United States: Nevada's Gaming Policy Committee Convenes To Discuss Marijuana And The Gaming Industry

How far do Nevada's casinos need to go to police marijuana use by their customers? Can a casino resort allow a marijuana industry conference to utilize its convention facilities? What practices do casinos need to follow regarding customers that may be gambling with funds acquired through participation in the state-legal marijuana industry?

Nevada's gaming licensees and regulators have been grappling with these questions, and more, since the state legalized both medical and recreational marijuana sales and use. As discussed in our article "Marijuana and the Gaming Industry in Nevada: Just Say No," the Nevada Gaming Commission ("Commission") kicked off the public discussion on these topics this past August. But this discussion really left more questions than answers. Therefore, Nevada Governor Brian Sandoval signed an Executive Order reconvening the state's Gaming Policy Committee ("Committee") to gather information, engage in discussion, and provide recommendations on policies related to the potential interactions between Nevada's gaming industry and the marijuana industry.

The Gaming Policy Committee is a special advisory board designated to weigh in on touchy or novel regulatory matters, and the Committee members include elected legislative officials, a tribal gaming representative, an educator, the Chairmen of both the Nevada Gaming Control Board and Nevada Gaming Commission, and "industry representatives" (Jim Murren, CEO and Chairman of MGM, Keith Smith, President of Boyd Corporation, and Blake Sartini, Chairman and CEO of Golden Gaming, among others).

The Gaming Policy Committee met on November 29, 2017, to discuss the following issues:

  1. The propriety of events that cater to or promote the use, sale, and cultivation or distribution of marijuana on the premises of a licensed gaming establishment;
  2. The propriety of a licensee contracting with or maintaining a business relationship with an individual or entity engaged in the sale, cultivation, or distribution of marijuana;
  3. The propriety of a licensee receiving financing from or providing financing to an individual, entity, or establishment that sells, cultivates, or distributes marijuana; and
  4. Any other matter as directed and determined necessary by the Chair.

After more than four hours of testimony and deliberations by the Committee, the Governor signed an order stating that the Committee would take the matter under advisement and would deliver its recommendations on or before March 31, 2018. The intent of the Governor would be to schedule another Committee meeting by the end of February 2018.

As discussed below, although there were no recommendations at this session, the audience heard an inkling of what might lie ahead on the subject of gaming's tenuous relationship with the marijuana industry.

The agenda for the meeting included a variety of topics ranging from a report on the current status of the Nevada Gaming regulators' perspectives on marijuana businesses and the persons involved who might seek Nevada gaming licenses. This was followed by a summary of existing federal laws, financial relationships and obligations under anti-money laundering ("AML") laws, and the burgeoning convention and meeting market for marijuana businesses. The convention business component was bolstered by a report from the Nevada Department of Taxation on potential revenues that could be lost if marijuana-related conclaves were excluded from holding their events at the Nevada resort properties.

By way of background, Control Board Chairman A.G. Burnett summarized the position taken by the Board on associations or involvement by licensees with the marijuana industry. That advice has remained static since the Board released a memo drafted by Board Member Terry Johnson in 2014. The memo formed the basis for gaming policy on the subject, which guidance has been affirmed by the Nevada Gaming Commission on at least two separate occasions, under two Chairmen, including the latest pronouncement on August 24, 2017, by current Commission Chairman, Tony Alamo, MD.

The position can best be summarized by the statement: "So long as it is illegal under federal law, gaming licensees must not have any involvement with or participation in the marijuana industry, because doing so would violate the requirement for licensees to obey all laws, including federal laws." Such involvement, however remote from the actual marijuana business operation, could reflect discredit on the gaming industry thereby tarnishing the "gold standard" of gaming regulation.

In describing those federal laws, Brian Barnes, an attorney from Colorado, provided a summary of federal statutes, referencing the Constitution's Supremacy Clause in which state laws are trumped by federal laws (a matter which will likely be the subject of the arguments before the U.S. Supreme Court in Christie v. NCAA involving PASPA and limitations on sports wagering).

Mr. Barnes also provided an overview of the pertinent provisions of the Controlled Substances Act (1970) 21 U.S.C. Section 801 et seq. ("CSA"). His message for the panel was that so long as marijuana is listed as a Schedule 1 drug (the same list includes heroin), federal law prohibits virtually every aspect of marijuana businesses, including providers, financial institutions, landlords, and consultants from supplying, aiding, or advising them. The only "savings clause" for marijuana in the CSA, short of an amendment by Congress, is a provision in the current law that allows the Attorney General to make a finding that marijuana has scientific or medical evidence to prove that its removal was warranted. (Don't wait on this one!)

Mr. Barnes has been involved in two separate Colorado actions in which he has employed civil RICO arguments to attack marijuana businesses on behalf of private objectors. The first involved a Holiday Inn that claimed its business was adversely affected by an adjacent marijuana dispensary. That case was eventually settled before verdict but not before the various ancillary individuals, including the accountant advising the marijuana business and the insurance company providing a bond required by that state's marijuana laws, jointly agreed to pay a settlement of $70,000.

Civil RICO would be in addition to criminal sanctions that might be sought by the Department of Justice ("DOJ"). It allows a private action seeking treble damages and attorneys' fees against a criminal enterprise. Given the potential awards, this may become the next powerful tool to be employed by plaintiffs' counsel.

The second case, Safe Streets v. Hickenlooper, 859 F.3rd 865 is still pending before Federal District Court in Colorado after a remand from the Tenth Circuit Court of Appeals, which reversed the prior decision of the lower court that had dismissed the case. The lawsuit had been brought against a marijuana cultivation facility that was emitting strong cannabis odors, which neighbors argued were objectionable and lowered their property values. The decision from the 10th Circuit Court is notable because it contains an outline of required proofs necessary to meet civil RICO standards.

The Policy Committee also heard from AML and banking experts who reiterated that casinos are "financial institutions" within the Bank Secrecy Act, 18 U.S.C. 1957, which requires a continuing obligation to "know your customer" (KYC). That means casinos should not accept sums over $10,000, for casino play or payments for other purposes, from individuals who were known (or after investigation should have been identified) as individuals engaged in the marijuana industry. At the very least, SARs (Suspicious Activity Reports - Casinos) identifying these persons should be sent to FinCEN. The general advice, however, from AML consultants would be to eschew any relationship with these customers unless it can be assured that their funds came from sources unrelated to marijuana.

Finally, the Committee heard from Cassandra Farrington, the CEO of Marijuana Business Daily, a company which produces MJBIZCON, a large marijuana industry event held in Las Vegas, bringing together Business to Business ("B2B") participants to learn more about their industry and the nuances of successfully operating in a legal environment. It was evident that presentation was the "gray area" that the Gaming Policy Committee was interested in addressing. Bolstered by estimates by the Nevada Department of Taxation about conventioneers' spending and the tax revenue to be derived from hosting such events, the Committee became focused upon whether there could be some reasonably congruent approach that would allow marijuana and gaming proscriptions to co-exist during the seemingly endless period of silence from the DOJ on enforcement of the CSA against marijuana businesses and their aiders and abettors.

In their informal "deliberations," Governor Sandoval noted that there have been no prior enforcement actions by the DOJ on ancillary or supportive businesses. Chairman Alamo appeared to soften his initial perspective, saying that there may be a way for gaming licensees to host B2B events.

Both Jim Murren and Keith Smith voiced concerns about companies operating in multiple jurisdictions, stating that although there are 29 states embracing some form of legal marijuana distribution (medical and recreational), there are likely different tolerances within gaming regulations in those jurisdictions, and the most conservative approach expressed by Brian Barnes' recitation of "black letter law" should not necessarily end the discussion of the gaming industry accepting marijuana-related business meetings and conventions.

Finally, Chairman Burnett summarized his thoughts by stating that Nevada should consider the "reasonableness" approach suggested by another presenter, former Clark County Sheriff Bill Young. If there is a gray area that is truly a gray area, he mused that licensees might be able to enter it, but it would be at their own risk. In other words, if a licensee accepted a marijuana convention and on that basis the Attorney General cited them for a violation of the CSA, it would be their risk.

In the interim, the debate will continue as the industry awaits the Committee's non-binding recommendations.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Similar Articles
Relevancy Powered by MondaqAI
Dickinson Wright PLLC
In association with
Related Topics
Similar Articles
Relevancy Powered by MondaqAI
Dickinson Wright PLLC
Related Articles
Up-coming Events Search
Font Size:
Mondaq on Twitter
Mondaq Free Registration
Gain access to Mondaq global archive of over 375,000 articles covering 200 countries with a personalised News Alert and automatic login on this device.
Mondaq News Alert (some suggested topics and region)
Select Topics
Registration (please scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions