisolak’s office creating a Cannabis Compliance Board — an agency modeled after Nevada’s “gold standard” gambling regulatory scheme.

Industry representatives are anxious to learn how stringent the system will be in the bill, which has yet to be introduced with less than a month left in the session. Once the Cannabis Compliance Board is in place, it may be less common to see so many divergent pieces of marijuana legislation.

Democratic Senate Majority Leader Nicole Cannizzaro said the Legislature is trying to work with Sisolak to create a solid regulatory scheme so the Legislature will “not have 10 different bills every session that are seeking to do 10 different things as we start to learn more information,” she said. “It’s not an effective way to regulate or legislate that issue.”

In the meantime, a long list of bills aimed at shaping the direction of one of the state’s newest industries has been whittled to proposals addressing a few key issues affecting the industry. Here’s what is still alive and moving forward:

Melissa Romero, right, shows marijuana products to Rico J inside the Underground, a cannabis farmers market inside Acres Cannabis in Las Vegas on Friday, April 20, 2018. Daniel Clark/The Nevada Independent

Cannabis Compliance Board:

This bill is still in the works and has yet to be introduced. But state leaders have offered the outlines of their project.

At a budget committee meeting last month, Sisolak’s chief counsel J. Brin Gibson described the proposed agency as one with divisions and chiefs similar to the Gaming Control Board. That agency has administrative, audit, enforcement, investigations, tax and licensing and technology divisions.

The budget called for eight new full-time positions and five governor-appointed, part-time board members who are paid salaries ranging from $40,000 to $46,000. Because Nevada’s voter-approved recreational marijuana initiative cannot be altered until three years after it was passed, the board would be officially established in November 2019, with some staff hired beforehand to ensure a smoother transition.

Lawmakers were still skeptical about why the agency needed to be a standalone entity, rather than a division within the Department of Taxation, which currently regulates marijuana. Taxation chief Melanie Young noted that once the agency took up the mantle of regulating marijuana in 2017, the task has dominated the workload and prevented it from moving forward on improving processes for collecting the $7 billion in other taxes they collect.

Signage for Acres Cannabis as seen in Las Vegas on Friday, April 20, 2018. Daniel Clark/The Nevada Independent

Easing up advertising rules

AB164 would ease up requirements on advertising. As it stands now, marijuana businesses have to seek pre-approval from the Department of Taxation before putting out an advertisement. The department screens the proposal to ensure it does not run afoul of rules prohibiting child-friendly packaging, images of actual consumption or anything encouraging overconsumption.

Riana Durrett, executive director of the Nevada Dispensary Association, called the process arduous and said approval often took a month.

“Marketing has to be fluid, especially in the age of social media,” she said.

Under the bill, violations of the advertising law carries a fine of $1,250 for the first offense to $10,000 for a fourth offense in the preceding two years.

“The people who are following the rules — those are the ones submitting for approval. They did everything accordingly. So this would focus more on just finding people who aren't following the rules,” she said.

Pilot program for banking

Banking services remain elusive because marijuana is illegal on the federal level, and federal agencies are intimately involved in the banking industry. Lawmakers made several proposals this session to try to solve the conundrum of the cash-intensive cannabis industry.

AB466 directs the treasurer’s office to launch a pilot program adopting a “closed loop” system in which cash could be turned into electronic currency and used within the marijuana industry, without touching the rest of the banking system and potentially triggering a federal crackdown.

Durrett said there still needs to be action in Congress to address the complications of banking in the marijuana industry.

“I think the pilot program at the treasurer’s office doing this could be positive, could go well, but it has to be done at the federal level,” she said.

Democratic Assemblyman Steve Yeager said the banking issue is more complicated than a state can realistically tackle.

“We could create a bank but it’s just a vault until you have the ability to actually do wire transfers and write checks,” he said. “I think everyone is anxious that maybe if the federal government just limited the Controlled Substances Act and just carved out state-legal marijuana, that would solve all the banking issues tomorrow.”

Democratic Attorney General Aaron Ford announced Wednesday that he had joined 37 other attorneys general in signing onto a letter encouraging Congress to pass the SAFE Banking Act. Nevada’s three Democratic House members are co-sponsoring the bill.

“As one of 33 states that has legalized the use of marijuana, this legislation would enable law enforcement, tax agencies and regulators to more effectively monitor local marijuana businesses and their transactions,” Ford said in a statement.

Party goers smoke marijuana in a limo on the first day of recreational sales in Nevada on Saturday, July 1, 2017. (Jeff Scheid/The Nevada Independent)

Studying marijuana DUIs

ACR7 proposes an interim study on issues related to driving under the influence of marijuana. The study scope would include scientific evidence about marijuana-related impairment as well as data about the number of arrests and convictions for marijuana DUIs before and after Nevada legalized recreational marijuana.

It would also explore how other states are handling marijuana-related DUIs and consider products that measure marijuana intoxication. The goal is to come up with recommendations that could inform the Legislature in 2021.

Yeager said that while much of the U.S. agrees that 0.8 is the blood alcohol concentration at which most people are intoxicated, there has not been enough research to come up with an analogous metric for marijuana.

Marijuana licensing transparency

SB32 makes certain information about marijuana licensing applicants public information. That includes the name of any owner, officer or board member of a company applying for a license, the scoring tool used by an evaluator, the methodology the department uses to rank applications, the final ranking and score of the applicant.

Previously, the department revealed next to nothing about applicants, including those who won conditional licenses in a December licensing round. Numerous applicants who did not win licenses have sued the department, saying its opacity could leave room for corruption.

Young noted that the Department of Taxation is bound by taxpayer privacy laws that limit their disclosure. That will be improved by the passage of SB32, which increases the amount of information that can be released — including the names of applicants — and is expected to be signed any day now.

Unlicensed marijuana businesses

SB238 aims to tackle unlicensed marijuana operations. It explicitly bans licensed marijuana establishments from selling any of their products through an unlicensed third party.

Democratic Sen. Yvanna Cancela, the bill sponsor, said marijuana businesses are also struggling with unauthorized sellers using their logos and branding. There’s not clear recourse for those kinds of violations.

The bill authorizes the attorney general to conduct a study into the unlicensed marijuana industry, including what resources are available to combat the unlicensed sale of marijuana products and gaps in enforcement.

Patrons look at marijuana merchandise on display inside NuWu Cannabis Marketplace in Las Vegas on Friday, April 20, 2018. Daniel Clark/The Nevada Independent

Closing disparities in the marijuana industry

Sponsored by Democratic Sen. Dallas Harris, SB346 requires the Nevada Department of Taxation to gather comprehensive demographic data about players within the marijuana industry and analyze the data to determine whether discrimination and disparities exist.

“The idea here is to get the lay of the land,” Harris said at a bill hearing. “In order to determine whether there is fairness in how these establishments are being set up, how licenses are being handed out, employment information — we’ve got to gather that information.”

The bill also calls for a Center for Emerging Small Marijuana Business Advocacy and Services within the Governor’s Office of Economic Development. The center would help businesses get information about financing and assist with inquiries from the businesses.

“The current market is not as diverse as we might hope it is,” she said. “So I really would like to start to address that.”

Expanding eligibility for medical marijuana cards

If approved, SB430 would add certain medical conditions to the list of conditions under which a patient is allowed to obtain a medical marijuana card. Medical conditions in the bill include anxiety disorders, autism spectrum disorders, an autoimmune disease, anorexia, opioid dependence or addiction, a neuropathic condition or any condition related to the human immunodeficiency virus. The bill also lowers the threshold from “severe nausea” to just “nausea.”

While Nevada allows all adults to buy marijuana, proponents say it’s important to expand the medical eligibility to show producers that there’s a market for medical products and because the cards allow patients — who tend to consume more than recreational customers — exemptions from certain taxes.

Sealing records for decriminalized offenses

Democratic Assemblyman William McCurdy’s AB192 establishes a procedure for sealing records when an offense has been decriminalized. It comes after a similar bill from McCurdy that was focused on vacating and sealing minor marijuana convictions was vetoed in 2017 by Gov. Brian Sandoval.

While the bill still requires the person to take proactive steps to clear their record rather than call for the wholesale expungement of records for decriminalized offenses, McCurdy said he’s happy with how far the bill goes because it covers future offenses that might be taken off the books — not just low-level marijuana possession.

“I believe in other sessions to come there will still be more work that needs to be done,” McCurdy said, “but I believe in whole that we’re taking positive steps in the right direction to right a lot of wrongs and provide a lot more opportunities for those who wish to participate in this industry to be able to do so.”

A delegation of Nevada legislators and industry representatives at the Harvest marijuana dispensary and consumption lounge in San Francisco on Nov. 19, 2018. Photo by Michelle Rindels.

What didn’t make it

AB409, which would have authorized local governments to create and issue licenses for marijuana consumption lounges, is dead.

This bill was aimed at ensuring a more diverse group of entrepreneurs could participate in the marijuana consumption lounge industry, according to bill sponsor McCurdy, but it was never scheduled for a hearing.

A legal opinion from the Legislative Counsel Bureau has said there’s nothing preventing local jurisdictions from regulating marijuana consumption lounges, and the city of Las Vegas has approved allowing licensed marijuana businesses to open consumption lounges within city limits.

SB305 also never received a hearing. This bill would have specified that 75 percent of marijuana excise tax revenue goes to the state’s Rainy Day Fund, but 25 percent goes to a new Account for the Support of Academic Achievement that would support public schools and scholarship programs.

Sisolak’s budget lays out other plans, though. He calls for marijuana tax revenue to support school safety initiatives, including social workers and infrastructure improvements.

And SB437 will not move forward. The bill would have allowed for the creation of charter banks and credit unions limited to serving marijuana businesses. The financial institutions could issue special checks that could be used for paying taxes and operational expenses for their business, as well as purchasing bonds from the state.

Sponsored by the Senate Judiciary Committee, the bill never got a hearing.

Amendment would make public the names of businesses that applied for marijuana licenses, scores

As the state faces criticism and lawsuits over its secretive process for licensing marijuana dispensaries, new legislation is calling for the disclosure of the names of business entities that applied and more details about scoring methodology.

Nevada Department of Taxation Director Melanie Young on Tuesday presented an amendment to SB32, which would expand transparency in the state’s marijuana regulation processes. Currently, the agency will not even release the business names of the 61 entities that in December won conditional licenses to open a dispensary, citing confidentiality provisions that date to an era when the state aimed to protect medical marijuana cardholder identities.

“This amendment is an important step in a multi-pronged approach to greater transparency in marijuana licensing under my administration,” Gov. Steve Sisolak said in a statement. “As our legal marijuana industry has evolved and flourished, it’s more important than ever that the industry and the public enjoy the benefits of a completely open and transparent process from licensing to operation so that our marijuana industry can become the gold standard in the nation."

The measure would be effective retroactively, so it would encompass all entities that have applied since May 1, 2017. It would also reveal the action taken with regard to those applications, the methodology used in scoring and ranking applicants, evidence showing how the methodology was applied, and the names of entities that were subject to disciplinary action.

It would exclude information compiled by investigative staff and law enforcement, blueprints and schematics related to the layout of a marijuana company building, information about security measures and other materials that might jeopardize public safety.

Also private would be “personal information,” trade secret information, and documents related to the finances, earnings and revenue of the applicant or individual people involved in the application. Young said in general, names of individual people who are part of an ownership group that applied will not be public, unless that person applied under their name as part of a sole proprietorship.

Applicants who did not win licenses in the most recent application round have filed lawsuits against the state over the process. One filed last week on behalf of 11 marijuana businesses argued that the level of secrecy on how the winners were determined has been so high that it’s creating an environment ripe for corruption.

Young, who took over the agency earlier this year, said she supported the proposal.

“I share Gov. Sisolak’s commitment to increasing transparency within the marijuana licensing process,” Young said in a statement. “I look forward to working alongside the governor’s office and the legislature to implement this and other needed reforms to shed more light on how marijuana licenses are issued.”

Nobody testified for or against the amendment, which was posted publicly shortly before the meeting, during a brief hearing in the Senate Revenue and Economic Development Committee. Riana Durrett of the Nevada Dispensary Association did not immediately have comment on the proposal.