Nevada cannabis industry breaks $100 million mark in annual tax payments
Nevada’s cannabis industry has broken a record for tax contributions — more than $100 million in revenue has been collected from dispensaries, cultivators, laboratories and producers in the fiscal year that just ended.
Marijuana tax contributions have increased by 33 percent year over year, from $74.7 million paid last fiscal year to $99.18 million in the 2019 fiscal year, with another $10 million fees on top of that. The Nevada Dispensary Association announced the milestone in a press release on Tuesday, along with a warning that the state should not take the strong collections for granted.
“Significant changes in the market or regulatory framework could impact tax collection,” said Riana Durrett, the group’s director. “The illegal market continues to deprive the state of funds that could be going to education.”
Divvying up marijuana revenue has been a hot topic for policymakers in recent years. The cannabis industry is subject to four types of taxes and fees — a 10 percent excise tax, a 15 percent wholesale tax, sales tax and licensing fees.
In fiscal year 2018, actual revenue of $69.8 million exceeded, by 40 percent, what the state had predicted for that fiscal year. And for the next two years, the state is projecting more than $100 million per year in marijuana tax collections.
A major sticking point has been whether the revenue ends up in the state’s education account. Although the state collected nearly $70 million in excise and wholesale taxes in the first year recreational sales were legal, just over $27 million of revenue was deposited in the Distributive School Account, the state’s main education account.
During the 2017 legislative session, decisions on an education funding model did not go as planned, leading lawmakers to shuffle marijuana excise tax revenue into the state’s Rainy Day Fund reserve account instead of directly to education. Schools did not lose money in the transaction because lawmakers backfilled the education money with general funds, but the diversion has been a source of confusion.
In May, the Legislature passed a bill that would somewhat rectify the 2017 diversion to the Rainy Day Fund by sending excise tax revenue directly to the Distributive School Account. That is expected to add $120 million to the education account over two years.