A new report from the University of Nevada, Las Vegas (UNLV) Cannabis Policy Institute argues that Nevada’s existing legal and regulatory separation between its cannabis industry and the gaming sector is depriving the state of substantial legal cannabis sales and tax income.
It was also found to be perpetuating a sizeable illegal cannabis market.
The study, undertaken by researchers from UNLV, UC Davis, and Strategies 64, quantifies the economic impact of three key regulatory barriers and calls for policy reforms to modernise the state’s approach.
The findings
The report estimates that Nevada’s legal cannabis retail sector lost approximately $540 million in revenue in 2024 due to three main restrictions:
- Ban on cannabis delivery to hotels and gaming properties: $210 million loss.
- 1,500-foot setback requirement between cannabis establishments and gaming venues in populous counties: contributes to market exclusion.
- Prohibition on investment, leasing or operational ties between gaming licence holders and cannabis businesses: restricts potential business integration.
These combined factors create “cannabis deserts” in central tourist zones, notably along the Las Vegas Strip, which attracts nearly 30 million visitors annually and where 69% of tourists reportedly stay at Strip hotels.
Recent Las Vegas Convention and Visitors Authority data shows that 38.5 million people visited Las Vegas in 2025, a 7.5% decrease year-over-year. Some 89% of visitors booked hotels, the lowest percentage in the last five years.
The report showed that visitors face inconvenient and costly travel to licensed dispensaries. Pedestrian trips were up to 95 minutes or taxi fares cost $30-$40, encouraging reliance on illegal cannabis sources.
Consequently, state tax revenue from cannabis falls short by about $80 million per year. FY2024 collections of roughly $120 million would be projected to potentially rise towards $200 million if current barriers were removed.
The barriers
Nevada state rules and Clark County ordinances currently forbid delivery of cannabis products to hotels and gaming-certified properties, severely limiting access for tourists.
Additionally, in counties exceeding 100,000 residents, cannabis businesses must be at least 1,500 feet away from licensed gaming venues. In densely populated areas such as Las Vegas, this effectively excludes cannabis retail from prime tourist corridors.
Since the publication of a 2014 Nevada Gaming Control Board memorandum, gaming regulators have enforced a policy disallowing gaming licensees from investing in, leasing to, or consuming cannabis on-site, citing concerns over regulatory compliance and reputational risks.
Since then, much has evolved, with federal authorities generally tolerating state-compliant cannabis operations and jurisdictions such as New Jersey and Canadian municipalities permitting closer cannabis-gaming integrations.
The reforms
Economically, the report describes the regulations as expensive “transaction costs” leading to revenue “leakage” from the legal to illicit markets. It reduces both cannabis sales and ancillary spending on hospitality and entertainment inside casinos and resorts.
The report urges two primary reforms – one would be to allow cannabis delivery to hotels, short-term rentals and gaming-licensed properties by revising cannabis compliance regulations and Clark County codes.
It also recommends repealing the 1,500-foot setback in populous counties and updating NGCB guidance to allow gaming operators the option to lease space to cannabis retailers and consumption lounges. This would include designated consumption areas on-site.
Survey data from 2025 revealed that 70% of US adults support allowing cannabis consumption spaces in casinos and 40% would be more inclined to visit casinos if cannabis was available.
Kathryn Evans
Kathryn covers bitesize breaking news with a primary focus on EMEA and US legislation. A proud North Walian, fluent Welsh speaker and lifelong Wrexham FC fan – long before Hollywood came calling.
Original article: https://igamingbusiness.com/legal-compliance/regulation/nevadas-cannabis-ban-casinos-costing-the-state/
