A new research report on cannabis and the gaming industry outlined Friday afternoon in Las Vegas revealed that the inability of visitors to access it at casinos hurts the tourism industry and called for a relaxation of state standards.

The University of Nevada Las Vegas Cannabis Policy Institute and International Gaming Institute’s 3rd Annual Gaming & Cannabis Policy Discussion included a presentation by Robin Goldstein, Cannabis Economics Group Director at UC Davis in California. He detailed the cannabis and gaming research report, “The 1,500-Foot Wall: Barriers between Cannabis and Gaming in Nevada and the Potential for Integration.”

Goldstein said the research included getting perspectives from the gaming industry, lobbyists, and academics. His study depicted the difficulties of tourists acquiring cannabis in Nevada, since it can’t be delivered to them in casinos. That is costing the retail ($540 million) and wholesale businesses ($210 million) about $750 million (total) a year and the state $80 million a year in tax revenue – $50 million in retail taxes and $30 million in wholesale taxes.

“We call it the ‘1,500-foot wall,’ due to the 1,500-foot distance requirement between a cannabis business and a licensed gaming business,” Goldstein said. “That’s just the tip of the iceberg. There are a lot of issues besides that and underlying that.”

Goldstein said the statutory and regulatory barriers are summarized in three parts. The first barrier is that cannabis can be delivered only to private residences and not the Strip. The second is the 1,500-foot barrier. The third is separation in ownership, business activities, relationships, and financial involvement between cannabis and gaming.

“The combined effects of these three barriers hurts Nevada’s tourism industry,” Goldstein said. “Forty-two million tourists in Las Vegas, as well as other parts of the state, have no access in the main areas where they stay and establishments they frequent most, including the Las Vegas Strip and areas around casinos in Reno and elsewhere.”

Goldstein said the multi-faceted effects start with tourists’ inability to spend money at licensed cannabis businesses. Second, hundreds of cannabis businesses can’t access the tourism market, which if they were able to do so in Las Vegas and Clark County, would be one of their bigger audiences.

“But visitors and people here for conventions have to go off the Strip and take an Uber ride 10 or 15 minutes or walk a substantial distance,” Goldstein said. “The result is that people seek out the illegal market, because people are willing to sell you cannabis all over Las Vegas, including the Strip.”

Instead of having access to safe tested products, they’re buying from drug dealers, some of whom sell synthetic knockoffs of cannabis and ingredients that could be dangerous, Goldstein said.

“The illegal market prospers, especially in an area around the Strip, and drug dealers have an incentive to frequent those areas,” Goldstein said. “The last thing the resorts want is people dealing drugs on their properties, whether they’re employees or people coming in off the street. It’s hard to control when there is no legal option anywhere near you. Consumers and illegal dealers find a way to transact. That will happen in front of, outside, near, and on properties. That affects public safety.”

The history behind the separation of cannabis and gaming dates back to 2014 with a Nevada Gaming Control Board memo that set out this separation, Goldstein said. He said the separation is not only about the rules in place, but guidance of behavior.

“For gaming establishments, having your license threatened with suspension makes them unwilling to take risks,” Goldstein said. “They’re incredibly compliant with both the federal government and state authorities.”

When the Gaming Control Board releases subsequent memos for the industry to stay away from cannabis, the properties are following “that to a T,” Goldstein said.

“Those advisory opinions and memos are taken very seriously. When we talk about what changes could be possible in the future and how the cannabis and gaming industries could be more integrated, a lot of it is not just about changing the 1,500-foot rule, but changing the informal guidance and what regulators say they’re willing to tolerate.”

Goldstein said when tourists leave gaming establishments to seek out licensed cannabis, they might stay away for hours and eat elsewhere. “There’s a loss of complementary spending there.” Goldstein said.

Beer and alcohol sales are down nationwide and that impacts Nevada’s tourism and hospitality sector that relies on those sales as a revenue stream. The ability for non-alcoholic beverages infused with cannabis to cover that shortfall has “enormous potential” if it’s available for sale in casinos. “Tourism establishments can charge money for something that’s not an alcoholic beverage, but consumers are willing to pay just as much for as alcohol.”

Goldstein said it looks like the federal government may take steps to revise a potential ban on hemp products and opening a channel nationwide would have potential for Nevada.

“The simple solution we list in the report is to lift these three barriers,” Goldstein said. “It’s as simple as that. The opportunity for many gaming establishments to share (in profits is important). They just don’t want to allow cannabis on their property if there’s nothing in it for them and no upside. The opportunity is for them to lease agreements similar to ones they have with nightclubs and bars. If a cannabis establishment were allowed to be inside a gaming resort, that’s not enough. You have to allow percentage rent agreements that allow a landlord from the success of that store.”