First Year Of Nevada’s Marijuana Tax Revenue Exceeds Expectations
By Roger Moleskin photo/istock/lucky-photographer
Recreational marijuana sales in Nevada began on July 1st, 2017, and were projected to rake in a maximum of $50 million over the first year. The numbers ended up being a good deal higher, with $500 million in overall sales, and tax revenue at almost $70 million, about 40% higher than expected.
State Tax Director Bill Anderson says combined marijuana tax revenue will total $69.4 million in the current fiscal year ending June 30, 2019. "As we move into fiscal year 2019, we expect to see continued growth in the industry by way of additional businesses opening up, and we expect revenues to continue to be strong," he said Tuesday. "We have not experienced any major hiccups or compliance issues, and our enforcement staff has worked diligently to make sure these businesses understand and comply with the laws and regulations that govern them."
However, not everyone is pleased with the way the money has been allocated. Legalization was a major political issue when being considered, and state legislators campaigned on the promise that the tax revenue would be used to improve schools, but critics have said that not enough has been used for education and too much went to the Nevada rainy day fund.
A rainy day fund is a reserve used to help the state in times of budget shortfalls.
By law, revenue from the wholesale tax is allocated to fund state and local government regulation of the industry, and what’s left is deposited into the Distributive School Account. Revenue from the excise tax is deposited into the Nevada Rainy Day Fund. Only $27.5 million of the total $70 million was put to schools.
State Senator Tick Segerblom acknowledged that schools will not see an immediate effect.
“It’s getting there, maybe not as fast as they thought, but it’s getting there,” Segerblom said. “It goes into what they call the Distributive Savings Account, which goes all around the state. So, Clark County isn’t going to see any more money this school year than they already were going to get.”
For their part, growers feel that the legislators were somewhat dishonest and didn’t deliver exactly what they had campaigned on. “If it were up to us operators, 100% of it would be going to schools,” John Muller, CEO of Acres Dispensary in Las Vegas, said. “We’d love to see that get out of the Rainy Day Fund and get out to the schools.”
The future of the legal market in Nevada is uncertain, as it is across the country. Tourism increased along with recreational pot sales, naturally, but market analysts warn that a ceiling could be hit before anyone realize it’s too late. Branding and retailing practices have advanced significantly, and stores now offer a larger assortment of products that appeal to both new and experienced consumers. The streamlining of the business means the market will flood sooner than later, and the boom will recede, hopefully without too much of an impact.
But for at least the next year, revenue will continue to grow exponentially. Nevada has a strong medical marijuana market that is good for at least 20% of the annual sales, and despite some off-months, tourism is invariably tied to legal sales, and is a major, reliable factor.
Nevada is the latest state that shows in its first year a recreational market to be beneficial to struggling schools, young entrepreneurs, and investors alike. Between Nevada and other states like Colorado and California, they have proven that a legal marijuana market is safe and should be implemented nationwide to help critically underfunded institutions the states have failed for years.