No matter which side of the fence you stand on when it comes to the legalization of marijuana, one point is undebatable: In the State of Nevada, recreational cannabis use has been highly popular and immensely profitable. Since legal adult sales began in July 2017, more than $420 million in marijuana products have been sold, generating nearly $70 million in tax revenue — about 140 percent of what was predicted.
And as cannabis in the Silver State has evolved, UNLV's Boyd School of Law has been involved, with professors and alumni helping to make the state a model for others rolling out their own programs.
“Time and time again people have said Nevada is the gold standard for marijuana regulation,” says Francine Lipman, a William S. Boyd professor of law who helped create marijuana taxation laws after being appointed by Nevada Governor Brian Sandoval to the Nevada Tax Commission in 2016. “And our law students are literally on the front lines of making this work better.”
Indeed they are. Take, for instance, Riana Durrett. She’s the executive director of the Nevada Dispensary Association, which advocated for Question 2, the ballot measure that voters passed in 2016 to officially legalize recreational marijuana use. Durrett graduated from UNLV Law in 2008 — one year after Eva Segerblom earned her J.D. from Boyd.
A partner at Maddox Segerblom Canepa, Segerblom is a Reno-based attorney who has represented both medical and recreational marijuana clients, including active dispensary, cultivation, and production businesses, as well as individuals and entities seeking licenses for dispensaries, production, and/or cultivation. Segerblom also happens to be the daughter of the Nevada legislator considered the godfather of the state’s marijuana movement, Sen. Tick Segerblom.
Both father and daughter acknowledge that the overwhelming first-year success enjoyed by the recreational marijuana industry can be traced to the solid foundation that was established three years ago when the state rolled out its medical marijuana rules and regulations.
“Starting in August 2015, when the first dispensary opened, other than a few small hiccups the trajectory has been straight up, with the biggest surprise being there have been no surprises,” Tick Segerblom says. “Whether by design or luck, Nevada hit the sweet spot for developing a secure and robust cannabis industry.”
Adds Eva Segerblom: “Building on the medical [marijuana] program — the most regulated and successful medical program in the United States — rather than setting up a completely different program for adult use allowed us to come to market much more quickly and smoothly than California. I don’t think there is any denying the success of our adult-use program’s first year.”
That’s not to say there weren’t a few twists on the path from medical to recreational consumption. Despite the careful planning, one significant issue arose between the state’s Department of Taxation and the liquor distributors who were initially given exclusive rights for recreational marijuana distribution. When the Tax Department determined that the liquor industry couldn’t meet distribution demands, it expanded licensure to non-liquor companies.
That led alcohol distributors to file a lawsuit against the tax department, with the case ultimately landing in the lap of the state Supreme Court, where it presently sits. “There was significant litigation that created tension no one wanted to create,” says Lipman, who is one of the nation’s top tax-law professors. “In retrospect, people would address the [recreational marijuana] statute differently.”
That dispute aside, as Tick Segerblom notes, it has been smooth sailing thus far for the state’s marijuana programs. For that, Durrett credits the collaborative relationship that’s been fostered between the regulators and the regulated.
“The state has a kind of consensus between the industry and the governor’s office, lawmakers, regulators, and other stakeholders,” Durrett says. “There’s a really good connection between the industry and the lawmakers — they work hand-in-hand to develop the outstanding regulations that we have now.”
A crucial point to remember, however, is that not every jurisdiction in the state has adopted recreational marijuana regulations. In fact, some of Nevada’s rural areas have resisted issuing recreational marijuana licenses. Two of those rural jurisdictions are Storey County and the City of Fallon, which are involved in litigation with businesses represented by Maddox Segerblom Canepa.
“Rural cannabis businesses are met with both a lack of education among the people that represent rural communities as to the realities of our medical and adult-use programs, as well as draconian attitudes toward considering marijuana a business at all,” Eva Segerblom says. She’s quick to add, though, that more rural leaders—such as Daniel Corona, the mayor of West Wendover in northeast Nevada — are starting to become better informed about the cannabis industry, while also advocating for the business opportunities it offers their communities.
Not in This Joint
Perhaps the biggest legal sticking point facing the state’s marijuana industry involves the matter of social consumption — particularly as it relates to the tourism sector.
In jurisdictions where recreational marijuana is legal, citizens can purchase cannabis products and consume them in private residences. However, current ordinances prohibit use in public areas, including on the Las Vegas Strip and inside resort-casinos. That means any of the 40 million-plus tourists over the age of 21 who visit Las Vegas annually can walk into a dispensary and purchase whatever they’d like — they just have nowhere to go to legally consume it.
Several Boyd students have been at the forefront of the public-consumption topic, crafting a white paper that was published in April 2018 in the Nevada Law Journal. The document — which was discussed during a Marijuana White Paper Symposium in November at the Thomas & Mack Moot Court — covered everything from zoning to transportation to air-quality considerations for employees.
Ask Boyd professor Dr. David Orentlicher, the co-director of UNLV’s Health Law Program, about marijuana’s public-consumption debate, and he compares it to a similar hot-button public-health topic: the soda tax that some U.S. cities and several foreign countries have instituted. “There are different kinds of arguments — [the] public-health argument, to control obesity, but also the argument about revenue-raising interests,” he says.
Stirring the Pot
Besides the convoluted public-consumption issue, there’s another critical legal hurdle facing the entire medical and recreational cannabis industry: Distributing, possessing, and consuming pot is still illegal in the eyes of the federal government. And that isn’t going to change anytime soon. In fact, as recently as January 2018, the office of the U.S. Attorney General issued a memo directing “all U.S. Attorneys to use previously established prosecutorial principles” to prosecute marijuana crimes.
“The federal ban on marijuana not only affects the user, but it affects banking and casinos,” Orentlicher says. “Those institutions are heavily regulated by the federal government.”
While Sessions’ directive may have put a slight damper on the marijuana industry, Orentlicher doubts there will be a full federal crackdown on states that have legalized cannabis. Still, as long as marijuana remains a Schedule 1 drug, there will be roadblocks to doing deep dives into the overall effects of cannabis. “That’s sorely needed,” Eva Segerblom says. “Nevada could be a mecca for cannabis research, but as long as universities are still dependent on federal funding, it’s an impossibility.”
On the bright side, the marijuana industry is providing new, intriguing, and potentially lucrative opportunities for the latest generation of lawyers. “I’ve already seen it with my tax-law students who are now in-house counsel for marijuana businesses that are going public in Canada,” Lipman says. “That’s exciting for someone less than five years out of law school to be on the front lines.”
Durrett can certainly attest to that. After previously working in criminal and immigration law, the Boyd alumna has relished the opportunity to get in on the ground floor of what is a burgeoning industry.
“It’s more fun than anything else,” Durrett says of her role with the Nevada Dispensary Association. “In criminal [law], you’re arguing rules that have been argued for more than 100 years, and many of those rules have not changed for more than 100 years. Attorneys who have been involved [with marijuana] are literally writing some of the rules or giving input into what those rules should be.
“It’s a very engaging field, because it is new and there will still be new laws emerging over the next decade — new laws every year, probably. So I say jump in!”