Guy Farmer: Corruption in the pot business

Gov. Steve Sisolak purports to be “outraged” by reports of corruption in Nevada’s highly lucrative marijuana industry, which contributed $723,000 to help finance his successful gubernatorial election campaign last year. The Las Vegas Review-Journal thinks the governor’s outrage is “contrived,” and so do I.

Sisolak finally reacted to his burgeoning marijuana fiasco after he learned that two Rudy Giuliani (President Trump’s personal attorney) associates, Ukrainian-Americans Igor Fruman and Lev Parnas, had been arrested and accused of violating national campaign finance laws and attempting to enter Nevada’s legalized marijuana market through the back door.

Sisolak’s office issued a strongly worded statement after charges were filed against Fruman and Parnas, saying the governor was “disappointed in the lack of oversight and inaction from the state … including the absence of a single criminal referral by the Marijuana Enforcement Division since the inception of licensed marijuana sales in Nevada.” The governor then announced the creation of a multi-agency task force that will “investigate issues surrounding the legalized marijuana industry.”

So much for the governor’s much-ballyhooed Cannabis Compliance Board, which he has compared to the Gaming Control Board, an effective agency that enforces Nevada’s strict gambling laws without fear or favor. By contrast, the Cannabis Compliance Board appears to be a taxpayer-funded PR agency designed to make the marijuana industry look good, which is all wrong.

The federal indictment against Fruman and Parnas alleges that they conspired with Andrey Kukushkin, another Ukrainian-born defendant, to obtain Nevada pot licenses by contributing to the political campaigns of two unsuccessful politicians, both Republicans. They donated $10,000 each to 2018 gubernatorial candidate Adam Laxalt and attorney general candidate Wes Duncan, both of whom returned the donations when they learned of the federal indictment.

The indictment leads us to a discussion of Nevada’s chaotic — and possibly corrupt — marijuana licensing procedures, which have come under increasing public scrutiny. Jon Ralston, the prize-winning editor of the online Nevada Independent, recently wrote that the FBI has declared the nationwide marijuana industry to be “a public corruption threat,” adding that Nevada’s regulatory structure “is at best inept and at worst corrupt.” Amen!

Former Tax Commission Director Deonne Contine, the state official who enthusiastically implemented ex-Gov. Brian Sandoval’s 2017 “early start” scheme to commercialize so-called “recreational” marijuana in just six months — as opposed to one year in California and 18 months in Massachusetts — resigned after a hectic, disorganized period of willy-nilly pot license issuances and denials and soon joined Kaempfer/Crowell, a high-powered statewide law firm that advertises a nine-member “Cannabis Team.” Her high-handed tenure at the Tax Commission resulted in multiple lawsuits accusing her of siding with the marijuana industry against liquor distributors in the adjudication of valuable pot distribution rights.

In June 2018, with strong backing from the marijuana industry, Contine ran unsuccessfully for the State Assembly from Washoe County. She recently resurfaced as Sisolak’s director of administration, one of the highest appointed positions in state government. At the same time, Tax Commission records list her as an officer of WSCC Inc., a company founded in 2014 that operates pot shops in Reno and Carson City.

Sisolak should follow-up on his tough talk by firing Contine, or at the very least suspending her pending a thorough investigation of her key role in the pot licensing scandal. Thanks to the Sacramento Bee, we know the FBI is already investigating alleged marijuana corruption in Sacramento, and is probably looking into dubious pot licensing procedures here in Nevada. After all, Sisolak has invited such an investigation by publicly indicting his own incompetent pot regulators.

Guy W. Farmer is the Appeal’s senior political columnist.