CARSON CITY — An “outraged” Gov. Steve Sisolak announced immediate action Friday to tighten regulation and enforcement of Nevada’s legal marijuana industry, a move triggered by federal charges that foreign nationals sought to enter the lucrative industry by buying political influence.
In a statement, the governor said he had formed a special task force involving multiple state agencies to “root out potential corruption or criminal influences in Nevada’s marijuana marketplace.”
“Any marijuana entity — licensed or unlicensed — that violates the law will see swift and severe criminal and regulatory action,” the statement read.
His office later declined to specify how the task force would operate or what agencies would be involved, citing a need to keep investigative and enforcement efforts confidential. It will investigate possible criminal behavior and regulatory misconduct and refer matters for criminal prosecution.
The task force will be “robust, real, significant and substantial and will have power and authority to hold bad actors accountable,” said Sisolak’s chief of staff, Michelle White.
The governor cited endemic problems with the still-nascent but booming state pot industry, such as illegal sales to minors, alleged manipulation of product testing and lawsuits over the licensing process. His office had been weighing an expedited enforcement effort even before Thursday’s federal indictment against men charged with influence peddling in state elections.
One count of the federal indictment charges four men in a scheme to enter the state’s marijuana industry with $1 million provided by an unidentified Russia businessman and hiding the foreign investor’s involvement because of his “Russian roots and current political paranoia about it.”
One of the men made maximum contributions of $10,000 each to Republican candidates for governor and attorney general in what the indictment alleges was an illegal effort by foreign interests to influence a state election. Foreign giving and concealment of contributions behind “straw” donors are violations of federal campaign law.
The broader indictment alleges additional campaign finance law violations. Two of the indicted men, Igor Fruman and Lev Parnas, worked with President Donald Trump’s personal lawyer Rudy Giuliani on efforts to gin up damaging information against the president’s political rivals, primarily former vice president and Democratic presidential candidate Joe Biden, over past dealings with the government of Ukraine.
In the Nevada case, the indictment states that Fruman and Parnas knew they had missed a September 2018 deadline to apply for a business license “unless (they) change the rules” by electing a candidate to state office who might “green light” their effort.
A week later, one of them made donations to Adam Laxalt and Wes Duncan, the respective 2018 GOP candidates for governor and attorney general, with funds from the Russian investor. The campaigns for both candidates said Thursday that they will return the donations.
Sisolak defeated Laxalt in 2018. One of his first acts as governor was to call for creation of the Cannabis Compliance Board, which came into being under a bill approved last spring by the Legislature.
The governor’s statement Friday said the new task force would undertake some of the actions the compliance board was created to address. He cited a lack of industry oversight and “inaction from the state over many years,” including the lack of any criminal referral to date by the marijuana enforcement division since legal marijuana sales began.
The compliance board, when fully up and running, will subsume the task force’s duties.
A closer look
Four men charged with illegally funneling foreign money into U.S. elections allegedly tried to obtain marijuana business licenses in Nevada and other states, according to an indictment filed in federal court in New York.
The men also made donations to two Nevada Republican political candidates in the fall of 2018, the indictment shows.
A check of Nevada campaign contributions made by one of the indicted men, Igor Fruman, shows he contributed the maximum $10,000 each to Adam Laxalt and Wesley Duncan, the Republican candidates for governor and attorney general, respectively, last year. The donations were made on Nov. 1, 2018, according to each campaign’s finance records.
Records show no additional contributions to other candidates by Fruman or any of his co-defendants.
Duncan, through a spokesman, said he was “made aware of the story about the indictment this morning and immediately had the treasurer from my (attorney general) campaign refund Mr. Fruman’s contribution. I had no idea Mr. Fruman was acting unlawfully.”
Andy Matthews, a spokesman for Laxalt, said Thursday that Fruman “came to a Las Vegas fundraiser. Adam doesn’t know the man.” Later, a consultant for Laxalt’s 2018 gubernatorial bid said that Laxalt, too, would be returning the contribution.
“Today’s indictment states that the defendants ‘concealed the scheme from the candidates, campaigns, federal regulators, and the public,'” consultant Robert Uithoven said in a statement, quoting from the indictment. “Until this morning, like everyone else, Adam was unaware of the illegal activity and he intends to return the donation.”
Fruman, and a second man named in the indictment, Lev Parnas, are associates of President Trump’s personal attorney, Rudy Giuliani. They helped fund Giuliani’s efforts to stir political investigations in Ukraine against Democratic presidential candidate Joe Biden and his son, Hunter. The two were scheduled to be deposed this week by congressional investigators as part of the impeachment inquiry against President Trump.
They were taken into custody on Thursday in Virginia.
— Bill Dentzer, Las Vegas Review-Journal