Nevada’s Marijuana Tax Revenue Expected to Reach $70 Million This Year
When Nevada voters legalized cannabis for adult use in 2016, they did so not just with an eye toward the social and civic gains of legal weed, but also toward generating revenue through state taxes. Prior to the legalization vote, advocates made the case that a regulated cannabis industry would generate millions of dollars in tax revenue for Nevada schools. Now, just over a year into legal retail sales, Nevada is expected to close out the year with $70 million in tax revenue from weed.
Nevada’s Tax Revenue From Legal Cannabis Is Surpassing Everyone’s Expectations
Before retail sales began in Nevada on July 1, 2017, lawmakers modified the tax structure for the state’s cannabis industry. The changes are a major reason Nevada’s cannabis tax revenue is surpassing expectations.
In Nevada, marijuana taxes change depending on whether a sale goes to a medical or a retail consumer. First, cultivators pay a 15 percent excise tax on wholesale cannabis sales. On top of that, retail stores pay a 10 percent excise tax on each sale to a retail customer. However, if the sale goes to a medical customer, the 10 percent excise tax does not apply to the retailer. Finally, both medical and retail customers pay the regular sales tax for their cannabis.
The sum total of those taxes has led to the expectation-busting revenue Nevada has received in its first year of selling and regulating cannabis. Projecting the current amount of cash Nevada is raising through marijuana taxes through to the end of 2018, authorities are saying that total tax revenue will hit $70 million.
Those projections top earlier estimates that Nevada would raise $50.3 million by the one-year mark. In fact, the state sailed past that estimate in 10 months of legal sales.
What Is Nevada Doing With All That Weed Tax Money?
Nevada Governor Brian Sandoval’s office has issued official projections for tax revenue through July 2019. In those two years, Nevada expects to raise a total of $120 million in tax revenue.
Many are celebrating the fact that tax earnings from legal weed sales are surpassing expectations. But most of the money will go back into funding the regulation of Nevada’s cannabis industry. It costs local governments and the state about $45 million dollars to fund Nevada’s legal weed program. And that amount gets subtracted from the total revenue that by law is intended for Nevada public schools.
In other words, Nevada schools will only see about $25 million of the total revenue from the 15 percent wholesale excise tax. Revenue from the 10 percent retail excise tax for non-medical consumers doesn’t go to schools. Instead, the state puts it away in the Nevada Rainy Day Fund.
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