The Justice Department made headlines when it took the unprecedented step of moving forward with the removing cannabis from Schedule I of the Controlled Substances Act, where it was listed alongside heroin, ecstasy, and peyote, and reclassifying it to Schedule III, a category reserved for substances with low abuse potential and accepted medical benefits.
This is, by all accounts, one of the most significant policy advancements for legal cannabis since states first began to legalize it for adult use in 2014.
And while the rescheduling of cannabis does not make it federally legal, it does send yet another significant signal affirming cannabis’ normalization and status, not only as a legitimate industry, but also, one that is viewed as such by the highest levels of the federal government.
Given this significant development, should Nevada’s gaming industry take this opportunity to reconsider its prohibitionist stance on engaging with the legal cannabis industry? Is this a chance to lead and mold a new market segment that is clearly in demand and sought by the newest generation of tourists and travelers?
Nevada gaming set its policy in 2018 shortly after the state voted to legalize cannabis for adult use, basing its decision on very real concerns both at a state and federal level. A significant portion of that policy was based on the realities of the legal cannabis markets at the time, which operated in the shadow of unclear federal guidance and enforcement. The hesitancy was justified, particularly in light of the Nevada gaming industry’s storied past.
However, many of those concerns have been mitigated, not only by the natural evolution of the industry but also because of successful regulation of cannabis markets by individual states, just like we have seen in Nevada.
The concerns have all but faded, just as society’s acceptance and interest in cannabis continues to grow. According to a recent Gallup poll, the percentage of U.S. adults who consume marijuana has more than doubled in the previous decade, increasing from 7% in 2013 to 17% by 2023. During the same time period, the percentage of those who said they had tried it at least once increased from 38% to 50%.
The majority of cannabis users within that group are between the ages of 18 and 34, with more than 25% reporting frequent usage.
In Las Vegas, a city that attracts visitors from across the world and provides the kind of tailored experiences that strive to keep generations of travelers coming back, major resorts and casinos do not offer cannabis products or experiences and strictly prohibit their possession and use on property.
But consider this: according to a recent Forbes article, a 2020 nationwide poll by market research firm MMGY Travel Intelligence revealed that nearly 18% of American leisure travelers are interested in cannabis-related vacation activities. If we restrict the poll sample to adults over 21 who consume cannabis and have an annual family income of $50,000 or more, the figure increases to 62%.
Concurrently, gaming establishments across the world are grappling with how to attract the new generation of gamblers, who are much more interested in internet gaming and online sports betting, back to the casino floor. When looking at the demographics of online gambling, it’s the same 18 to 34-year-old age group that makes up the largest segment, with over 30% owning an online sports betting account.
Embracing cannabis does not mean unleashing clouds of marijuana smoke throughout the hotel and casino. Cannabis products outside of traditional joints and smokeable flower have evolved significantly since the start of state legalization. The cannabis-infused beverage category specifically has seen exponential growth recently, as younger generations are ditching alcohol in record numbers and seeking other adult alternatives to enjoy in a social setting.
In fact, recent research by Heineken 0.0 shows that Gen Z alcohol consumption has decreased by 25% in the last four years. Simply embracing low-dose cannabis-infused beverages could be a huge opportunity to meet new consumer demand and recapture any lost revenue from non-alcoholic drinkers.
What we also know, and what is clear just by walking down Las Vegas Boulevard, is that consumers are going to make cannabis a part of their experience either way. The biggest players on the Strip, resorts and casinos where consumption is already taking place, are the ones missing out on capturing this revenue.
You don’t need to be a cannabis advocate to see the opportunities and obvious interplay between these two markets. Nevada gaming establishments would be smart to begin revisiting their concerns, investing in the proper infrastructure, and positioning themselves to be leaders in this burgeoning marketplace.
Tyler Klimas is the former executive director of Nevada’s Cannabis Compliance Board and former President of the National Cannabis Regulators Association. He is currently principal of Leaf Street Strategies, a Las Vegas-based cannabis and hemp consulting firm.