(AsiaGameHub) –   A new report from the University of Nevada, Las Vegas (UNLV) Cannabis Policy Institute highlights that Nevada’s legal and regulatory separation between its cannabis industry and gaming sector is resulting in significant lost legal cannabis sales and tax revenue for the state.

The study also indicates that this separation is sustaining a large illegal cannabis market.

Conducted by researchers from UNLV, UC Davis, and Strategies 64, the research quantifies the economic consequences of three major regulatory barriers and advocates for policy changes to modernise the state’s approach.

The findings

The report estimates that Nevada’s legal cannabis retail sector experienced a loss of approximately $540 million in revenue in 2024 due to three main restrictions:

• Banning cannabis delivery to hotels and gaming properties: $210 million loss.
• A 1,500-foot setback requirement between cannabis establishments and gaming venues in populous counties: contributing to market exclusion.
• Prohibition on investment, leasing or operational ties between gaming licence holders and cannabis businesses: limiting business integration.

These factors have created “cannabis deserts” in central tourist areas, particularly along the Las Vegas Strip, which sees 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, marking a 7.5% year-over-year decline. Approximately 89% of visitors booked hotels, the lowest percentage in five years.

The report found that visitors face inconvenient and expensive travel to licensed dispensaries, with pedestrian trips taking up to 95 minutes or taxi fares costing $30–$40, leading many to turn to illegal cannabis sources.

As a result, state tax revenue from cannabis falls short by about $80 million annually. FY2024 collections of roughly $120 million could potentially rise toward $200 million if current barriers were removed.

The barriers

Nevada state regulations and Clark County ordinances currently prohibit delivering cannabis products to hotels and gaming-certified properties, greatly restricting access for tourists.

Additionally, in counties with over 100,000 residents, cannabis businesses must be located at least 1,500 feet away from licensed gaming venues. In densely populated areas such as Las Vegas, this effectively blocks cannabis retail from prime tourist corridors.

Since a 2014 Nevada Gaming Control Board memorandum, gaming regulators have enforced a policy preventing gaming licensees from investing in, leasing space to, or consuming cannabis on-site, citing concerns over regulatory compliance and reputational risks.

Since then, much has changed—federal authorities have generally tolerated state-compliant cannabis operations, and jurisdictions like New Jersey and Canadian municipalities now allow closer integrations between cannabis and gaming.

The reforms

Economically, the report describes these regulations as costly “transaction costs,” leading to revenue “leakage” from the legal to illicit markets. They reduce both cannabis sales and related spending on hospitality and entertainment within casinos and resorts.

The report calls for two key reforms: first, allowing cannabis delivery to hotels, short-term rentals, and gaming-licensed properties by revising cannabis compliance rules and Clark County codes.

It also recommends removing the 1,500-foot setback requirement in populous counties and updating NGCB guidance to permit gaming operators to lease space to cannabis retailers and consumption lounges, including designated on-site consumption areas.

Survey data from 2025 showed that 70% of US adults support allowing cannabis consumption spaces in casinos, and 40% would be more likely to visit casinos if cannabis was available.