Considering how much attention is given to the successes of legalized marijuana, you'd probably think it's a surefire way for state's to make money. But in Nevada, the cannabis business has taken a downward turn only one month after starting, and people are beginning to point fingers.
According to a report from the Nevada Department of Taxation, marijuana sales have dropped 20 to 30 percent since recreational cannabis became legal last July. The department conducted a survey of dispensaries to determine what the problems are, and the answer was obvious: Too much regulation.
One of the biggest issues is dispensaries don't have the supply to match the demand for marijuana. A huge contributor to this is the state's strict rules on who can distribute marijuana to retail stores. Liquor license companies are the only ones allowed to pick up cannabis grown by Nevada cultivators and deliver it to dispensaries. But there aren't enough licensees willing to deliver the marijuana to the stores, which causes a shortage in supply.
Dispensaries are also arguing that the marijuana taxes are too high. There's currently a 15 percent wholesale tax, a 10 percent excise tax and a sales tax that varies by county on marijuana. On top of that, dispensaries need to pay thousands of dollars for licenses to operate their businesses, which makes the operating cost incredibly high.
Another issue not cited by the dispensaries is the fact that under Nevada law, anyone can purchase marijuana, but they can only use it inside their own residence. That means the numerous visitors to the Las Vegas strip are allowed to purchase marijuana, but they can't enjoy it within their hotels, which possibly keeps them from purchasing from Nevada dispensaries.
A Nevada district court is set to make a decision this week regarding whether or not alcohol distributors should be the only ones allowed to deliver marijuana throughout the state. If they open up the distribution channels, it could help with the supply problem and lead to an uptick in sales.
But at least now marijuana advocates can point to a state where unnecessary regulations can kill the industry and can point to success stories like Colorado as a model for future states.