Cannabis Taxes in Nevada: An Explainer

More than eight years after the decriminalization of possession of up to one ounce of marijuana for those in Nevada aged 21 and over, misconceptions regarding the budgetary implications of cannabis taxation persist. Two excise taxes, differences in distribution, and associated statutory changes have resulted in some confusion among both policymakers and the public.

This explainer seeks to clarify the status of cannabis law, tax policy, and related revenue in Nevada by exploring Nevada’s current cannabis use and tax policies and showing the inconsistency between the state’s projected and actual tax revenue in recent fiscal years.

Some key takeaways from our research include:

• Cannabis is currently legal in 39 states—24 on a recreational basis.

• In Nevada, cannabis is taxed at the wholesale and retail levels, and the vast majority of the tax revenue is designated to support K-12 education.

• Since 2018, the two taxes exclusive to cannabis have provided nearly $716 million in K-12 funding, plus additional school funding through other sales taxes.

• Among the nine western states collecting cannabis taxes, Nevada ranks fourth in per capita taxes collected.

• After four initial years of growth in cannabis tax revenues, they dropped in Fiscal Year (FY) 2022 and FY 2023, which is a pattern seen in other states.