RENO — Nevada took a gamble on recreational marijuana, and it’s paying off.
Dispensaries sold $27.1 million of pot in Nevada in July alone.
That's almost double what both Colorado and Oregon sold in their first months. It's almost seven times what Washington sold.
Banking on weed, Nevada made $10.2 million off the fledgling industry during the first month of sales in July, according to the Nevada Department of Taxation.
Of that, $6.5 million came from industry fees and $3.68 million came from tax revenue.
Gov. Brian Sandoval projected that, between its 2-year-old medical marijuana industry and the now upright recreational marijuana industry, the state could pull in approximately $100 million over the next two fiscal years from both taxes and fees.
The latest projection, however, is that the state will generate nearly $120 million from taxes over the next two years, according to Stephanie Klapstein, spokeswoman for the Department of Taxation.
Where does the money go?
The state reeled in $2.71 million from the 10% tax tacked on to the sale of all recreational marijuana sales at the register. Another $974,060 rolled in from the 15% wholesale tax, which cultivators pay for both medical and recreational marijuana.
Although Nevadans hoped much of the industry's revenue would go to the schools, only a portion will.
Initially, Sandoval proposed that the revenue from the sales tax would go to the schools, but he decided later to shift the money to the state's rainy day fund so that the education department’s budget was not leaning on a mercurial market. The rainy day fund can be spent on anything but is usually spared for emergencies.
Revenue from the 15% wholesale tax, which is tacked on at the cultivation level for both recreational and medical marijuana, goes towards paying for the cost incurred by the state and local governments. Any remainder thereafter goes to the state's School Distributive Account, which gives money to schools per pupil. Income from the industry fees will be treated the same way.
Where does the money come from?
The state Department of Taxation, which runs both the medical and recreational marijuana program, has received 333 applications for recreational marijuana establishment licenses and has issued 250 licenses, including 53 retail stores, 92 cultivation facilities, 65 product manufacturing facilities, 9 testing labs, and 31 distributors.
Of those 250 licenses issued, 203 are located in Clark County with the remaining distributed in Carson City and Nye and Washoe Counties. About a dozen dispensaries operate in the Northern Nevada. The application fee for all recreational marijuana licenses is $5,000 and actual license fees range from $10,000 to $30,000.
Although the big bucks are good news for the industry, it's not enough to distract from the embarrassing hiccup of the distribution issues it has had. The state still is in an embroiled court battle with alcohol distributors, who have thwarted all of the state's efforts to license additional recreational marijuana distributors.
Since July, the state has only been able to license a handful of recreational marijuana distributors, the only businesses allowed to deliver product to dispensaries for sale. As a result, many dispensaries have been struggling to stay stocked with supply.
"I think it’s fair to say that a number of the establishments struggled to get all of their inventory in stock, so I think it’s safe to say that it affected them, but I can’t quantify it,” Klapstein said.