Nevada Newsmakers

News - May 22, 2019 - by Ray Hagar

By Ray Hagar

Nevada Newsmakers

The co-CEO of the largest marijuana dispensary in the world said on Nevada Newsmakers that he applauds Nevada's effort to regulate the state's marijuana industry with a framework modeled after the state's successful gaming-control system.

Assembly Bill 533, now being considered at the Nevada Legislature, will set up Nevada's Cannabis Advisory Commission and Cannabis Compliance Board, mirroring the state's gold-standard Gaming Control Board and Gaming Commission.

Yet Bob Groesbeck, the co-CEO for Las Vegas' 15,000-square foot Planet 13 marijuana retailer, is opposed to the bill's restrictions on marijuana consumption lounges. They will become the only places tourists can lawfully consume and smoke marijuana in Las Vegas if the bill is approved by the Legislature in the final days of the 2019 Legislature.

Currently, the only legal place to smoke pot in Nevada is in a home.

"It is a significant issue, especially in southern Nevada," Groesbeck told host Sam Shad about the marijuana lounges. "The vast majority of our customers at Planet 13 are tourists and they are here visiting. Under current regulations, they are permitted to buy (marijuana) product but there is no legal venue for them to use product. It is an issue that we all recognized and an issue that needs to be resolved."

The Las Vegas City Council has already approved the the lounges, yet they would fall under the oversight of the Cannabis Compliance Board if AB 533 is approved by state lawmakers. Groesbeck supports marijuana lounges but opposes language in the bill that would:

* Not allow lounges within 1,500 feet of a gaming establishment;

* Not allow alcohol to be sold in the lounges, and;

* Not allow current marijuana dispensary owners who want to add a consumption lounge to be grandfathered into the process.

The 1,500-feet distance from a gaming establishment galls Groesbeck since the proposed law also mandates the lounges only need to be 1,000 feet from schools and churches.

"The arbitrary distance requirements -- those are huge," he said. "We set separation requirements for dispensaries from parks, churches and schools that could go up to 1,000 feet. Then arbitrarily, someone throws in 1,500 feet, without giving any thought to the practical applications for the existing operators."

Nevada's gaming industry is wary of the marijuana business. State gaming regulators have decreed that gaming executives can play no role in the marijuana industry. Marijuana is still considered a Category 1 substance, like heroin and LSD, by the federal Drug Enforcement Agency. It's sale and use remain illegal under federal law.

Gaming's insistence of the 1,500-foot barrier hurts the legal operation of the marijuana business in Las Vegas, Groesbeck said. The Nevada Resort Association, made up of the state's largest gaming resorts, pushed for the 1,500-foot barrier in AB 533, according to published reports.

It does not sit well with Groesbeck.

"That is a policy decision that was made and something they (gaming executives) have to grapple with," he said about gaming's approach to the marijuana industry. "But you shouldn't, by virtue of that decision, try to co-opt another industry, tell us how we are going to operate and restrict our ability to operate within the parameters of the state law."

Groesbeck said the 1,500-foot barrier could harm the marijuana business.

"I think our operation (Planet 13)  would probably be OK within that 1,500 feet, but for other operators, it would take them out of the opportunity," Groesbeck said. "And it just doesn't make and sense. It doesn't make any sense to make the gaming restrictions more onerous than you would for parks, schools and churches. It is arbitrary and it was designed to be arbitrary."

Groesbeck would like to see more cooperation between gaming and marijuana, noting they share the same customers -- tourists.

"We think we compliment the gaming experience and tourist experience," he said. "The customer is coming in, they are spending a lot of time and money in those properties and then they come over to our facilities to buy product. They discover, though, very quickly, that you can't use (marijuana) product in the hotel rooms. Again, that is a policy decision the gamers have made.

"So what we are trying to to do is create that venue which allows them to responsibly buy and use product in a facility that is adjacent to an existing dispensary, in our case," Groesbeck said. "It just makes common sense."

Groesbeck noted that smoking marijuana in a Las Vegas hotel room, which is illegal, can prove costly.

"There is a real void here (without the lounges) and it creates an issue for our customers and their customers," he said. "They are the same customers. And when you're telling them they can't use product or if they are using product in a room and if the customer gets $500 cleaning fee, that creates ill will across the board. And now you have an angry tourist/customer. It just doesn't make sense.

"Look, we respect your right to prohibit (marijuana) use on property," Groesbeck said of gaming's policy. "You have that right as a private company. We want to allow them to come (to a marijuana lounge) and use product responsibly and then get back in the cab or the ride share and go back to the hotel. It is that simple."

He said establishing a marijuana/gaming partnership makes sense.

"With about 50 million tourists coming through Vegas every year, the whole idea is to make them comfortable, make sure they have a good time and come back again and again," Groesbeck said.

No alcohol in lounges: Marijuana industry leaders have met with the Clark County Sheriff's Office and are willing to take a wait-and-see attitude about serving alcohol in the lounges.

"We had the opportunity to meet with the sheriff of Clark County and I respect his opinions," Groesbeck said. "And we have agreed we probably should walk before we run. So maybe it does make sense to license these operations, give them some time to show how they perform and whether the calls for service are any different that what you see in a tavern. But to just blanket restrict it (alcohol) or prohibit it, I don't think is the correct thing to do. I think taking time is a valid point but restrictions against it make no sense."

Grandfather clause: The law should allow current dispensary licensees to open lounges without going through all of the legal requirements needed for those who currently don't have a dispensary license but want to open a marijuana lounge.

"As dispensary operators, many of us now have been in the business going on three years. and longer in some cases," he said. "And if we meet the requirements to be a dispensary, you should automatically meet the requirements to be a lounge venue. If you meet the other criteria, I mean space is an issue, obviously, but we should be grandfathered in, and let the cannabis commission, in my opinion, deal with licensees going forward, beyond this initial round."