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Nevada Cannabis Industry Rings Up Nearly $1 Billion in Yearly Sales

In the fiscal year 2022, Nevada’s cannabis industry generated more than $965million in taxable sales. This is a small dip from last year’s $1 billion. 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. This figure represents a 4 percent drop in sales compared to the prior year when cannabis sales were over $1 billion.

Tiana Bohner (a spokesperson for Nevada Cannabis Compliance Board) stated that the decline in marijuana sales was due to both national and international economic factors. Due to the coronavirus outbreaks, marijuana sales soared in legalized markets throughout the nation. Many states saw a spike in cannabis sales due to coronavirus shutdowns. In some cases, this was partially due to the status of marijuana producers and sellers as essential businesses. This allowed these companies to stay open while many other shops were shut down.

“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.

Following the COVID-19 pandemic in which consumers wanted to go back to their families, restaurants, and other social activities, the sales dropped. With most states reporting records-breaking cannabis sales during the shutdowns of legal markets, marijuana sales soared. The cannabis market data analytics company BDSA said that in March sales were 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.

Nevada Cannabis Taxes Fund Education

The revenue generated from taxable cannabis sales in Nevada was $152 million during fiscal 2022. This includes $89 million of the 10% excise taxes on adult-use retail and $63 million for the 15% tax wholesale on recreational and medicinal marijuana. 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.

However, cannabis companies claim state taxes are excessive and that regulatory fees can be overwhelming when combined with declining sales and other economic factors like 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. Will Adler, Sierra Cannabis Coalition, stated that although some fees were reduced recently, it could prove counterproductive, especially if revenue from time and effort is used for education.

“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 was a chair for the cannabis company Congerium LLC. He spoke to us via phone. The Nevada IndependentIn July, it was revealed that the illegal marijuana market has an edge over the legal cannabis industry because of the high taxes.

“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.”