The gamble Nevada took on recreational cannabis is certainly paying off. In July alone, the state’s first month of legal sales, dispensaries sold a whopping $27.1 million worth of weed, which is near twice the amount that both Oregon and Colorado made in their first sales months, and it is nearly seven times what Washington managed to sell.
According to the Nevada Department of Taxation, the fledgling market generated $10.2 million for state coffers in its first month. Of that, industry fees financed $6.5 million and tax revenues the other $3.68 million. Governor Brian Sandoval estimates that taxes and fees could generate roughly $100 million in revenues for the state over the next two fiscal years.
However, between the state’s two-year-old medical cannabis market and its new recreational industry,
Stephanie Klapstein, Department of Taxation spokesperson, thinks that this figure will be much higher, closer to $120 million. That is a lot of money, and Nevadans have a right to know where it will go and how the state will use it.
What will happen to the money?
The 10 percent tax the state tacked onto all recreational marijuana sales made at the register reeled in $2.71 million. The 15 percent wholesale tax brought in another $974,060, which growers pay to cultivate both medical and recreational weed. Although the people of Nevada wanted a large portion of this industry’s revenues to go to the school system, only some of it will.
Sandoval initially proposed that sales tax revenues would go to schools. However, he later decided to put the money into the state’s “rainy day fund,” to prevent the education department’s budget from relying too heavily on a mercurial market. Although the “rainy day fund” is available for any necessity, it is typically there to fund emergencies, such as disaster relief programs.
Monies generated from the 15 percent wholesale tax, tacked onto the cultivation sector for both recreational and medical pot, will go towards financing the cost incurred by local and state governments. Only then will any leftover monies go into the state’s School Distributive Account, which funds schools on a per-pupil basis. Industry fee revenues will receive the same treatment.
Where did the money originate?
The state’s Department of Taxation, which governs both the recreational and medical cannabis programs, is processing 333 applications for recreational business licenses. Thus far, it has issued 250 licenses, including 92 for cultivation facilities, 53 for retail outlets, 65 for manufacturing products, 9 for testing laboratories, and 31 for distribution.
Of these 250 state-issued licenses, 203 operate in Clark County, with the remaining distributed throughout Washoe, Nye, and Carson City counties. Northern Nevada has approximately a dozen operational dispensaries. The set application fee for any recreational license is $5,000, but businesses can expect to pay anywhere from $10,000 to $30,000 in actual licensing fees.
Although the industry can celebrate the big bucks it is clearly making, it is insufficient to distract from the distribution problems plaguing the state. Nevada is still fighting alcohol distributors in court, who demand sole rights to distribution and are thwarting all state efforts to license other cannabis distributors and allow people equal access.
Nevada has only been able to issue a handful of licenses to recreational distributors since July, which is the only businesses the law allows to transport marijuana from grow sites to marijuana dispensaries. Because of these issues, most dispensaries had serious difficulties trying to keep their inventories full and stocked with enough supply.
As Klapstein said, “I think it is fair to say that a number of the establishments struggled to get their entire inventory in stock, so I think it is safe to say that it affected them, but I cannot quantify it.”