Las Vegas became the first city in Nevada to legalize 'social use venues' for cannabis

Gaming companies are worried because marijuana is still considered an illegal drug federally

The law doesn't cover The Strip, which is in Clark County — not the city of Las Vegas

LAS VEGAS – For two years, tourists here have dealt with a cannabis conundrum: All over this glittering town, there are shops selling weed — and nowhere to smoke it.

That soon will change.

The Las Vegas City Council this month voted to allow existing dispensaries to apply for permits to open consumption lounges where tourists can use marijuana products in a cozy setting, perhaps with a meal and some live entertainment.

While the whiff of legal marijuana smoke floating around Las Vegas has entrepreneurs hopeful about the industry’s future, it has the gaming industry wondering and worrying about this question: Will Las Vegas become the next Amsterdam?

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A legal path to pot lounges in Las Vegas marks a victory for cannabis investors now poised to capitalize on a unique brand of pot tourism with a Sin City twist. But this new genre also represents a potential threat to gaming companies worried the recreational weed trade could siphon tourists – and their cash – from a casino corridor struggling to increase profits.

Considered Nevada’s pot ambassador, Clark County Commissioner and former state senator Tick Segerblom is putting his money on Las Vegas becoming the next holy land of weed tourism.

"We’re the new Amsterdam," he said.

That should be a concern to gaming companies, Segerblom told the USA TODAY Network.

“They’re concerned about (lounges) making money outside the hotels,” Segerblom said. “They’re worried the longer this goes outside hotels, the more established they’ll get. As a business person, I would be concerned too.”

A nervous gaming industry — and a cannabis industry waiting to pounce

As president of the National Resort Association, Virginia Valentine's job is to protect the interests of the lobbying group's central clientele: gaming companies.

Lately, she's been the the shield between casinos and cannabis.

“As long as it’s federally illegal, we can’t have it on the property,” Valentine told the USA TODAY Network. “We’re trying to create that separation.”

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Because the federal government recognizes cannabis as an illicit substance, gaming giants remain reluctant to join hands with the weed industry.

On May 1, less than a month after a bill to legalize weed lounges in Nevada died in the state Legislature, Valentine urged the Las Vegas City Council to halt the push for pot lounges to allow state legislators to plot a forward path.

“We can’t wait for the state to act,” said Councilman Bob Coffin, the city bill’s sponsor.

Valentine asked for a 1,500-foot buffer between gaming establishments and cannabis lounges, and the city compromised at 1,000 feet. The city passed the ordinance, 4-1, making Las Vegas the first city in the state to legalize "social use venues."

After the city builds an application, 20 dispensaries – already open or forthcoming in Las Vegas this year – can apply for licenses to open lounges prohibited from selling alcohol.

The ordinance excludes dispensaries on The Strip, which is controlled by Clark County, not the city of Las Vegas, as well as Henderson and North Las Vegas.

The single dissenting vote came from Councilman Stavros Anthony, a retired Las Vegas Metropolitan Police captain and gaming industry ally.

The cannabis industry, he said, is after the most important ingredient in the Las Vegas profit recipe.

"What they're really trying to target are the tourists coming into Las Vegas,” Anthony told the USA TODAY Network. “That’s really where the money is. That’s always where it’s been. These consumption lounges are really the first attempt to gather in the tourists that want to smoke marijuana here in Nevada."

Las Vegas is like an amusement park — where will cannabis fit in?

If Las Vegas is an amusement park, cannabis is the newest ride, but gaming operators aren't ready to buy a ticket and buckle up.

“Las Vegas, in many ways, is like a Six Flags that has to add a new roller coaster every summer – or people stop coming,” said Bo Bernhard, executive director of the UNLV International Gaming Institute. “It’s a fascinating chapter that will be interesting to see whether (marijuana lounges are) something that draws folks – and, of course, there are concerns it will draw folks away from the resorts.”

The gaming community's conservative stance on cannabis and unwavering commitment to regulators is in line with the story of Las Vegas, where the Nevada Gaming Control Board has long served as the law-and-order arm in a land often perceived as the vice capital of the wild west.

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The gaming board, Bernhard said, has always been the governor on the golf cart to make sure it doesn’t go careening off the cliff and into the pond.

“The conservatism isn’t ungrounded,” Bernhard said. “It’s not without merit. The gaming regulatory system has been wary given the federal government’s reticence here as it pertains to cannabis policy."

Nevertheless, cannabis is something Vegas vacationers want to engage. And they'll be able to do so – outside the confines of the traditional casino-resort.

That could pose a problem for resorts turning profits out of the soon-to-be competitors of marijuana lounges: Nightclubs.

“The nightclub is a profit center,” Bernhard said. “The nightclub is a place where margins based on massive mark-ups of things like bottles of alcohol are generating huge amounts of money to the bottom line. Something that obviously threatens that revenue stream is something that is going to be a concern."

'It's time to move on'

Ask John Mueller, CEO of Las Vegas-based Acres Cannabis, whether the city will become the new Amsterdam, and it becomes apparent he has a different goal in mind: Helping Sin City overshadow the charming European city of vice and weed-friendly coffeehouses.

“We are better at entertainment, and we are better at controlling vices,” Mueller said. “You put those two together, and you’ve got a one-two punch of creating another tourist destination. You pull back the veil on cannabis and all of a sudden it’s not as scary as [Ronald] Reagan told us.”

In March, Mueller sold Acres, a 19,000 square-foot dispensary, for $70 million. He stayed on board to usher the company into the pot lounge era. Mueller aims to roll out a brand of lounge that rivals what a tourist might find in U.S. cities like San Francisco and Denver.

The consumption lounge at Acres will include a concert hall and full-service kitchen launched with the Morton family – founders of famed Morton's The Steakhouse in Chicago.

"You’re going to see an elevated experience over something you’ve seen in Amsterdam or these little boutique places," Mueller said.

As for the menu?

"I think you can basically – tongue-in-cheek – make fun of yourself with Dorito sandwiches and pizza the size of your head," Mueller said. "Tongue-in-cheek but delicious."

The next chapter for the cannabis movement

For decades, Segerblom said, policymakers have been beholden to the gaming industry.

Marijuana lounges advancing in Las Vegas represents the start of a new chapter that departs from the old Nevada narrative, Segerblom said:

“We’re not going to let you dictate what our policy is. We have millions of dollars and millions of tourists coming here with no place to use (cannabis). We can’t sit around and wait for the federal government to change its mind. It’s time to move on.”