In 2021, Nevada Gov. Steve Sisolak pledged to use a large chunk of cannabis tax dollars to fund the state’s education system. It’s a move that has paid off for the state’s schools, with $147 million going to education in the fiscal year that ended in June 2022.
State officials recently announced that the cannabis industry in Nevada reported nearly $965 million in taxable sales over the last fiscal year, generating about $152 million to the state. The $147 million for education comes from a 10 percent retail tax on adult-use cannabis sales and a 15 percent wholesale tax on both recreational and medical marijuana sales.
The end result: the $147 million goes into the state education fund and is then distributed to schools across the state based on a set formula. The two taxes put about $100 million into education in the 2020 fiscal year that ended in June 2021, according to data from the state.
Nevada Sales Dropped Slightly From 2021
As with other states, sales in Nevada dropped from the highs of 2020-2021, when the COVID-19 pandemic resulted in skyrocketing cannabis dispensary revenue across the country. Nevada saw a relatively small drop, just 4 percent below the previous year.
Inflation also is playing a role, according to Tiana Bohner, a spokesperson for the Nevada Cannabis Compliance Board. She told the Nevada Independent that “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.”
While cannabis taxes can do a great deal of good, such as the hundreds of millions that Nevada has put into education, people in the cannabis industry argue that a line must be drawn between providing public good and over taxation. Judah Zakalik, chairman for cannabis company Congerium LLC, told the Nevada Independent that too high taxes give black market cannabis operations an advantage.
Zakalik said that “if taxes are too high, that will just lead to prices going up which is going to lead to the black market thriving more.”
Cannabis Tax Revenue in the Millions
As of September 2022, 19 states had instituted a cannabis tax. Five of those states – Connecticut, New York, Rhode Island, Vermont, and Virginia – have not yet started taxable sales. According to the Urban Institute, 12 states collected cannabis taxes in fiscal year 2022 (July 2021 through June 2022).
California ranked the highest in cannabis tax revenue, with $774.4 million, followed by Washington ($517 million), Illinois ($466.6 million) and Colorado ($353.7 million). Alaska collected the lowest amount at $28.9 million.
Each state uses the money in different ways. For example, Arizona spends about 33 percent on community colleges, while Colorado spends all of it on public school construction. Michigan uses a majority of its cannabis tax money from K-12 public schools and road repair and maintenance, while Washington spends half on health care programs.