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August 07, 2018, Nevada
Two years ago when Nevada voters approved adult-use legalization, they were well aware of its socio-economic benefits. Advocates made it sure to canvass for the issue of legalization with its civic, social and financial gains. Before the public ballot took place, there were estimates that millions of dollars would be added to the income stream of the state. It’s been just over a year into legal retail operations and Nevada is expected to hit the $70 million mark from weed tax collections.
It’s a pleasant surprise
Nevada’s weed tax revenue is surprising everyone in a good way. Experts think the amendment made by the state lawmakers in the tax structure for local marijuana industry just before its inauguration is the major reason why the collections are going beyond everyone’s expectations.
Let’s have a look on Nevada’s very own tax structure for local medical and recreational cannabis industry. First, local cannabis growers have to pay 15% excise tax on wholesale marijuana sale. Then retail stores pay 10% excise tax on every product sold to a recreational customer. However, this retail excise tax is not applied to MMJ products. Finally, regular sales tax is imposed on both medical and recreational products.
It is pretty evident that the local cannabis industry is not heavily taxed. On top of that, MMJ products also get a significant tax relief. And this same tax structure has made it possible for the state to collect expectation-busting revenues. With the current situation of marijuana tax collection in the state, the authorities are positive that the revenue will eventually reach $70 million by the end of this year.
This amount of tax revenue is staggeringly 40 percent more than what was projected earlier as the collection from the first year of legalization. In the beginning, the state’s department of revenue estimated that it would raise $50.3 million cannabis tax by the end of the first year of legalization. This type of miscalculation is really rare, particularly when the actual amount of revenue surpasses the projections. Gov. Brian Sandoval has also issued new official projections for tax collection until July 2019. In the two years of legal retail sales, the state expects to collect a sum of $120 million in weed tax.
How will this revenue be spent?
Stakeholders are happy with the hefty amount of tax collections. A large chunk of this money will go back into streamlining the cannabis industry. The state and local governments will use up to $45 million of this revenue to fund different aspects of the legal weed program.
This amount will actually be deducted from the share allocated for the state’s public schools as per cannabis laws. The lawmakers added a provision while formulating the cannabis laws that the 15 percent wholesale tax would be used to fund the education sector. On the other hand, 10 percent retail excise tax collected from the sales of medical marijuana sales would be put in the state’s rainy day fund.