Nevada was 1 of 4 states to legalize recreational marijuana in last November’s ballot and it is the first one to have begun to reap the rewards. Recreational marijuana went on sale to the public in Nevada this July. Now the fiscal results are in and the numbers are very impressive. It appears that the state has made $27 million in marijuana sales in the first month. This is nearly double what Colorado and Oregon made in their first months of operation at about $14 million and it is nearly 7 times what Washington made at $3.8 million.
An Increase in Estimates
Governor Brian Sandoval estimated that recreational marijuana would bring in approximately $100 million in tax revenue during its first 2 years of operation. According to the latest projects, however, that number has increased to $120 million. The state worked very hard to begin sales as soon as possible in order to get the industry up and running within the fastest time frame. “Although July was not accounted for in our projections, the first month’s revenues demonstrate that the state’s structure appears to be collecting at a rate consistent with the consensus forecast,” said Mari St. Martin, spokeswoman for Governor Brian Sandoval.
Nevada’s Rainy Day Fund
Like all the other states with legal marijuana, the tax revenue will go towards paying for the industry and caring for community needs. Many voters expected the majority of funds to go to schools but this structure was changed. Sales tax, which is the extra 10 percent placed on retail sales of the plant, will go to the state’s rainy day fund, which can be spent anywhere although is usually used to cover emergencies. The state has already made $2.71 million in sales tax.
Further Tax Distribution
333 companies applied for marijuana related business licenses for cultivation, retailing, distribution and manufacturing marijuana related products. 250 licenses were ultimately distributed. Each applicant paid $5,000 and, if they were awarded a license, they would have had to pay between $10,000 and $30,000. Industry fees and the 15 percent wholesale tax, which is paid by cultivators who are selling to the stores, will firstly go towards covering the government costs of running the industry and the remaining amount will go towards the state’s School Distributive Account which distributes money to schools per student. $974,060 has already been made from wholesale tax revenue.
The state started its journey towards building a solid recreational marijuana industry in a somewhat problematic way. According to the law, alcohol distributors had the exclusive rights to distribute marijuana upon its legalization. The problem was that ultimately there were a limited amount of distributors who applied and so distribution was given to the marijuana distributors who were already working to deliver medical marijuana. As a result, the alcohol companies sued the state. In the meantime, marijuana retailers have had a hard time getting stock replenished as there is too much pressure on just a few delivery people to keep up with demands. As this issue continues to be resolved, at the very least, the state can enjoy its lucrative start.