Existing law imposes a 2% tax upon each wholesale sale of marijuana by a cultivation facility. SB 487 increases the tax on wholesale marijuana for medical use by a cultivation facility to 15%. Because SB 487 changes the tax on medical marijuana to align with the 15% wholesale tax on recreational marijuana cultivators, businesses do not have to separate medical and recreational plants. Further, this bill abolishes the tax on sales by a facility for the production of edible marijuana products or marijuana-infused products.
What Does SB 487 Do?
Essentially, this bill removes the 2% excise tax at each stage (Cultivation → (2%)Production → (2%)Distribution → (2%) Consumer) and imposes a flat 15% wholesale tax on cultivators. Additionally, it imposes an excise tax of 10% on retail marijuana store sales.
Where Will the Revenue from Marijuana Go?
The bill originally proposed that the revenue from recreational marijuana sales go to Nevada’s public education fund. However, the revenue will go to the state’s rainy day fund. This way no programs or funding would be reliant upon revenue that is prediction based, at this point. Additionally, lawmakers would have limited access to the funds until 2019, so there will be almost two years of untouched revenues to analyze before lawmakers decide how to allocate the revenue. This bill also deems $5,000,000 from the excise taxes each fiscal year to be sufficient to cover the costs of local governments for regulating the sale of any type of marijuana.
How Will SB 487 Affect Medical Marijuana Registration Certificates?
This bill allows the Department of Taxation to accept applications for medical marijuana registration certificates if: 1) if the application is accompanied by a letter from the incorporated city endorsing the issuance of the certificate; and 2) the applicant already holds a medical marijuana establishment registration certificate, unless no medical marijuana establishment certificate has been issued to a medical marijuana dispensary located in the incorporated city (on or before December 31, 2018). The Department shall issue one medical cultivation and one medical production certificate in each county. The Department is limited to 10 days per year to accept applications to operate medical marijuana establishments.
Each cultivation, production, and dispensary facility must submit a report to the Department that includes certain data, reported separately for each month.
These provisions became effective July 1, 2017.