The Nevada cannabis industry rang up more than $965 million in taxable sales during the 2022 fiscal year, showing a slight dip from the $1 billion in sales recorded the previous year. Regulated sales of marijuana generated nearly $150 million in cannabis tax revenue, providing critical funding for the state’s public school system.
The Nevada Cannabis Compliance Board released sales figures for the state’s regulated marijuana industry last week, showing just over $965 million in taxable wholesale and retail sales during the 2022 fiscal year, which ran from July 1, 2021, through June 30, 2022. The figure reflects a 4% drop in sales over the previous year, when taxable sales of cannabis topped $1 billion.
Tiana Bohner, a spokesperson for the Nevada Cannabis Compliance Board, said that national and global economic factors played a role in the decrease in cannabis sales compared to last year. In 2020, cannabis sales skyrocketed in legal markets across the country as coronavirus shutdowns took hold. In many states, the jump in sales was in part fueled by the designation of cannabis retailers and producers as essential businesses, allowing them to remain open as many others were forced to shut their doors.
“Over the first part of the year, Nevada’s cannabis industry saw lower retail sales, a trend consistent with other mature cannabis marketplaces nationwide. While sales increased during the COVID-19 pandemic, cannabis businesses are not immune to the effects of inflation and lack of disposable income as consumers adjust their spending habits and priorities,” Bohner wrote in an email to The Nevada Independent.
The drop in sales followed the easing of restrictions put in place because of the COVID-19 pandemic, when consumers were eager to return to family gatherings, restaurant dining, and other public activities. During the shutdowns, cannabis sales in legal markets skyrocketed, with most states reporting record-breaking sales. In March, however, cannabis market data analytics firm BDSA reported that sales appeared to be returning to pre-pandemic levels.
“Though most legal cannabis markets saw sales soften in the second half of 2021, the global cannabis market is expected to see brisk growth in 2022, driven by strong sales in new and emerging markets in the U.S., steady growth in Canada and international markets led by Mexico and Germany,” BDSA chief commercial officer Jessica Lukas said in a statement quoted by Newsweek.
Revenue generated by taxable cannabis sales in Nevada totaled about $152 million in fiscal 2022, including $89 million from the 10% excise tax on adult-use retail sales and another $63 million from the 15% tax on wholesale recreational and medical marijuana sales. Tax revenue raised, minus regulatory costs incurred by the state, is dedicated to Nevada’s K-12 education budget, totaling $147 million for public schools during the 2022 fiscal year.
But cannabis businesses say that state taxes and regulatory fees are overwhelming, especially when combined with the decline in sales and other economic factors including inflation. Operators have been particularly critical of the Cannabis Compliance Board’s time and effort charges, which cost licensees $111 per hour for regulatory tasks performed by the board’s staff, including mandated inspections, audits, and correspondence. Although some fees have been recently rolled back, Will Adler of the Sierra Cannabis Coalition said that even if the time and effort revenue is dedicated to education, the system could be counterproductive.
“The idea of additional fines or additional fees adds additional good to the pile for education — I think it’s misguided,” he said. “At this point, the additional fines and fees could be trying to kill that golden goose that is the cannabis industry.”
Judah Zakalik, a chairman for cannabis company Congerium LLC, said in a phone interview with The Nevada Independent in July that high taxes give the illicit marijuana market an advantage over the regulated cannabis industry.
“I think if taxes are too high, that will just lead to prices going up which is going to lead to the black market thriving more,” Zakalik said. “That’s tough because that’s a competitor that we have as legitimate business people that is very difficult to compete with.”
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