Nevada Cannabis Sales Slightly Off High, But Still About $1B Yearly
Posted on: October 5, 2022, 05:24h.
Last updated on: October 5, 2022, 05:36h.
Sales from legal cannabis brought about $1B in taxable revenue into Nevada this past fiscal year, according to the Nevada Cannabis Compliance Board (CCB), funding the state’s K-12 public schools to the tune of $147M.
More than $89M of this budgetary boon came from a 10% retail adult-use excise tax – as per SB 545, approved by the state legislature in 2019. Another $64M came from a portion of a 15% wholesale tax for adult and medical use. Other sources included civil penalties, in addition to licensing and other fees.
As well as education, the wholesale tax proceeds fund two additional pots: $5M goes to local governments and the remainder to regulatory operations, such as the CCB.
The news comes just as the CCB projects a fresh $9.2M injection of annual tax revenue from the fees and taxes on cannabis consumption lounges. Nevada’s first are expected to open either late this year or early next. As many as 45 licenses will be issued to owners of cannabis dispensaries with social lounges, as well as 20 licenses to standalone lounges. (The state’s application window for licenses opens from Oct. 14-27.)
Coming Down From its High
Sales are down about 4%, according to the CCB, falling from a high of $1.003B in fiscal year 2021 to $965M in fiscal year 2022 (July 1-June 30). Most states saw a similar decline, widely attributed to lower cannabis prices nationwide and declining disposable income because of inflation.
“Over the first part of the year, Nevada’s cannabis industry saw lower retail sales, a trend consistent with other mature cannabis marketplaces nationwide,” CCB spokesperson Tina Bohner told the Nevada Independent. “While sales increased during the COVID-19 pandemic, cannabis businesses are not immune to the effects of inflation and lack of disposable income, as consumers adjust their spending habits and priorities.”
Local cannabis business say this sales dip severely strains their bottom line – especially in combination with inflation and a taxation and fee structure they say is already excessive. Operators are especially critical of the CCB’s time and effort charges, which cost licensees $111 per hour for regulatory tasks performed by the board’s staff. These include mandated inspections, audits, and correspondence.
“I think if taxes are too high, that will just lead to prices going up, which is going to lead to the black market thriving more,” Judah Zakalik, chairman of cannabis company Congerium LLC, told the Nevada Independent. “That’s tough, because that’s a competitor that we have as legitimate business people that is very difficult to compete with.”
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