Governor Sandoval Calls For 10 Percent Marijuana Tax
Governor Brian Sandoval's proposed budget of $8.1 billion is the largest in Nevada's history, and a 10 percent increase over the current budget of $7.3 billion.
Governor Brian Sandoval's proposed budget of $8.1 billion is the largest in Nevada's history, and a 10 percent increase over the current budget of $7.3 billion. The growth is a result of growing revenue. Sandoval's plan calls for one new tax, which he announced during his fourth and final State of the State Address.
"My budget includes one new source of revenue, a 10 percent excise tax on all retail sales of recreational marijuana," Sandoval said. "The proceeds of this tax will be invested exclusively in education."
The excise tax is projected to generate $69.3 million over the next two years. The tax is in addition to the 15 percent tax on wholesale transactions. In total, fees and taxes from all marijuana sales budgeted for the Distributive School Account is $99.2 million. The extra money is going into a growing bucket of school funding that could increase statewide programs.
"Now we have a combined and sort of dedicated revenue stream to build those investments over time, where as before we would have to move some money around," Steve Canavero, Superintendent of Public Instruction said.
Sandoval made the decision to add the tax, as a result of voters approving Question 2, which approved the legal use of recreational marijuana.
"While I did not support it, I respect the will of the voters who did," Sandoval said.
Will Adler is the Executive Director of the Nevada Medical Marijuana Association. He says Nevada lawmakers should look at states like Colorado and Washington before deciding what the tax rate should be.
"If you tax it too high, all the sales will go to the black market but if you tax it too low, the state of Nevada feels cheapened," Adler said. "So, there's a balance in between there and I'm sure the legislature and the Department of Tax and the industry will find it."
Adler says he does not oppose any new taxes on the drug, but says the governor's proposal might be pushing the limit.
"15 percent excise tax on the wholesale value, plus 10 percent at the retail, plus another 8 percent for the existing sales tax. It's starting to look like a big tax," Adler said.
Since the law is brand new to Nevada, regulations have not been written either. Sandoval says he will create a task force to implement Question 2, to fulfill the requirements and "without compromising Nevada's commitment to public safety".
"I will ask regulators to limit the sale of marijuana products and packaging that appeal to children or may be mistaken for candy," Sandoval said.
Recreational marijuana became legal January 1, and while many regulations have not been put in place, Adler thinks the state will do it the right way, comparing it to gaming.
"Overall, I think it's going to be something to work with because Nevada has an opportunity here and they're going to take it in one form or another," Adler said.
The 79th Legislative Session begins February 6, and several bills regarding recreational marijuana will be on the table for lawmakers. Ultimately, it is the legislature that will determine the tax rate and regulations.
"Let's work together to make sure Nevada's market for legal marijuana is restricted, responsible, and respected." said Sandoval.