February 16, 2020

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Colorado Gaming Commission Moves to Ban Licensees From Involvement in Marijuana Industry

The Colorado Limited Gaming Control Commission proposed new resolutions on September 20 that would bar all Colorado gaming licensees from "any involvement with the marijuana industry" and, conversely, prohibit anyone involved in the cannabis industry from obtaining a Colorado gaming license.

The proposed resolutions also set forth three prohibitions that would preclude Colorado gaming licensees from:

  • holding or obtaining a marijuana license;

  • contracting with or maintaining business relationships with individuals, entities, or establishments that sell, cultivate, or distribute cannabis (which includes arm’s-length transactions such as landlord/tenant agreements); and

  • receiving financing from or providing financing to individuals, entities, or establishments that sell, cultivate, or distribute cannabis.

Further, Colorado gaming licensees would be obligated to conduct the "necessary due diligence and exercise discretion and sound judgment" to prevent violations of Colorado or federal law.

Colorado joins Nevada as a gaming jurisdiction that views investment or involvement in the properly licensed and state-regulated cannabis industry as a likely disqualification for a gaming license. Colorado's proposed resolutions are notable, however, in that they offer more specific guidance on what constitutes involvement in the cannabis industry. As explained in Nevada Gaming Control Board Notice 2014-39, "[T]he Board does not believe investment or any other involvement in a medical marijuana facility or establishment by a person who has received a gaming approval or has applied for a gaming approval is consistent with the effective regulation of gaming . . . the Board believes that any such investment or involvement by gaming licensees or applicants would tend to reflect discredit upon gaming in the State of Nevada."

With this recent development in Colorado, individuals and businesses in the gaming and/or cannabis industries or those providing services to these industries should be aware of these new tensions and obstacles. With continuing uncertainty regarding the legality of the cannabis industry under state and federal law, this is likely to continue to be an issue considered by other gaming regulatory agencies around the country—formally or informally. We have kept a close watch on developments at the intersection of these two industries in order to best advise clients.

Copyright © by Ballard Spahr LLP


About this Author

Adrian King Attorney Ballard Spahr Partner Philadelphia

Adrian R. King, Jr., is Co-Practice Leader of Ballard Spahr's Government Relations, Regulatory Affairs and Contracting Group. Adrian focuses on general business and corporate law, government relations, regulatory affairs, government contracting, and gaming. He regularly represents clients before federal, state, and local executive branch and administrative agencies.

Over the years, Adrian has served the public by playing several high-level roles within Pennsylvania state government. Most recently, he was First Deputy Attorney General in the...

Michael Fabius Gaming Attorney Ballard Spahr Philadelphia

Michael D. Fabius is an administrative law attorney with particular experience advising clients in the highly-regulated gaming and racing industries, and in litigating claims in front of administrative agencies. In Pennsylvania and New Jersey's well-established gaming markets, Mike has advised three casino applicants in competitive application proceedings—two were successful. He also actively advises numerous casino clients, manufacturers, and other companies serving the gaming industry on gaming licensing, compliance, and transactions. This includes frequent meetings with staff and public presentations to gaming and racing regulatory agencies. In addition, Mike has extensive experience as lead regulatory counsel advising clients on compliance for large, multi-jurisdictional transactions requiring notices and approvals from several independent regulatory agencies.

Mike advises public sector and private sector clients on various areas of political and ethics laws addressing the public's access to records, open meetings, ethics, government contracting, elections, and campaign finance, and lobbying disclosure. He is a frequent presenter on Pennsylvania's Right-to-Know Law—drawing upon his extensive experience, including multiple successful appeals to Pennsylvania's Commonwealth Court on behalf of private sector clients.

In his administrative law practice, Mike helps clients structure and obtain requisite approvals for transactions, and litigates matters before administrative agencies. He has also represented clients in front of Pennsylvania's Commonwealth Court in the court's appellate and original jurisdiction. Among his unique experiences, Mike may be one of the only lawyers to represent a private sector defendant in a mandamus action.

Mike is a member of the Pennsylvania Bar Association and its Administrative Law Section. He also serves on the Gaming Law Committee, where he tracks and reports on all current developments affecting Pennsylvania's casino industry. He also maintains a survey of consent agreements entered into between the Pennsylvania Gaming Control Board and licensees to create a resource that helps licensees in negotiating future consent agreements when the need arises.

Amber Gonzales Attorney Ballard Spahr Denver

Amber Gonzales, a former Ballard Spahr Summer Associate, worked in education before entering law school. As a program facilitator at a large urban high school in Dallas, she implemented a comprehensive college/academic guidance program. She also developed bilingual program materials, workshops, and curriculum for parents and students. She was a financial aid advisor at a technical school and conducted information sessions with students and families about financial aid options and requirements.

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