Marijuana Moment
Nevada is losing out on $80 million in annual marijuana tax revenue by imposing rules that have created strict barriers between the state’s cannabis and gaming industries, according to a new report. And that policy choice has also driven consumers to purchase “unlicensed, unsafe” products in the illicit market.
At the University of Nevada Las Vegas (UNLV) Cannabis Policy Institute and International Gaming Institute’s 3rd Annual Gaming & Cannabis Policy Discussion late last month, lawmakers and officials discussed the impact of regulations that have kept the licensed marijuana industry from fully integrating with the state’s storied gaming sector.
Specifically, they pointed to rules highlighted in the UNLV cannabis institute’s report that prevent marijuana deliveries to most hotels and gaming properties, ban retailers from operating within 1,500 feet of gaming establishments in major counties and broadly restrict gaming licensees from dually participating in or profiting from the licensed cannabis sector.
“The separations act as severe constraints on capital mobility, tourism synergy, and public-revenue growth, without any corresponding economic, public health or safety, or risk benefits to market participants in either market,” the authors wrote.
The report—titled “The 1,500 Foot Wall”—estimates that marijuana businesses are missing out on $750 million in revenue each year due to the onerous regulations. That includes lost revenue from retail sales ($540 million) and wholesale ($210 million).
With respect to unrealized tax revenue from those missed sales opportunities, the forced separation amounts to approximately $80 million that Nevada could be adding to its coffers every year if the two industries were freed up to more closely integrate.
Marijuana is legal in Nevada for adults, including tourists, 21 years or older. But because licensed cannabis businesses are effectively pushed outside of main commercial gaming hubs such as the Strip in Las Vegas, illicit businesses that aren’t playing by the rules in the first place are taking advantage of the state regulations, the report found.
“The cannabis-gaming barriers are currently preventing millions of Nevada consumers from accessing legal cannabis,” it said. “All of the cannabis sold [in gaming areas such as the Strip] is unlicensed, unsafe cannabis from the illegal market.”
“Another result of the barriers is that many of the state’s legal cannabis businesses are struggling to survive as a result of their severely limited access to tourists,” the authors said. “The original separation between cannabis and gaming was a rational precaution in 2014. A decade later, it is an economic and policy anachronism.”
