From Dram Shop Law To "Gram" Shop Law: No Civil Liability For Licensed Establishments

• Published date: 24 September 2021
• Subject Matter: Litigation, Mediation & Arbitration, Cannabis & Hemp, Personal Injury
• Law Firm: Holley Driggs
• Author: Mr John Savage

Nevada remains in a small minority of states that do not recognize dram shop liability, at least for establishments licensed to sell alcohol (the term "dram shop" dates back to when alcohol was served by the "dram", which is one-eighth of an ounce). Many states have passed dram shop laws that now hold establishments liable if they serve alcohol to underage or intoxicated persons who then injure a third-person while intoxicated.

However, the Supreme Court of Nevada has repeatedly refused to judicially create a cause of action for dram shop liability where none existed at common law. See Hamm v. Carson City Nugget, Inc., 450 P.2d 358 (Nev. 1969); Snyder v. Viani, 885 P.2d 610 (Nev. 1994) (discussing Hamm and its progeny). The Court reasoned that creating dram shop liability "is the function of the legislative, not the judicial, branch of government." Hinegardner v. Marcor Resorts, L.P.V., 844 P.2d 800 (Nev. 1992).

As a result, establishments licensed to sell alcohol in Nevada remain immune from civil liability for injuries caused by their patrons' drunken negligence. NRS 41.1305 expressly provides such immunity to licensed alcohol establishments, but the statute imposes civil liability on any unlicensed person who knowingly serves or sells alcohol to an underage person or who knowingly allows an underage person to consume alcohol on premises controlled by the unlicensed person.

The legislative intent behind NRS 41.1305 was to impose civil liability on social hosts only. See Nevada Assembly Committee Minutes, 5/3/2007. Licensed establishments remain exempt from civil liability because regulatory penalties exist to deter licensed establishments from selling and serving alcohol to minors. Id. Social hosts have no such regulatory deterrence.

Nevada's new "gram" shop law

Nevada's dram shop law for alcohol will now apply to cannabis as well. This past legislative session, Nevada became one of the first states to allow cannabis to be consumed in licensed establishments when the 2021 Nevada Legislature passed Assembly Bill 341 ("AB 341") and Governor Sisolak signed the same into law. Some legal prognosticators have colloquially referred to anticipated laws regulating civil liability in the cannabis industry as "gram shop" laws because, like the "dram" once was for alcohol, a gram is the smallest quantity in...