Is Nevada Running Out of Weed?

Marijuana Sales Tax Revenue Nevada

The recreational marijuana industry has experienced some significant wins over the past couple of years, especially last November, when Nevada, California, Massachusetts, and Maine voted to legalize recreational marijuana. Nevada experiences many tourists annually. According to the LasVegasSun, "42.9 million people visited Southern Nevada in 2016, spending $35.5 billion – 16.3% more than in 2015, when they left behind $30.5 billion." These figures have stolen the attention of all kinds of people, and it's safe to say that Nevada is an ideal state in which to sell recreational marijuana.



Read on to find out more about Nevada marijuana laws and what the Nevada weed shortage is all about, and how it could affect the future of recreational marijuana sales

Is Nevada Really Out of Weed?

Recreational marijuana sales officially began this past July 1st, and nearly fifty dispensaries held distribution licenses to legally sell recreational weed. However, those same dispensaries don't have the authority to restock their inventories, as stated by BusinessInsider. This is because of a court order that Nevada's district judge signed off on when voters approved of the recreational marijuana legalization.

According to the Los Angeles Times, "It immediately became clear there was not enough supply to meet demand." Less than two weeks after recreational sales began, dispensaries started running out of products, according to the state's Department of Taxation. To make matters worse, Nevada only allows liquor distributors to distribute marijuana from the grow facilities to the dispensaries; therefore, dispensary owners cannot do anything as Nevada runs out of weed.

According to Reno Gazette-Journal, last November, liquor distributors were given exclusive rights to move marijuana from growers to retailers in Nevada for the first 18 months of legal sales. As stated by BusinessInsider, the intention of this was to "promote the goal of regulating marijuana similar to alcohol and protect liquor stores from losing business as the demand for recreational marijuana rises." Regardless, this rule confuses a lot of people, and Nevada is the only U.S. state that follows this kind of arrangement.

Once Nevada began selling out of nearly all marijuana products, Governor Brian Sandoval endorsed the Department of Taxation's call for a "statement of emergency." This endorsement allowed for additional licensed marijuana distributors beyond just liquor distributors, as stated by Reno Gazette-Journal.

Customers can still purchase recreational weed in Nevada, but until the distribution issue is completely worked out, the state may continue experiencing weed shortages. Nevada running out of weed would imply that consumer demand will not be met, leading to a decrease in sales and tax income for the state.

The Marijuana Distribution Issue

The Los Angeles Times reported, "The crisis has to do with distribution and state rules over who is allowed to transport marijuana." On Thursday, July 13th, the Nevada Tax Commission approved of the regulation that would allow for the issuing of additional distribution licenses to a larger pool of applicants, including those outside of the alcohol industry, according to BusinessInsider. Stephanie Klapstein, a spokeswoman for the Department of Taxation, said the following about this situation:

"A collapsed marijuana market would have far-reaching consequences. A 15 percent tax on the cultivation of marijuana generates revenue that the state spends on public education. A halt in this market will lead to a hole in the state's school budget."

The marijuana distribution issue affects more people than one would imagine, especially because such a large chunk of money goes towards Nevada's public school system. As a result, the Nevada weed shortage affects more than just tourism. A sudden decline in tax income for the local government could harm the state's ability to improve the public school system.

The issue Nevada ran into could have been avoided if they would have given more distributors the opportunity to apply for licenses and if all distributors were given more of an advanced notice to apply for a distribution license before the deadline. Ultimately, Nevada made a last-minute move that caused a lot of stress, and the statement of emergency endorsement may not be enough to match the state's demand long-term.

Potential Recreational Marijuana Earnings

marijuana sales tax revenue nevada

According to Forbes.com, "The Nevada Dispensary Association reported that at least $3-5 million in sales were recorded for the first weekend of recreational marijuana sales, and Nevada is on track to achieving $30 million in sales over the next 6 months." The demand for recreational weed is huge, and Nevada running out of weed would be catastrophic if they want their program to succeed.

The first weekend of recreational sales brought in over 40,000 retail transactions, and some dispensaries reported that they more than doubled their estimated sales, as stated by Fortune.com. As a result of Nevada's booming recreational marijuana marketaround $70 million is expected from marijuana tax revenue, which will be put towards Nevada's underfunded public education system, as also mentioned by Fortune.com.

Sink or Swim Situation

Since July, Nevada has made some changes regarding marijuana distributors; however, a lot is still on the line. If Nevada runs of out weed entirely, medical consumers will suffer without their products, countless people may lose their jobs, and less revenue will be put towards Nevada's public schools. Fortune.com predicts that Nevada could rake in $30 million by the end of 2017, and for this to happen, necessary adjustments must be made to Nevada marijuana laws. These adjustments will make it so that the demand for recreational marijuana will always be met, and that dispensaries will never fully run out of weed.

Read up on everything weed-related in the Silver State, starting with our Nevada page, which outlines everything you need to know about Nevada marijuana laws.