Nevada Ballot Questions 2016: The Marijuana Initiative

Marijuana revenue Thus far two ballot questions in the 2016 general election have reached the qualifying status to be assigned numbers by the Secretary of State’s Office. [RGJ]  This means that they have achieved at least 55,234 valid signatures from registered Nevada voters, including at least 13,809 signatures from each of the four petition districts. (pdf )

The initiative to regulate and tax marijuana (Question 1) (pdf) isn’t quite a Fun for All blanket permission slip.  Marijuana may only be purchased from a licensed business; business owners are subject to state review confirming the business owners and business location are suitable; cultivation, manufacturing, testing, transporting, and selling marijuana is to be controlled by state licensing and regulation; selling or supplying marijuana to someone under 21 years of age remains illegal; and, individuals will have to be 21 or older to purchase marijuana. Additionally, driving under the influence remains illegal, and all marijuana sold in the state must be tested and labeled. If this sounds similar to the restrictions on the sale of alcohol, that’s because it is.   And, if this sounds like Nevada wants to emulate the statutes in Colorado, you’re probably right.  The revenue numbers for last October in Colorado were impressive:

“There are three types of state taxes on recreational marijuana: the standard 2.9 percent sales tax, a 10 percent special marijuana sales tax and a 15 percent excise tax on wholesale marijuana transfers. For August, Colorado collected $11.2 million in recreational taxes and fees and $2.0 million in medical taxes and fees, bringing the 2015 cumulative revenue total to nearly $86.7 million. In 2014, total marijuana revenue was $76.2 million.” [DenverPost]

Total taxes, licenses, and fees for Colorado were $61,372,376 in FY 2014-2015, increasing to $97,741,988 in FY 2015-2016. [CO rev dwnld]

Nevada would collect a marijuana excise tax (15%) in addition to sales taxes, and use taxes that apply to retail sales of tangible property. Tax revenues are to be used to pay for administration and regulation (state and local) with the excess remitted to the State Treasurer to be deposited in the State Distributive School Account.  There is a one time application fee of $5,000, an initial license fee of $20,000 and renewal fee of $6,600. Cultivation facilities would pay $30,000 for an initial license and $10,000 for renewal.  Other fees are listed in Section 12 (fee schedule) (pdf) of the initiative.  There’s nothing cheap or easy about setting up cultivation, transport, or sales of marijuana in this ballot initiative.  Before getting too enthusiastic about immediate effects and potential revenue, it’s probably time for a reminder that Nevada really doesn’t have statutory direct initiative:

“Citizens of Nevada may initiate statutes through the process of indirect initiative and constitutional amendments through the process of direct initiative. Once sufficient signatures have been collected, statutory initiatives are first presented to the Nevada State Legislature. If approved by the legislature and signed by the Governor, the proposed statute becomes law. If not, the law is submitted to voters at the next general election. However, upon the Governor’s recommendation (and approval), the legislature may propose an alternative statute to voters. Proposed amendments proceed directly to a vote of the people, but must be approved at two consecutive elections.” [Ballotpd]

This initiative is interesting not only as a revenue enhancement project for a state strapped by Constitutional prohibitions on income taxation, but also as something of a “reverse” wedge issue. Fiscal conservatives may find it an acceptable alternative to increases in business, sales, or property taxation.   Social conservatives may see in it the harbinger of doom, gloom, and social degeneration.   It will be interesting to see how this plays out in the 2016 Nevada general election.

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