1. How much money is being made from recreational marijuana sales?
A: It has been going down for the last three years — every year is less than the one before it.
In the last fiscal year that ended in June, there was $760 million in sales, leading to $110 million in taxes for the state.
It sounds like a lot, but it has been going down since FY 2021, when there was $1 billion in sales — and $158 million in tax revenue.
When cannabis sales began in 2017, it started at $530 million in sales and went up every year until 2021 when it hit that peak of $1 billion.
Since then it has dropped 30%.
2. Why are sales down and where exactly is the tax revenue going?
A: In 2022, when sales decreased from more than $1 billion to $965 million, the Nevada Cannabis Compliance Board said “This decline is consistent with sales trends in other states with mature cannabis markets and can be attributed at least in part to after-effects of the COVID-19 pandemic.” So it’s gone down the last three years now.
But others say the legal market faces tough competition from the unlicensed illegal market, which doesn’t pay taxes, or have other costs of compliance like testing, so they’re selling for much cheaper.
Marijuana growers say the state’s tax formula has them paying higher taxes than they should. To calculate how much taxes must be paid, the state uses the fair market value of a pound of cannabis, rather than its actual wholesale price, which is lower.
Pot growers find themselves paying an effective tax rate of between 25% and 30%, instead of the 15% it’s supposed to be.
As to where the revenue goes, much of it goes to schools and some goes to local government services, such as law enforcement and public health programs.
But we’re talking about only $110 million this past year, spread throughout the state – that’s a drop in the bucket for say the Clark County School District, which has a $3.4 billion budget, it’s a small percentage.