Nevada’s 70-cent per gram tax on marijuana flower

Nevada taxes marijuana like Colorado, with a de facto weight tax (and a percentage-based retail tax).  Alaska taxes only by weight.  So three of the five states collecting marijuana taxes now are doing so by weighing every gram (Washington and Oregon tax only by percentage of retail price).  The Tax Foundation’s strange claim that taxing by anything other than price is “untenable” loses even more credibility.  After all, price taxes have almost no place in federal alcohol taxation.  States stick to volume for alcohol, too, in general.

It starts with a percentage rate. Nevada’s new tax law, passed by the Legislature and effective July 1, 2017, taxes all cannabis, medical and adult-use, at “15 percent of the fair market value at wholesale of the marijuana.” https://www.leg.state.nv.us/App/NELIS/REL/79th2017/Bill/5688/Text.

That’s in addition to the 10-percent retail tax, which applies only to adult-use product, not to medical cannabis.
“The Fair Market Value at Wholesale is utilized by the Department in levying the wholesale excise tax imposed pursuant to NRS 453D.500 on the sale of marijuana by a marijuana cultivation facility.” https://tax.nv.gov/uploadedFiles/taxnvgov/Content/FAQs/Fair%20Market%20Value%20at%20Wholesale_July_1_2017.pdf

“The Department determined that the excise tax upon wholesale sales of retail marijuana can effectively be levied upon seven product categories:
1. Flower
2. Small Bud
3. Trim
4. Wet Whole Plants
5. Immature Plants
6. Pre-Rolls
7. Seeds.”

The prices to be multiplied by the 15-percent rate include $2,145 per pound for flower and $631 per pound for trim. So the tax per gram is 70 cents for flower and 21 cents for trim.  (The per-pound tax, at 15 percent of $2,145, is $321.75, and there are some 453 grams in a pound.)  The chart, with several more categories, is at https://tax.nv.gov/uploadedFiles/taxnvgov/Content/FAQs/Fair%20Market%20Value%20at%20Wholesale_July_1_2017.pdf.

Whether these rates apply to non-vertically integrated transactions, I’m not sure. I don’t see a limitation, but would not be surprised to learn of one.  UPDATE August 2017:  They apply to all!

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Author: patoglesby

From 1982 to 1990, I worked in tax policy for Committees of the United States Congress. In recent years, I was Adjunct Lecturer at UNC-Chapel Hill's Business School and then Adjunct Professor at its Law School.

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