FBI Scrutinizing Nevada Cannabis Licensing Process
FBI Scrutinizing Nevada Cannabis Licensing Process
Licensing

Feds Scrutinize Nevada Cannabis Licensing For Corruption

FBI Scrutinizing Nevada Cannabis Licensing Process
Licensing

Feds Scrutinize Nevada Cannabis Licensing For Corruption

Author James Eason
Published Sep 07, 2021
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For the past year, FBI agents have been investigating Nevada’s marijuana industry for corruption involving industry executives in the awarding of business permits. Since voting to legalize recreational marijuana in 2016, Nevada’s licensing process has been surrounded by controversy and lawsuits. Applicants who didn’t get licenses accused those who did of corruption. Many high-profile politicians and businessmen with no prior experience in either retail or marijuana joined groups to obtain licenses and open marijuana businesses. This then raised concerns about whether these cannabis companies had an unfair advantage in getting zoning or licensing.

“My gut told me and our Spidey sense is telling us there is a lot of ‘pay to play,’” Chad Christensen, a former lawmaker who co-owns Pisos Dispensary in Las Vegas, said.

In 2018, the Nevada Department of Taxation received over 460 applications from groups and individuals for 64 new licenses. The department awarded all of the new licenses to just 17 applicants. Hoping to eliminate future controversy, state lawmakers later transferred authority to a new Nevada Cannabis Compliance Board modeled after Nevada’s Gaming Control Board.

“It’s all about public trust and confidence,” said Tyler Klimas, executive director of the Nevada Cannabis Compliance Board. “As regulators of the state’s cannabis industry, it’s imperative that we work with our federal partners to ensure that trust and confidence extend outside of our borders and prevents any actions that could damage the state’s reputation or harm the industry.”

Since 2016, cannabis businesses, trade associations, and individuals employed in the industry in Nevada gave approximately $540,000 to local, state, and federal politicians. The Nevada Dispensary Association, a trade group that advocates for state cannabis businesses, gave the most to candidates in the time period. Gov. Steve Sisolak has received more than $200,000 in contributions. Then in 2019, Nevada Gov. Sisolak appointed a task force to “root out corruption or criminal influences” in the cannabis industry.

Because Nevada doesn’t require donors to reveal their business interests it becomes difficult to connect contributions to specific interests. For example, suspended attorney Brian Padgett, who also ran a dispensary, gave maximum donations to several candidates during the 2018 campaign cycle and was counted as a lawyer, not a marijuana interest.

“Looking back to 2018 it’s been pretty public how messy it was,” said Klimas. “They can look back and think of a million things to do differently.”

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