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That Time Nevada Had So Much Tax Revenue From Legal Cannabis They Just Didn't Know What To Do

By Brandon A. Dorfman
Dec 22, 2017

Nevada’s combined recreational and medical marijuana markets outpaced sales projections, just months after prohibition repeal went into effect in the state. Figures from the Nevada Department of Taxation for the month of September show sales reached $27.7 million, down from the previous month of August but still $5 million more than initially projected. In October, sales hit record highs, as the state’s cannabis sales reached $37 million. Together, recreational and medical marijuana helped bring the state an estimated $5.8 million in tax revenue for the month of October.

Since legalization first began at the beginning of July, Nevada has filled state coffers with more than $19 million worth of tax revenue. Recreational marijuana consumers pat a 10 percent retail excise tax, money that is set aside for the states rainy-day fund, according to The Las Vegas Review-Journal. On top of that, there is also a 15 percent wholesale excise tax, used by the state to pay for education in public schools after state and local governments take out their share.

“We are pretty on target with projections, maybe a little over,” said Nevada Department of Taxation spokeswoman Stephanie Klapstein in a  statement to The Las Vegas Review-Journal.

The overall numbers are quite astounding as well. Since July 1, the wholesale excise tax has generated almost $6.5 million for the state. Officials expect that over the first two years of legalization that tax will give Nevada nearly $56 million in revenue. In the first month alone the wholesale tax brought in $974,000 in tax revenue. For comparison, between July 2016 and July 2017, pre-legalization, Nevada’s monthly average for wholesale tax revenue was around $300,000.

Though there is excitement over the state’s financial windfall, some worry that the recent move to legalize cannabis in Los Angeles and the rest of California may hurt sales. Las Vegas receives about 42.9 million tourists annually, and about 27 percent of those hail from Southern California every year. Some dispensary owners say that around 10 to 15 percent of their business comes from those tourists.

Still, others are not as worried about the prospects of more competition. “People will purchase recreationally there, but they’ll still purchase here,” one owner told The Las Vegas Sun in early December. “Just like some people bring their own alcohol to Vegas and other people purchase alcohol in Vegas. It’s just a matter of preference, and I think a rising tide does raise all boats.”

Nevada State Senator Tick Segerblom (D-Las Vegas) an early legalization champion who worked hard to make it a reality in the state believes that, at least when it comes to Vegas, people will come for the novelty of it all.

“We’ve learned from gambling that even while more states have allowed gambling, it hasn’t come back to hurt Nevada,” the Senator told The Las Vegas Sun in an interview this month. “We just want to make sure we’re always the gold standard for marijuana, and it’s always the best place to come use and enjoy the plant.”

As for the tax revenue, Segerblom took to Twitter to show his excitement over the revenue numbers. The Democrat from Las Vegas called on the Legislature to discuss how to disperse the funds in a special session. He says the money should go to the Clark County School District, as per the will of the voters.

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