Nevada became the fifth state to legalize the adult use of cannabis on July 1, 2017. Just as it was initially anticipated, the state is doing well out of legal cannabis.
The Department of Taxation from Nevada is anticipating a $60 million dollar increase in the tax revenue within just two years.
Only a year after the drug was legalized, it had exceeded the expected tax revenue. With June 2018’s marijuana tax revenue finalized, Nevada is coming to the end of its first full year of legal cannabis sales.
A total of $69.8 million dollars was collected for the entire fiscal year.
The most stable months for cannabis’ tax revenue was in the last four months of this fiscal year. Each month was able to reach a total of $6.5 million of tax revenue.
By the end of June, a total of 64 medical cannabis dispensaries have sprouted in Nevada and 61 out of the 64 are licensed to sell recreational cannabis to adults. For the entire year, the total taxable sales of these dispensaries and retail stores reached $529.9 million dollars.
To meet the growing demand, around 40 dispensaries currently selling medical cannabis have received a request to produce pot for recreational purposes as well.
Northern Nevada has 13 recreational cannabis dispensaries, 14 production facilities, 18 cultivators and a total of two laboratories. In the south, there are 98 cultivators, 48 recreational dispensaries, 66 production facilities, and a total of seven cannabis labs.
The taxable sales included the adult-use of cannabis, medical cannabis, and cannabis-related tangible goods.
According to Nevada’s data, a total of $424.9 million dollars was recorded from cannabis sales for the year. The industry generated $42.5 million in tax collection based on the 10 percent Retail Marijuana Tax.
On the other hand, around $27.3 million dollars was collected under the 15 percent Wholesale Marijuana Tax for the entire fiscal year. All the profit from cannabis sales – including application and licensing fees – will directly go to Nevada’s primary education through the State Distributive School Account.
In line with the closing of the fiscal year, the Department of Taxation already transferred $27.5 million dollars of the Wholesale Marijuana Tax to the education account. The state’s Rainy Day Fund will now include all the revenues from Marijuana Tax.
The suffocation of the black market was one of the motivators as to why this legislation was pursued, the black market seems to be doing okay amidst all the earnings from the legal cannabis market.
For the Nevada Dispensary Association executive director, Riana Durett, “It’s still pervasive because the cost (of marijuana) is lower on the black market. They don’t pay taxes, security, they don’t pay for regulation, for overhead. It’s going to take law enforcement time and resources to regulate the black market.”
Durett added that a lot of dealers from the black market are not from the area. She highlighted that most of these illegal smuggled products are actually from California. The legal industry as a whole is strong with the leadership of the Nevada market having 75 percent of the establishments and providing employment to as much as 6,800 local residents at the recreational market.
However, given all these data, the state was not able to track whether the price of pot has increased or decreased. The next goal of the Department of Taxation now is to trace the changes in the price of the product in order to establish a comparison between the legal market and the black market.
The state has the ability to regulate the cultivation and production of cannabis in order to control supply and demand. They also have the power to limit licenses in cases where establishments fail to follow the rules and regulations that came with the legalization of the adult use of cannabis.
Nevada’s first year of allowing the adult-use of the substance has produced a positive result, not only to the state’s revenues but it has also proven itself to be successful in the regulatory perspective.