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The State of Cannabis & Hemp Mfg.: Nevada

By Eric Peterson / CompanyWeek | Aug 26, 2020

Cannabis & Hemp

A tourism juggernaut, Nevada saw voters legalize recreational cannabis in 2016 with their approval of Question 2. It made perfect sense: Sin City could expand its menu of adult allures to include edibles and smokables alongside gambling and other vices.

Nevada's cannabis industry has seen dynamic growth in the years since. The hospitality-heavy economic engine slowed in Las Vegas with the onset of the COVID-19 pandemic, and sales suffered in spring 2020 -- but the rebound has been swift.

Cannabis

The number of dispensary licenses, based on the population, is capped at 130 for 2020.

As of February 2019, Nevada had 96 active production licenses for cannabis manufacturing. Clark County had three-quarters of that total, with 72 licenses.

Total cannabis sales and tax revenue

Fiscal Year (FY) 2018

Taxable sales: $529,851,245

State tax revenue: $69,759,783

FY 2019

Taxable sales: $639,035,590

State tax revenue: $99,184,973

FY 2020

Taxable sales: $690,400,814 (est.)

State tax revenue: $106,142,272 (est.)

The 2019-20 growth represents an 8 percent year-over-year increase.

That said, COVID-19 had a big impact. In March-May 2020, sales were down nearly 30 percent from the same period in 2019.

March / April / May 2019: $59,748,815 / $54,674,578 / $62,019,961

March / April / May 2020: $43,372,730 / $41,953,236 / $51,426,150

That's a $40 million drop. It's safe to say the 2019-20 growth would eclipse 15 percent in a world without a pandemic.

June 2020 was the high sales month to date, with $66.8 million in sales, according to BDSA. Before that, the high month was January 2020, with $64,118,478 in total sales.

Nevada's population is about 3 million, but the state lured about 42 million tourists in 2019. That dynamic has driven some trends in format: BDSA estimated pre-rolls comprised 14 percent of all cannabis sales in Nevada in 2019, more than double Colorado's 6 percent. Disposable vapes are 25 percent of the vapes market (versus 12 percent in Colorado), and ingestibles are marginally more popular than they are in other states.

A June 2020 report prepared by BDSA for the Nevada Dispensary Association (NDA) found prices down by single-digit percentages in all categories of cannabis products. Pre-roll sales were down 10 percent from June 2019 as flower sales grew by 40 percent.

Las Vegas-based RCG Economics' “2020 Marijuana Economic & Fiscal Benefits Analysis: Nevada,” commissioned by the NDA, projects that total marijuana sales in Nevada will hit $956 million by 2024 based on pre-COVID-19 conditions.

The report found the industry employed 9,800 Nevadans in 2018, and projected that the job base would jump to 14,800 in 2024.

Both jobs in sales were concentrated in Clark County: The RCG report estimated that 80.4 percent of sales and 83.5 percent of jobs took place in the state’s most populous county and home to Las Vegas.

RCG’s estimate of economic impact in Nevada (2018-24): $10 billion.

Total taxes raised (2018-24): $1.39 billion

Hemp

Under the provisions of the 2014 U.S. Farm Bill, the 2015 Nevada Senate Bill (SB) 305, and the 2016 Nevada SB 396, the Nevada Department of Agriculture (NDA) oversees the state's hemp program.

The 2019-20 growing season was Nevada's fourth. The NDA said it grew by more than 600 percent since 2017 in a press release at the start of the season

2018 Nevada Hemp Certificate holders: 178 (115 growers, 47 handlers, 16 seed producers, )

2019 Nevada Hemp Certificate holders: 324 (216 growers, 61 handlers, 47 seed producers)

2020 Nevada Hemp Certificate holders: 179 (112 growers, 47 handlers, 20 seed producers)

In 2017, the crop was planted on 434 acres in the Silver State. According to the NDA, that was up to 1,128 acres in 2018 and 4,917 in 2019.

Photo courtesy Nevada Department of Agriculture.