By Nevada Considers First Cannabis Tax Overhaul Since 2017
Nevada lawmakers are weighing the state’s first cannabis industry tax reforms since legalizing adult-use cannabis in 2017. The proposal would eliminate the state’s 15% wholesale cannabis tax and raise the retail excise tax to offset the lost revenue.
Officials cited declining revenue from the state’s cannabis excise tax, which supports the State Education Fund. Tax revenue from the industry peaked in 2021 after four years of rapid growth and declined 40% by 2025.
The decline is “in part due to price compression attributed to a maturing market,” according to a new report by a committee tasked with reviewing potential tax changes. The report was presented to the Interim Legislative Committee on Revenue last week.
Currently, the state collects a 15% tax on the fair market value of wholesale cannabis and a 10% excise tax on retail sales, plus standard state and local sales taxes ranging from 6.85% to 8.375%.
The formula used to calculate “fair market value” has drawn complaints from cultivators, who argue the metric has lagged as prices fall, leaving them heavily overtaxed.
What the Numbers Show
The retail price of flower in Nevada fell from $9.02 per gram in 2019 to $4.46 in 2025, a 50% drop. Infused edibles dropped from $19.77 per item to $11.81 over the same period, a 40% decline.
“Overall the annual price trends indicate that Nevada’s cannabis market became less expensive for many of the product categories analyzed,” said Erica Scott, an economist in the Nevada Department of Taxation and chair of the subcommittee that produced the report.
Scott said the price compression could reflect market maturation, increased competition, production efficiencies, technological advancements, or greater availability of lower-priced products, including illicit products and intoxicating hemp.
The subcommittee’s report found the state would need to raise the retail tax to between 12% and 15% to offset the eliminated wholesale tax. The report emphasized it was studying impact only and not recommending specific changes.
The state would also need to address impacts on local governments, regulatory operations, and the State Education Fund, which all currently receive distributions from the wholesale cannabis tax.
What Comes Next
The idea was first introduced in a 2025 proposal by Assemblywoman Danielle Gallant (R) of Henderson. That bill never advanced out of committee, but language to study the proposal was amended into another cannabis bill that created the subcommittee.
“We are getting rid of one big tax a 15 percent excise tax on wholesale and increasing retail tax anywhere from 2 to 5 percent,” said Cannabis Control Board Executive Director Michael Miles in the report.
Miles said it’s “not guaranteed it’s going to even out, but the idea is that it should even out.” He noted Nevada is considered “average or below average” on cannabis taxation nationally.
Recreational consumers currently pay a combined retail tax rate around 18%. Under the restructuring, consumers in Clark County would pay a 23% combined retail sales tax rate, with slightly lower rates in other counties.
