Nevada cannabis entrepreneurs have been enjoying over the last year some of the biggest businesses booms in the country. US Attorney General Jeff Sessions’ recent decision to rescind the Cole Memo, however, could cast clouds of uncertainty over what should otherwise be a bright future for Nevada’s weed industry. Let’s take a look at how this could impact Sin City’s pot plans.
Nevada is one of only eight US states that have legalized recreational marijuana, having voted in 2016 to move ahead with its legalization. While the start date for recreational sales was set for January 1, 2018, state legislature moved to allow the state’s existing 60 medical marijuana dispensaries to begin an experimental, early run of recreational sales that started on July 1, 2017. This gamble paid off as sales skyrocketed, generating approximately $126 million in sales revenue plus $19 million in tax revenue between July and October. These numbers eclipse inaugural sales of weed in states like Colorado or Oregon, which is hardly shocking for the state that was at the forefront of legalized gambling.
Sessions’ latest move in his crackdown on cannabis affects Nevada in a couple of specific ways. First of all, the rescission of the Cole Memo places decision making about weed enforcement in the hands of the state attorneys. Just one day prior to his announcement, Sessions had appointed Dayle Elieson of Dallas, Texas as the interim US Attorney for Nevada. Elieson, who has no ties to Nevada, is regarded as a bit of a wild card. State Senator Tick Segerbloom, aka Nevada’s “godfather of marijuana”, told Reno Gazette Journal that “all he knew about Elieson was that she was from Texas, ‘which is kind of scary.’” Elieson has so far avoided speaking on the record. It is unclear at this point where she stands or what she will do moving forward.
A second potential complication, as reported by the Las Vegas Review-Journal, is that casinos are regarded as federal land and are also deemed banking institutions under federal law. Casinos will end up in a perilous position if a federal crackdown occurs. Their owners will grapple with whether or not to accept cash from weed businesses, including payment from organizations holding weed conventions, as acceptance of such payment could lead to civil racketeering or money laundering charges. Banks and credit unions could also face some danger, since many of their wealthy clients have marijuana businesses tucked away in their large portfolios.
Las Vegas also began its push for public cannabis consumption lounges right after recreational legalization was voted in. Consumers are currently only allowed to smoke in private residences or on private property with permission from the owners. Vegas’ millions of tourists who stay in casino hotels that are bound by federal law will be legally prohibited from consuming in their rooms. Approval for consumption lounges was pretty much a given up until this month, with lounges anticipated to open as early as March or April of this year. Their fate is now very much up in the air.
Colorado’s US attorney has stated that he does not plan on changing his approach to prosecuting recreational marijuana-related crimes, despite the rescission. Nevada Governor Brian Sandoval, who regards his state’s successful market as a model for other states, has said that he is hopeful that Nevada will follow Colorado’s lead. Meanwhile, the Nevada Tax Department, the organization responsible for regulating the state’s marijuana market, is going ahead with business as usual as it closes in on more permanent regulations to replace the temporary guidelines that were put into place to accommodate July sales. While the organization did vote to make most of the existing temporary rules permanent, the Legislative Commission still needs to approve the Tax Department’s update before the temporary guidelines expire at the end of February.
One thing is for certain, which is that Nevada’s profitable marijuana industry has become vital to many local regions. A federal crackdown would lead to the loss of at least 7,000 jobs and more than $5 million in monthly state tax revenue, not to mention millions of investment dollars. Members of Nevada’s congress, along with many other government officials, have become publicly defiant in the face of Sessions’ latest threat. America’s marijuana movers and shakers will just have to wait and see how this hand plays out.