Nevada cannabis licenses are being federally investigated

Industry actors in Nevada were interviewed by the FBI about the cannabis licensing process.

The purpose of the investigation is to determine whether any person or company has attempted to bribe politicians or other government officials in any way in order to obtain an operating license. Recreational cannabis has been legal in Nevada since 2016, and there has been controversy over the process all along. Unlicensed applicants have raised allegations of corruption against those in business and there has been discussions about the cannabis companies associated with politicians and business leaders and whether they ethically obtained their licenses.

So far, the state has issued more than 750 licenses for all parts of the industry. A total of 335 of these are double licenses for medical and leisure providers.

“My gut instincts told me, and our Spidey instincts tell us, there is a lot of pay to play,” said Chad Christensen, a former lawmaker and co-owner of Pisos Dispensary in Las Vegas, told the Las Vegas Review Journal. He’s one of the concerned people who spoke to the FBI. At least two other anonymous sources were also interviewed.

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

“I’m not commenting on the investigation, and I have no authority to do so,” said FBI agent Matt Edwards when questioned by the Las Vegas Review Journal. “I’m not going to have a conversation about FBI investigations.”

“It’s about public trust and confidence,” said Tyler Klimas of the Nevada Cannabis Compliance Board. “As the state’s cannabis industry regulator, it is imperative that we work with our federal partners to ensure that trust goes beyond our borders and prevents actions that could damage the reputation of the state or the industry.”

Another controversy after the original scandal arose in 2018 when 64 new licenses became available. The Nevada Department of Taxation has reportedly received a total of more than 460 applications from 127 different groups and people interested in getting involved in the industry. However, only 17 of these applicants received all 64 of these licenses. This led to an even bigger lawsuit, dubbed “World War Weed” by some industry insiders. It has now been brought before the Nevada Supreme Court.

In 2019, the Nevada Cannabis Compliance Board was established to potentially take over the licensing process in the future from the Gaming Control Board, which previously had control. The idea behind this move was to try to dispel further controversy and show that new, unbiased people are taking responsibility. The board was also responsible for issuing permits for consumer lounges, and the hope was to make licenses more available and accessible to growers, manufacturers, and retailers.

However, they failed to defuse the controversy as FBI agents began their investigation in 2020. They interviewed a source just last April about the “pay-to-play” nature of cannabis in Nevada.

“They were interested in discussing any licensing issues from a year ago,” said the anonymous source of the allegations and investigation when asked by the Las Vegas Review Journal about the nature of the investigation.

According to sources, the FBI was not asking about politicians, but rather many questions about the former assistant director of the taxation department, Jorge Pupo, who was on leave in 2019 and appears to be a person of interest when it comes to the FBI’s investigation.

For now, the FBI is silent about the investigation and the end of the investigation, but one thing is clear: they are taking these corruption allegations very seriously.