The Federal Government is changing some of its stance on marijuana.

What that means for Nevada's cannabis industry and its potential relationship with gaming, that's this week on Nevada Week.

♪♪ Support for Nevada Week is provided by Senator William H. Hernstadt and other supporters.

-Welcome to Nevada Week.

I'm Amber Renee Dixon.

In April, under a directive from President Donald Trump, the U.S.

Department of Justice reclassified medical marijuana from a Schedule I drug to a Schedule III drug.

That means the Federal Government now recognizes a medical use for marijuana in certain circumstances, and it creates an opportunity for state-licensed medical marijuana businesses to operate under federal rules.

But what does that mean for Nevada's cannabis businesses, many of which serve both medical patients and recreational customers?

Here to discuss that and the potential rescheduling of marijuana more broadly are Riana Durrett, Executive Director of the Cannabis Policy Institute at UNLV; Nevada State Senator Rochelle Nguyen; David Goldwater, Owner of Inyo Fine Cannabis dispensary; and A'Esha Goins, an equity in cannabis industry advocate.

Thank you all for joining us.

Let's start with what has happened, and that is the federal rescheduling of medical marijuana to Schedule III.

Riana, how big of a deal is that?

(Riana Durrett) It's historical, but at the same time it is going to take time to implement.

So the Federal Government has said this is now Schedule III, but we're still seeing that being implemented.

And there's still a lot more questions than there are answers.

-What is one of the biggest questions, or two of the biggest questions?

-One of the biggest questions is how does this affect Nevada licensees?

They're mostly dual-use licensees.

They have medical and adult use.

What has been rescheduled is medical.

So how does that impact the licensees?

And we don't have answers.

I also serve on Nevada's Cannabis Compliance Board.

We have been in discussions with the DEA, and there are not-- Just the whole country is waiting to find out.

-If I'm interpreting it correctly, you would have to separate your medical business from the recreational or retail business, and the tax benefits would only apply to the medical aspect?

Is that-- (David Goldwater) It's ambiguous at best.

We'd need probably guidance from the IRS, finally, maybe with some help from the State.

It would be an administrative nightmare just to kind of separate the two.

It's a very challenging situation to have that kind of split up.

And I'm also reluctant to call it a tax benefit, because right now it's a tax penalty, 280E.

We're not treated like other businesses.

So just to, just to get equitable tax status would be a great thing for the industry.

-And you're not treated as another business, because marijuana federally is still illegal?

-It's still a Schedule I narcotic, yeah.

-Okay.

State Senator Rochelle Nguyen, this is an area that you have focused on, the regulation of cannabis and the reforms of that regulation.

What are you thinking of for this upcoming session?

Is anything possible in relation to what the Federal Government just did?

(Rochelle Nguyen) I think what Riana said was accurate.

There are so many more questions now on what kind of-- what the impact that this decision on the federal level has on state licensees, what it has to do with regulation, what we need to do.

And I feel like over the next couple of months, as we're getting ready for the 2027 legislative session, I'm really going to be talking to the operators, the manufacturers, the people that are in the industry, the advocates, the people that are in this-- at this table today to figure out what we need to do to move forward.

Whether or not we need to have trigger-type legislation that's in place, what kind of changes that we may need to make to our statutes and our regulatory, like, systems I think are all up for grabs.

And we're going to try to make it as smooth as possible for our Nevada businesses and this growing industry.

-A'Esha, where do you think the State should start in relation to what the Federal Government decided in rescheduling medical marijuana?

(A'Esha Goins) I'm always going to think about what is in the best interest of small businesses.

And then also the second would be criminal justice.

So in the interest of small businesses, I just want to make sure that the process is streamlined as much as can be, right, because it is ambiguous.

And then I'm thinking about those persons who are incarcerated and those persons who could be affected by the criminal justice system and how this will affect them in the whole.

-How would it affect them?

-Currently, it won't.

However, if the industry adapts or adopts different ideas as it relates to policy, it could.

And so that's-- I'm always thinking strategically about how that could work.

-Riana, we were talking off camera ahead of this, also with you, A'Esha, about the Board of Pharmacy, the Pharmacy Board in Nevada, and how they schedule marijuana.

It is still a Schedule I substance according to the state's Pharmacy Board.

Should that change?

-Yes.

I-- It has been rescheduled at the national level.

We should follow that.

I-- They're clinging on to it for some reason.

They've litigated over it.

They need to let it go.

They-- It's used very selectively.

It's used in very few cases, so it's not even something that will make a huge impact.

But it should be rescheduled along with the national level.

-Agreed.

Some of the conflicts they have, though, I think in law enforcement-- We're sort of torn in the industry because there is a very prolific illicit market that operates all over the place, and they use some of those, that Schedule I status sometimes to invoke criminal penalties for people who are selling illegally.

So it's a challenging balance for law enforcement.

-A'Esha?

-I definitely think that Riana and Goldwater are absolutely correct, but the concern that I have is going to always be it's just inequitable, right?

So when we're talking about prosecutions, it's always inequitable.

And I think that what we should be focused on again is how this affects the businesses, because how it affects the businesses is exactly how it's going to affect the community at large.

And we have a huge, you know, not to throw a wrench, but we have a huge hemp problem that also adds to how our businesses are able to function.

So, you know, that's a concern of mine.

-Can you elaborate on what it looks like right now as far as how many people are still incarcerated for cannabis offenses?

-I mean, I don't-- (laughter) -Well, there's not a lot of great data on it either, though.

-Absolutely.

And one of those reasons is because what was actually found in the case is oftentimes it's not the first charge, right?

They're asked to plead out of that charge to take a larger issue as their first offense, so it's difficult to track what that looks like.

But I will say that during Covid, the governor at that time, he pardoned 15,000 small minor cases.

But also tracking those cases down, those persons who were pardoned is also difficult because of how those cases show up to the prosecuted person.

-Riana, do you want to add to that?

I see you nodding.

-Oh, I just know that Nevada Legal Center has done some great work around sealing these cases and obtaining the pardons, but it's exactly what she's saying.

But some of the relief has been provided, but we really need a lot further momentum at the federal level to get federal relief.

-Okay.

-Our business has supported the Legal Center's sealing of records.

It's interesting.

There is no question, as A'Esha points out, that the war on drugs is a complete failure and adversely affected minority communities.

That is without question, and it's not a good part of this country's history or the state's history.

The challenge today is for legal cannabis operators is we are now asking for more enforcement against an illicit market that's affecting our businesses and it's affecting the state's tax revenue.

That's different than kind of how the war on drugs manifested itself and those adverse reactions.

But if we are hesitant to enforce the law on the laws that we do have on cannabis, it's going to have an adverse effect on the state's revenues, the business revenues, and I think that's a, that's a challenge.

-I spent nearly a little over 20 years as a criminal defense lawyer.

So having, you know, seen the impact of, you know, a failed war on drugs, and, honestly, a lot of, like, policies that we had in the criminal justice, like, arena collectively, it's incredibly complex.

Even our prosecutors struggle to prosecute the illicit market because you have a, you know, jury pools that are under the impression that it's recreationally legal.

And so they don't want to incarcerate someone that is illicitly selling, like, cannabis on the black market because, at the end of the day, it still is weed.

And there's a public perception, and so they're not able to prosecute those cases even when they do have them.

And so I think there's probably been a movement amongst prosecutors across the country and especially here in this state to not prosecute the illicit market because it's so intertwined with public perception about recreational cannabis use.

-As it stands, recreational marijuana, or retail marijuana, is a Schedule I drug on the same level as heroin and LSD.

Should it be rescheduled to Schedule III, Senator?

-I'm of the opinion that it should be at this point.

There's so many implications, whether it's taxes, regulation, the way we do it.

I mean, there's already inequities that we're seeing now.

We don't tax other prescription medication.

And if this has been rescheduled and its medical, like, use, why are we still taxing that at the same rate?

So there are a lot of-- It's just incredibly complex.

So, yes, I, you know, I've been on this show before talking about psilocybin and magic mushrooms also.

You know, we talk about fentanyl, and we talk about marijuana, and we talk about things like psilocybin, and they're all Schedule I, so I think it's about time that we start looking at the science behind a lot of this, these natural substances, and make some hard decisions, and which actually aren't that hard.

-Okay.

At the same time, though, the Drug Enforcement Administration right now is holding a hearing on whether to reschedule marijuana, all marijuana, more broadly to Schedule III.

And that hearing is full of entities that are opposed to that happening, right, Riana?

What is coming out of those hearings?

Why would they only hear from folks who are opposed to it?

-Yeah.

There are different theories on that.

Partly, this hearing is about rescheduling adult use.

Partly, it's just about laying a record for future litigation.

There are going to-- There will be lawsuits aimed at the rescheduling, both the medical and adult use, and this will-- is providing a record for appeal, or yet to appeal the administrative law judges' decision.

So the theory is that the opponents were called so that they could get their day in court, they could exhaust their administrative remedies, we could move forward.

I don't know why you wouldn't also call researchers that have proven the medical benefits and have a more well-rounded hearing, but it's mostly testimony as to, as to opposing rescheduling.

-A'Esha, what do you think the likelihood is of marijuana being rescheduled as a whole to Schedule III?

Why do you keep laughing at me?

(laughter) -I partly laugh because I am-- At this age in my life, I am just not as much of an optimist as I used to be, especially as we're watching government unfold.

And so do I think they will reschedule?

I think there is a cost to the criminal justice system that falls in alignment with rescheduling, and I don't think that the governmental body wants to take on that cost.

-What does that cost look like?

-If, if it's rescheduled, if adult use is rescheduled, then you have to take a look at all of the prosecutions that have happened prior, and then the penal system is, it is moved and financially sound because of bodies.

And cannabis has been largely used in many states for many years as an opportunity to add bodies to the penal system.

And so when you take that away, that cost, I just don't see the governmental body taking that hit financially.

-You know, Amber, when it comes to rescheduling, I think it's worthwhile to kind of go back to first principles.

Why was it put on Schedule I in the first place?

How was it used then?

I think any of us, if we review that history, we come to the conclusion probably it was more arbitrary than based on any reasonable science or public protection, preserving the public.

If we could start from first principles now, why do we want to regulate cannabis?

Does it belong on Schedule I?

It's certainly there are things that are important.

We want to-- It's important to protect minors from having too easy access to cannabis.

It's important to make sure it's taxed and regulated in a market so that everybody does what they should be doing.

It's important to control the quality and protect the public.

All those things don't require a Schedule I anymore.

And doing that with what A'Esha said, keeping in mind we don't want to create laws that we end up leveraging different communities adversely through law enforcement, I think would be a worthwhile endeavor on the regulatory front.

-Senator Nguyen, from the attorney's perspective, what A'Esha said, would that have to happen, cases across the country be pulled and identified for cannabis convictions?

And then what kind of work would that take?

Or would that not happen in your opinion?

-Oh, I think it would happen, definitely.

-It would have to happen?

-It would.

I think it would have to happen.

I think advocates and people that are working with those communities that have been incarcerated, sometimes for years and years and years, for convictions like this would demand it happen, and rightfully so.

And so I definitely think that is like something that is in consideration.

I think there's still, like, you know, we're fairly new in this industry even being recreationally legal.

I know we're hitting more than 10 years, but that is still relatively like a young industry, young perception.

And I think it's going to take a lot longer to get there.

-I also think that, to Goldwater's point, I think it's in the best interest of industry to reschedule.

And I want to put this on the record that also it's in the best interest of small businesses to reschedule to have an opportunity for entryway for other persons.

So I think that rescheduling could be positive.

I just want to make sure that when we're talking about rescheduling that we're also talking about the impact that it's going to have on all of the commerce, right, because there's lost tax.

I'm not a small cannabis business owner, but I'd like to one day have-- I have friends who are interested.

And I am thinking about the lost tax dollars with not having more cannabis businesses, more businesses have access to having businesses, right?

There are lost tax dollars.

And it could be great for communities and for commerce to reschedule, but I also know the implications of it.

-It is very complicated, but I also really wanted to say that I completely agree with David that we're not meeting our policy needs by not rescheduling.

It's not-- I'm not a super advocate of people consuming cannabis.

It's we have policy goals to protect the youth, protect health, and we're not meeting those because we have it illegal and legal at the exact same time.

And we're not focusing on the research, the realities.

We did ignore the Shafer Commission and the LaGuardia report, which provided scientific foundations for not having it be treated the same as heroin as a Schedule I. And we're just ignoring our own policy goals.

And it's cliche at this point, but this is in the face of alcohol being legal.

And so, so in the U.S., we do allow adults to make decisions about consuming intoxicating substances, so I just want to see us say these are our policy goals, and we need to meet them.

And we're not by keeping it where it's at.

-Okay.

Let's talk about policy as it relates to cannabis and gaming within Nevada.

The "1,500-Foot Wall" is a recent report from the Cannabis Policy Institute at UNLV.

And, Riana, how would you summarize what you found?

-So Dr.

Robin Goldstein helped me prepare this report, which really outlines what are all the ways that we prevent gaming and cannabis from interacting in the state and from taking advantage of maybe some of their business synergies.

We don't allow investors to invest in both.

We don't allow them to co-locate.

We keep them 1,500 feet apart.

And as we point out in the report, there's a 1,000-foot distance setback from cannabis facilities and schools, but there's a 1,500 setback from gaming establishments, so I think a lot of people can see that's kind of inconsistent with how we've treated them in other areas.

We also don't allow delivery specifically to the Strip corridor.

So the economist opines about the lost potential revenue; the lost opportunities; that when voters passed the initiative petition, a large part of that was likely based on the 42 million visitors we have.

And we've set up a lot of road blocks to our visitors obtaining cannabis.

So he also opines that there's not really many benefits being seen.

We're not improving public health or public safety by putting up these road blocks.

So that's the report in a nutshell.

-And, David, that 1,500-foot wall that we're talking about, how do you think it impacts the illicit market that you are competing against, correct?

-Amber, absolutely.

It has a definite impact.

But I don't want to-- I think it's a challenge between what's really happening on the street and what we say is happening in the law.

What's happening, my friends in gaming, the people that are unrestricted licensees, are pillars of the community.

They run outstanding operations.

-We're talking about casinos?

-The casino operators.

They do a great job in making this town what it is.

And they definitely don't want to say to their regulator at the state level that they are going to do anything that is illegal or bad.

They can't do that.

But what's really happening on the street?

What's really happening in their hotels?

What's happening is these restrictions are keeping a very well-regulated legal business from servicing their customers.

And someone will fill that space.

And the people who are currently filling that space are illegal operators who are selling not just cannabis, but also other types and taking advantage of tourists and using violence to enforce the things that they want or want to take.

They are not checking IDs or checking for-- or protecting children.

And if anybody's walked down the street or through a casino in a while, you can smell what's going on in there.

So somewhere along the line, we have to view this as an opportunity of two highly regulated industries who can work together to accomplish the policy goals that Riana laid out.

-The reality right now is that tourists will come to the Las Vegas Strip.

And if they want to legally purchase marijuana, they need to get in a taxi or a car, an Uber, and drive to a dispensary in order to purchase it, right?

And they cannot have it delivered.

That's not legal, but that is happening.

When you think of that reality, Senator, where do you start with trying to address it?

-I mean, I recognize the struggles and the concerns that our resort corridor and our tourism industry have, especially around gaming.

They don't want to do anything to disrupt something that is currently federally illegal.

They don't want it to interrupt already their highly regulated market, their taxation structure.

Everything about they're dealing with, they don't want to worry about that.

They also have concerns about the employees that they have in their facilities being, you know, subject to cannabis smoke, you know, any of those kind of things.

And so I think on paper and the reality of the regulation that they're undergoing is that they have to address that.

To what David had said, I mean, you could just walk in there.

And with your own ears, eyes, and, you know, nose, you can see that it is going on unlawfully and illegally there.

And so I think it's just trying to figure out what that balance is.

And, you know, we've heard as a part of the Cannabis Policy Institute that there are some, you know, gaming companies out there that want to explore having cannabis and being able to have dual licenses and being able to, like, figure out what steps they're going to take.

But on the flip side, there are a lot of industries that they hear from their consumers, they hear from tourists, that they don't want that in their facilities.

They don't want it.

They don't want to have to walk through it.

So I think there's a lot of conversations to have, and it just goes to how complex this is and how it is a very fine balancing, you know, act that we're, you know, in the position to, like, determine.

-Amber, could I add that I think as part of the report and the panel discussions we have at the CPI, the motivation isn't to pursue any specific changes.

It's to open up the conversation, because it's a really old conversation.

The first order that was imposed on the gaming industry was in 2014.

It was a, it was a notice to licensees that they couldn't invest in the cannabis industry.

So that's been 12 years, so the issue is just let's dust off the conversation.

It's mostly been based on the legal status.

The legal status has changed, at least for medical.

It is currently Schedule III.

So it's about figuring out what that means and how ultimately that could or should be implemented in Nevada.

-Okay.

We did reach out to the Gaming Compliance Board, and they do not consider the rescheduling of medical marijuana as something that will impact them; but they are monitoring the situation and say they will address it when things change.

Hopefully, we have been part of brushing off that old conversation.

Thank you all for joining us.

And thank you for watching.

For any of the resources discussed, including a link to the UNLV Cannabis Policy Institute report, "The 1,500-Foot Wall," go to vegaspbs.org/nevadaweek.

And we'll see you next week on Nevada Week.

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