New Report Estimates Over $1 Billion In Cannabis-Derived Taxes For Nevada
It won’t happen until 2024, but it looks like Nevada has hit the jackpot.
3 min read
Opinions expressed by Green Entrepreneur contributors are their own.
The marijuana sales numbers are out for the Silver State, and they’re pretty darn impressive.
According to a new report by RCG Economics LLC and The Nevada Dispensary Association (NDA), which represents 90 percent of dispensaries statewide, taxable cannabis sales surpassed $525 million in the period from July 2017 to July 2018. The sales generated total economic benefits of almost $1 billion. The report predicts that recreational marijuana sales should hit compounded sales of $4.9 billion (in 2018 inflation-adjusted dollars) by July of 2024.
This should generate direct, indirect and induced economic benefits of $8 billion over the seven-year period, supporting approximately 67,500 person-years of jobs (or the equivalent to work for 67,500 people for a full year) in the state.
In fact, it is anticipated that regulated cannabis sales generate approximately $3.6 billion in direct, indirect and induced labor income between 2018 and 2024, inclusive.
But how do less than $5 billion in sales turn into more than $8 billion in total economic benefits?
Well, as the experts behind the report explain, direct spending helps create additional spending. In fact, they have estimated that “for every dollar spent on retail marijuana, an additional $0.63 would ripple through the Nevada economy.”
“The report is an indication that Nevada’s strict regulations are working,” said Riana Durrett, the Executive Director of the Nevada Dispensary Association,”because the state is able to track all legal product and all sales in real time, which allows each level of government to collect the tax on those sales.”
By 2024, an estimated $1.2 billion of total output activity; and $546.2 million in direct, indirect and induced labor income are projected to be generated for the Nevada economy each year due to marijuana regulation.
All about the taxes
Beyond benefiting employees and entrepreneurs, cannabis sales will bring big bucks to the Battle Born State, which will be able to allocate to important things like education. According to the “Marijuana Economic & Fiscal Benefits Analysis: Nevada” report, procured exclusively by Entrepreneur, the total fiscal benefit (sales and use tax, property tax, and local licensing fees based on gross revenue) is expected to surpass $1 billion in the 7-year period.
To provide some perspective, and based on the inflation-adjusted median cost of building a school in the U.S., the $1 billion in tax revenue would build approximately (as per back of the envelope calculations) 53 elementary schools or 19 high schools.
“Legal marijuana sales numbers are significant because many people would prefer to buy tested products from safe sources, but what people don’t often hear about are the significant expenses and taxes paid at each level of government by the businesses. I hope we can continue to shed light on those dynamics as well as the economic benefits to the state,” Andrew Jolley, president of the Nevada Dispensary Association, told Entrepreneur.