Las Vegas Is Losing Tourists Over Cannabis Regulations, Study Says

According to researchers, who presented at the University of Nevada’s Las Vegas Cannabis Policy Institute and International Gaming Institute’s 3rd Annual Gaming & Cannabis Policy Discussion, Las Vegas may be losing tourists because they cannot obtain cannabis in casinos.

Regulations Restrict Las Vegas Tourist Numbers, Study Says

Although recreational marijuana is legal in Nevada, its use is mostly limited to private settings and licensed lounges. Notably, it is not permitted inside casino resorts. In a presentation by Robin Goldstein, Cannabis Economics Group Director at UC Davis in California, he outlined how this could affect tourism in Las Vegas.

Goldstein said the study drew on input from the gaming industry, lobbyists, and academics. It also highlighted the challenges tourists face when trying to obtain cannabis in Nevada. Goldstein said the statutory and regulatory barriers can be grouped into three categories. 

The first is that cannabis deliveries are permitted only to private residences, not to the Strip. The second is the 1,500-foot restriction, which mandates that there should be at least a 1,500-foot distance requirement between a cannabis business and a licensed gaming business. The third involves strict separation in ownership, business operations, relationships, and financial ties between the cannabis and gaming industries.

He added that the combined impact of these barriers harms Nevada’s tourism sector. According to Goldstein, the roughly 42 million visitors to Las Vegas, as well as tourists in other parts of the state, lack access to the primary areas where they stay and spend most of their time. 

What Are the Financial and Social Effect of These Regulations?

As a result of regulations, the retail cannabis sector (about $540 million) and wholesale businesses (around $210 million) are losing a combined $750 million annually. Meanwhile, the state misses out on roughly $80 million in tax revenue – $50 million from retail and $30 million from wholesale. 

On the topic of tourists, Goldstein said the effects are multi-layered. First, they are unable to spend money at licensed cannabis businesses. Second, hundreds of cannabis companies are unable to access the tourism market, which, if available in Las Vegas and Clark County, would represent one of their largest customer bases. He also noted that instead of accessing safe, tested products, some tourists end up purchasing from illicit dealers, some of whom sell synthetic cannabis substitutes and potentially dangerous ingredients.

Goldstein said the illegal market thrives, particularly in areas surrounding the Strip, where drug dealers are incentivized to operate. He added that casino resorts aim to prevent any drug dealing on their properties, whether by employees or by individuals entering from outside.

Goldstein Argues Regulations Should be Loosened

According to Goldstein, removing the existing regulatory barriers would have a positive impact on Las Vegas’ economy. He argued that loosening restrictions would allow gaming establishments to share in the financial benefits, also noting that casinos are generally unwilling to permit cannabis on their properties without a clear economic incentive.

Goldstein added that a possible model would involve lease agreements similar to those used with nightclubs and bars. If cannabis businesses were allowed inside gaming resorts, percentage-based rent agreements would also be needed so landlords could benefit directly from the success of those businesses.

Goldstein isn’t the only one who thinks integrating cannabis more could be good for businesses, as Pennsylvania Governor Josh Shapiro has argued that legalizing it, as well as regulating skill-based casino games, could bring in about $2 billion each year for the state.