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.