Nevada Cannabis Licenses are Being Federally Investigated

Nevada industry players have been getting interviewed by the FBI over the cannabis licensing process. 

The investigation is to see if any people or businesses tried to bribe politicians or other government officials in any way to obtain licenses to operate. Since 2016, recreational cannabis has been legal in Nevada, and there has been controversy over the process the entire time. Applicants who didn’t get licenses have brought corruption charges against those who are in business, and there has been discussion about the cannabis companies associated with politicians and business leaders, and whether they obtained their licenses ethically. 

So far, the state has given out more than 750 licenses for all parts of the industry. A total of 335 of those are dual licenses for medical and recreational providers. 

“My gut told me, and our Spidey sense is telling us, there is a lot of ‘pay to play,’” Chad Christensen, a former legislator and co-owner of Pisos Dispensary in Las Vegas, told the Las Vegas Review Journal. He is one of the concerned individuals who came forth and chatted with the FBI. At least two other anonymous sources have been interviewed as well. 

On February 18, 2020, the investigation became official, as Nevada’s attorney general was notified about the investigation. 

“I don’t comment on investigations and am not authorized to do that,” FBI agent Matt Edwards said when questioned by the Las Vegas Review Journal. “I’m not going to have any conversation about FBI investigations.”

“It’s all about public trust and confidence,” said Tyler Klimas 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 extends outside of our borders and prevents any actions that could damage the state’s reputation or harm the industry.”

Further controversy following the original scandal surfaced in 2018 when 64 new licenses became available. The Nevada Department of Taxation allegedly received more than 460 applications total from 127 different groups and people who were interested in getting involved in the industry. However, only 17 of those applicants received all 64 of those licenses. This brought about an even bigger lawsuit that was called “World War Weed” by some industry insiders. It has now been elevated to the Nevada Supreme Court. 

In 2019, to try and get some of the controversy to die down, the Nevada Cannabis Compliance Board was established to potentially take over the licensing process in the future from the  Gaming Control Board, who had previously been in control. The  idea behind this move was to try and eliminate further controversy and show that new, unbiased people were being put in charge. The board was responsible for issuing permits for consumption lounges as well, and the hope was to make licenses for growers, manufacturers, and retail businesses more available and accessible. 

However, they were not successful in mitigating controversy, as FBI agents began their investigation in 2020. They interviewed a source as recently as this past April about the “pay to play” nature of cannabis in Nevada. 

“They were interested in talking about all licensing issues from a year ago plus,” the anonymous source said regarding the allegation and the investigation, when asked by the Las Vegas Review Journal what the nature of the investigation was. 

According to sources, the FBI didn’t ask about politicians, but asked a lot of questions about the former taxation department deputy director Jorge Pupo, who was put on leave in 2019 and seems to be a person of interest when it comes to the FBI investigation. 

Currently, the FBI is being silent about the investigation and when it may come to an end, but one thing is clear—they are taking these claims of corruption very seriously.