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Regional & Urban Economics

MARIJUANA
ECONOMIC &
FISCAL BENEFITS
ANALYSIS:
NEVADA
PREPARED FOR:

NEVADA DISPENSARY
ASSOCIATION
AUGUST 2018

3900 Paradise Rd., Ste. 209
Las Vegas, NV 89169
Main 702-967-3188
Fax 702-967-3196
www.rcg1.com

Prepared By:

 Ms. Riana Durrett

August 1, 2018
Page 1

August 1, 2018

Ms. Riana Durrett, Esq.
Executive Director
Nevada Dispensary Association

521 S. 7th St.
Las Vegas, NV 89101
Re:

Marijuana Economic & Fiscal Benefits Analysis: Nevada ("the Study")

Dear Ms. Durrett:
RCG Economics LLC (“RCG”) is pleased to submit the referenced Study to the Nevada Dispensary
Association (“NDA” or “the Client”) relative to updating RCG’s Nevada Adult-Use Marijuana Economic & Fiscal
Benefits Analysis, July 2016 report. The purpose of the Study is to analyze the potential economic and fiscal
benefits of the marijuana industry (“the Industry”) on the Nevada economy.
The Study represents an analysis of the estimated and hypothetical economic benefits, and a portion of the
potential public fiscal benefits, associated with the Industry. These benefits include, but are not limited to,
increases in output (gross sales/spending), employment and wages/labor income, as well as sales and use
taxes resulting from industry activities in the market.
Our analysis of the Industry’s direct benefits on the state’s economy is based upon survey results provided
by Nevada firms that participate in the state’s Industry as well as data provided by various state and local
government agencies pertaining to the potential benefits noted above. Estimates of indirect and induced
benefits were prepared by RCG employing the widely used and widely accepted IMPLAN (Impact Analysis
for PLANing) economic benefits model. Our general fiscal analysis is also based on the above survey results
in addition to Nevada Revised Statutes and municipal tax information and formulas.
The Study is intended for the sole use of the NDA and it may be distributed to the press, to various interest
groups and to governmental representatives. Publication of the Study or any information contained therein,
in any manner, must explicitly indicate that it was prepared by RCG.
Standard Assumptions
This work scope was performed according to the “Standard Assumptions & Limiting Conditions” detailed in an
attachment to this letter.
Independence
We do not warrant the results or outcomes of our research on engagements, and our fees are not
contingent on the findings. As such, RCG is an independent advisory firm.

 Ms. Riana Durrett

August 1, 2018
Page 2
Use & Nature of Report & Methodologies
The distribution of the Study is limited to the NDA. If the NDA intends to reproduce and distribute the
Study, it must be reproduced in its entirety. If it intends to include the Study in a document used for the
offering of securities, the NDA agrees: (1) to provide RCG with a representation letter; (2) that legal counsel
will have advised it before the offering is made; (3) that the offering document complies with all applicable
local jurisdictions and regional agencies, State of Nevada and federal legal requirements; and (4) that no
reference will be made to our name in any promotional or offering materials without first furnishing us a
draft of the materials and then obtaining our written consent.
The results of RCG’s services under this engagement are the property of RCG. Copies of all documents
including writings and computer or machine-readable data, which describe or relate to the services
performed pursuant to this consulting assignment, or the results thereof, are the property of RCG and will
be provided upon request. However, the NDA will not provide RCG’s Inventions and Works to any third
party or use the same for the benefit of any third party, except with the prior written consent of RCG.
The Study is in the form of a narrative-report, along with any appropriate tables, graphs and maps. RCG is
not responsible for statements or interpretations made by the NDA relating to the Study.
All ideas, developments, computer models, methodologies, innovations, inventions and copyrightable work
(hereinafter “Inventions and Works”), which RCG conceived and were used during the period of the Study,
and which either (a) are within the scope of RCG’s businesses or investigations, or (b) are supported by the
use of materials, facilities or information paid for or provided by RCG are the exclusive property of RCG. In
this regard, the NDA agrees to credit RCG for its work.
Scope of Work
A. Survey
In cooperation with the Client, RCG designed and NDA management distributed a high-level survey to the
members of the NDA electronically. RCG analyzed the survey results for the purpose of comparing its 2016
report findings to the latest actual dispensary operations data, specifically regarding tax collections, gross
sales, wages and benefits and employment. We understand that the NDA represents 90 percent of
dispensaries in Southern Nevada and 80 percent of dispensaries statewide. Thus, it potentially has a broad
enough sample size to apply to the universe of dispensaries in the state.
B. Economic Benefits Analysis (“EBA”)
RCG estimated and updated three levels of economic benefits: direct, indirect and induced, comparing those
estimates with all available actual data. Whereas the concept of a direct benefit is relatively
straightforward, the concepts of indirect and induced benefits are powerful but often misunderstood tools
in economic analysis. Fundamentally, they are based on an extension of the direct expenditures by a
business’ operations and employment. Each type of benefit is briefly described below:
1.

Direct benefits include the revenue benefits generated by the Industry’s ongoing operations (annual
benefit), including output, employment and compensation (including fringe benefits and tip income)
paid to those employed as a direct result of the existence of the Industry.

2.

Indirect benefits are the wholesale purchases of goods and services resulting from the initial direct
spending generated by the Industry. For example, spending by the Industry (a direct benefit) will
cause Nevada businesses serving it to purchase products and services from their suppliers. The
portion of these purchases made within Nevada is counted as an “indirect” economic benefit.
Accordingly, inter-industry purchases associated with the facility are calculated as annual indirect
benefits in this analysis.

 Ms. Riana Durrett

August 1, 2018
Page 3
3.

Induced benefits are the output, employment and labor compensation growth generated by the
Industry’s employees as they consume goods and services within the state’s economy. Their Nevada
spending will cycle through the state’s economy and will be exchanged for goods and services
provided by Nevada businesses, thus “inducing” additional new spending (retail, groceries, gas, etc.)
and employment in Nevada.

C. Fiscal Benefits Analysis (“FBA”)
As part of this proposal, RCG, as noted above, prepared an updated FBA. In addition to the Study’s actual
state-level excise taxes, some of the other taxes that were considered as part of our FBA, if measurable,
included retail sales and use tax and modified business tax (payroll). The required data came from the
Nevada Department of Taxation and a survey of members of the NDA.
Like RCG’s EBA, our FBA does NOT estimate whether the Study potentially generates a “net” fiscal impact
to state and local governments associated with the Industry. Specifically, we did not estimate the public
service or other costs associated with the Industry (e.g., public safety, health and human services, schools,
parks, transportation).
If you have any questions, please do not hesitate to contact us at your convenience by phone at 702-9673188 ext. 401 or by email at jrestrepo@rcg1.com.
Regards,

RCG Economics LLC
Attachment

 Ms. Riana Durrett

August 1, 2018
Page 4
Attachment: Standard Assumptions & Limiting Conditions
1.

RCG prepared, from third-party information collected by RCG, as well as our internal economic and
fiscal models, databases and sources, the Study.

2.

The Client is responsible for representations about their plans and expectations and for disclosure of
significant information that might affect the ultimate realization of the analyses results.

3.

The results of RCG’s analyses apply only to the effective date of our Study. The success of the Client’s
plans will be affected by many related and unrelated economic conditions within a local, regional,
national and/or world context. We assume no liability for an unforeseen change in the local, regional or
national economies. Accordingly, we have no responsibility to update our report for events and
circumstances occurring after the date of our Study.

4.

Our Study is based on historical economic, dispensary operations and fiscal benchmark information.
Thus, variations in the future could be material and have an impact on our Study conclusions. Even if our
Study’s hypothetical assumptions were to occur, there will usually be differences between the
estimated and actual results, because events and circumstances frequently do not occur as expected,
and those differences may be material. These could include major changes in economic and market
conditions; and/or terms or availability of financing altogether; and/or major revisions in current state
and/or federal tax or regulatory laws.

5.

If our Study is reproduced by the Client, it must be reproduced in its entirety.

6.

RCG makes no representation or warranty as to the accuracy or completeness of the third-party
information contained in our Study, and shall have no liability for any representations (expressed or
implied) contained in, or for any omissions from, our materials.

7.

The working papers for this consulting assignment will be retained in RCG’s files and will be made
available for your reference. We are available to support the analyses, as required.

8.

Unless otherwise stated in our report, no effort was made to determine the possible effect, if any, of
future Federal, State or local legislation, including any environmental or ecological matters or
interpretations thereof.

9.

We did not perform an audit, review or examination or any other attest function (as defined by the
AICPA) regarding any of the third-party historical market, Industry and economic benchmarks or
demographic information used or included in the report; therefore, RCG does not express any opinion
or any other form of assurance with regard to the same, in the context of our Study.

 MARIJUANA ECONOMIC & FISCAL BENEFITS ANALYSIS: NEVADA
TABLE OF CONTENTS
Page
I. EXECUTIVE SUMMARY .................................................................................................................................................................... I-1
Economic Benefits Summary ........................................................................................................................................................ I-2
Fiscal Benefits Summary ................................................................................................................................................................ I-4
II. MARIJUANA INDUSTRY & SURVEY .......................................................................................................................................... II-1
A. The Industry ............................................................................................................................................................................... II-1
B. Marijuana Industry Survey ................................................................................................................................................... II-1
III. ECONOMIC BENEFITS ANALYSIS (“EBA”) ............................................................................................................................ III-1
A. Overview ................................................................................................................................................................................... III-1
B. Statement of Methodology ................................................................................................................................................ III-1
C. Detailed EBA Results ............................................................................................................................................................ III-3
IV. FISCAL BENEFITS ANALYSIS (“FBA”) .....................................................................................................................................IV-1
A. Overview ................................................................................................................................................................................... IV-1
B. Retail Sales and Use Tax Estimate ................................................................................................................................... IV-2
C. Wholesale & Retail Excise Tax Estimate ....................................................................................................................... IV-2
D. Commerce Tax Estimate ..................................................................................................................................................... IV-2
E. Modified Business Tax Estimate ...................................................................................................................................... IV-3
F. Business Licensing Fees ....................................................................................................................................................... IV-4

i

 MARIJUANA ECONOMIC & FISCAL BENEFITS ANALYSIS: NEVADA
LIST OF TABLES
Page
Table ES-1: Total Economic Benefits from Marijuana Industry: 2018 – 2024 ............................................................................ I-3
Table ES-2: Total Economic Benefits from Marijuana Industry: 2024 ........................................................................................... I-3
Table ES-3: Total Economic Benefits from Marijuana Industry: 2018 ........................................................................................... I-4
Table ES-4: Total Fiscal Benefits from Marijuana Industry: 2018 – 2024 .................................................................................... I-5
Table II-1: Active Marijuana Licenses, by Location and Type: Dec-17 .......................................................................................... II-3
Table II-2: Industry Expense Breakdown, by Selected Type: 2018 – 2024 ................................................................................. II-3
Table III-1: Total Economic Benefits from Marijuana Industry: 2018 – 2024.......................................................................... III-9
Table III-2: Total Economic Benefits from Marijuana Industry: 2024 ......................................................................................... III-9
Table III-3: Total Economic Benefits from Marijuana Industry: 2018 ......................................................................................... III-9
Table III-4: Economic Multipliers Relative to Marijuana Industry: 2018 – 2024 .................................................................... III-9
Table IV-1: Total Fiscal Benefits from Marijuana Industry: 2018 – 2024 ................................................................................. IV-5
Table IV-2: Applicable Sales & Use Tax Rates: 2018 ......................................................................................................................... IV-5
Table IV-3: Sales & Use Tax Revenues: 2018 – 2024 ........................................................................................................................ IV-5
Table IV-4: Wholesale & Retail Excise Tax Revenues: 2018 – 2024 ........................................................................................... IV-6
Table IV-5: Commerce Tax Revenues: 2018 – 2024 ......................................................................................................................... IV-6
Table IV-6: Modified Business Tax Revenue: 2018 – 2024............................................................................................................. IV-6
Table IV-7: Total Licensing Fee Revenues: 2018 – 2024 ................................................................................................................. IV-7
LIST OF FIGURES
Page
Figure III-1: Total Economic Benefits from Marijuana Industry: 2018-2024.........................................................................III-10
Figure III-2: Total Economic Benefits from Marijuana Industry: 2024 .....................................................................................III-10
Figure III-3: Total Economic Benefits from Marijuana Industry: 2018 .....................................................................................III-11

ii

 MARIJUANA ECONOMIC & FISCAL BENEFITS ANALYSIS: NEVADA
I. EXECUTIVE SUMMARY

R

CG Economics LLC (“RCG”) was retained by the Nevada Dispensary Association (“NDA”) to prepare an
economic & fiscal benefits study (“the Study”). The purpose of the Study is to analyze the potential economic

and fiscal benefits on the Nevada economy from the legalized marijuana industry (“the Industry”), especially in
relation to the start of adult-use, or recreational, sales in July 2017. Additionally, when possible, we relate these
findings to those found in Nevada Adult-Use Marijuana Economic & Fiscal Benefits Analysis (“the Original Study”)
performed in July 2016 in relation to the Initiative to Regulate and Tax Marijuana that passed as a statewide ballot
initiative in November 2016. The seven-year “study period” is 2018 – 2024 to facilitate comparisons of the two
studies. The results of the Study are based in large part on the results of a survey (“the Survey”) prepared by RCG.
The Study is comprised of two complementary analyses:
Economic Benefit Analysis (“EBA”)
Fiscal Benefit Analysis (“FBA”)
The EBA estimates direct, indirect and induced economic benefits associated with the Industry. These benefits
include, but are not limited to, increases in output (gross sales/spending), employment and wages/labor income
resulting from Nevada marijuana sales.
Our analysis of the Industry’s direct benefits on the Nevada economy is largely based on information provided by
firms participating in the marijuana market by means of the Survey that RCG prepared as well as data provided by
various state and local government agencies. RCG prepared estimates of indirect and induced benefits by employing
the widely used and widely accepted IMPLAN (Impact Analysis for PLANning) economic benefits model. Our general
fiscal analysis is also based on the results of the Survey as well as Nevada Revised Statutes and municipal tax
information and formulas.
Our FBA is based on the following sources of tax revenue related to the Industry for the seven-year period (“study
period”) from 2018 – 2024:
Retail sales and use tax revenue from the sale of marijuana.
Excise tax revenues from the wholesale of marijuana.
Excise tax revenues from the retail sale of marijuana.
State Commerce Tax revenue generated by retailers, manufacturers and cultivators with gross revenues in
excess of $4,000,000 for the tax year.

I-1

 MARIJUANA ECONOMIC & FISCAL BENEFITS ANALYSIS: NEVADA
Modified Business Tax (“MBT”) revenues by retailer, manufacturers, and cultivators with gross wages in
excess of $50,000 for the tax quarter.
Business license fees paid by retailers (not including cultivators or manufacturers). We also did not include
one-time application fees.

ECONOMIC BENEFITS SUMMARY
Summary of the Total Benefits of the Regulated Marijuana Industry: 2018 – 2024
RCG found that the forecasted spending of $4.9 billion (in 2018 inflation-adjusted dollars) has potentially sizable
effects on the Nevada economy. The benefits are broken into two parts: total seven-year study period and the year
2024. “Total economic benefits” are the sum of direct, indirect and induced benefits.
These total results apply to only the first seven years of the existence of the regulated market. The single year
(2024) is meant to show what the Industry should look like after reaching maturity.
The results of our EBA are as follows. The EBA is detailed in Chapter III.
To summarize the total results:
An estimated $8.0 billion of total output activity is projected to be generated for the Nevada economy
during the first seven years of adult-use marijuana regulation.
The Industry is forecasted to support approximately 67,500 person-years of jobs in Nevada during the study
period.
Marijuana regulation is expected to generate approximately $3.6 billion in direct, indirect and induced labor
income during the study period.
Table ES-1 illustrates the cumulative economic benefits of marijuana regulation in Nevada from the associated
direct, indirect and induced spending.

I-2

 MARIJUANA ECONOMIC & FISCAL BENEFITS ANALYSIS: NEVADA
Table ES-1: Total Economic Benefits from Marijuana Industry: 2018 – 2024
Impact Type
Direct Benefit
Indirect Benefit
Induced Benefit
Total Benefits
Multipliers

Spending/Output Employment Labor Income
$4,941,486,000
47,900
$2,611,560,000
$976,677,000
6,600
$325,634,000
$2,129,035,000
13,000
$667,731,000
$8,047,198,000
67,500
$3,604,925,000
1.63
1.41
1.38

Sources: RCG Economics, IMPLAN. Numbers may not calculate exactly due to rounding.
Direct spending also helps create additional spending. The total benefits are described using “multipliers”. For
example, “direct spending/output” would potentially result in a multiplier of 1.63 in the state economy during the
seven-year study period. This means that for every dollar spent on retail marijuana, an additional $0.63 would ripple
through the Nevada economy. These multipliers measure the total increase in output/economic activity, total
employment and labor income in the wider regional economy per dollar in output/spending, per new jobs created
and per dollar increase in earnings.

Summary of Total Initiative Economic Benefits: 2024
The total annual economic benefits, based on 2024 benefits, are the sum of the annual averages of direct, indirect
and induced benefits (see Table ES-2).
By 2024, an estimated $1.2 billion of total output activity is projected to be generated for the Nevada
economy each year due to marijuana regulation.
By 2024, the Industry is forecasted to support about 10,200 FTE jobs in Nevada per year.
By 2024, the Industry is expected to generate approximately $546.2 million in direct, indirect and induced
labor income each year.

Table ES-2: Total Economic Benefits from Marijuana Industry: 2024
Impact Type
Direct Benefit
Indirect Benefit
Induced Benefit
Total Benefits
Multipliers

Spending/Output Employment
$748,644,000
7,300
$147,968,000
1,000
$322,553,000
2,000
$1,219,165,000
10,200
1.63
1.41

Labor Income
$395,656,000
$49,334,000
$101,162,000
$546,153,000
1.38

Sources: RCG Economics, IMPLAN. Numbers may not calculate exactly due to rounding.

I-3

 MARIJUANA ECONOMIC & FISCAL BENEFITS ANALYSIS: NEVADA
Summary of Total Initiative Economic Benefits: 2018
The total annual economic benefits, based on 2018 benefits, are the sum of the annual averages of direct, indirect
and induced benefits (see Table ES-3).
In 2018, an estimated $989.7 million of total output activity is estimated to be generated for the Nevada
economy due to marijuana regulation.
In 2018, the Industry is expected to support about 8,300 FTE jobs in Nevada.
In 2018, the Industry is estimated to generate approximately $443.3 million in direct, indirect and induced
labor income.

Table ES-3: Total Economic Benefits from Marijuana Industry: 2018
Impact Type
Direct Benefit
Indirect Benefit
Induced Benefit
Total Benefits
Multipliers

Spending/Output Employment
$607,710,000
5,900
$120,113,000
800
$261,831,000
1,600
$989,654,000
8,300
1.63
1.41

Labor Income
$321,173,000
$40,047,000
$82,118,000
$443,338,000
1.38

Sources: RCG Economics, IMPLAN. Numbers may not calculate exactly due to rounding.

FISCAL BENEFITS SUMMARY
The following sources of tax revenue related to the Industry for the study period from 2018 – 2024 were analyzed:
Retail sales and use tax revenue from the sale of marijuana.
Excise tax revenues from the wholesale of marijuana.
Excise tax revenues from the retail sale of marijuana.
State Commerce Tax revenue generated by retailers, manufacturers and cultivators with gross revenues in
excess of $4,000,000 for the tax year.
Modified Business Tax (“MBT”) revenues by retailer, manufacturers, and cultivators with gross wages in
excess of $50,000 for the tax quarter.
Business license fees paid by retailers (not including cultivators or manufacturers). We also did not include
one-time application fees.
The results of our FBA are as follows. The FBA is detailed in Chapter IV.
I-4

 MARIJUANA ECONOMIC & FISCAL BENEFITS ANALYSIS: NEVADA

RCG found that the Industry could potentially produce in excess of one billion dollars in fiscal benefits to the State
and its local jurisdictions over the study period (see Table ES-4). The sales and use tax accounts for the largest piece
of the revenue pie with $349.4 million. The retail excise tax is projected to contribute another $336.2 million with
the wholesale excise tax adding $212.3 million. County and municipal license fees could add another $112.0 million,
while the MBT and commerce tax will add $19.1 million and $2.5 million, respectively.

Table ES-4: Total Fiscal Benefits from Marijuana Industry: 2018 – 2024
Tax
Estimated Total Sales and Use Tax Revenue
Estimated Wholesale Excise Tax Revenue
Estimated Retail Excise Tax Revenue
Total Nevada Commerce Tax Revenue
Total Nevada Modified Business Taxes
License Fee Revenue
Total Fiscal Benefit

Revenue
$349,434,000
$212,260,000
$336,232,000
$2,511,000
$19,073,000
$111,973,000
$1,031,483,000

Source: RCG Economics

I-5

 MARIJUANA ECONOMIC & FISCAL BENEFITS ANALYSIS: NEVADA
II. MARIJUANA INDUSTRY & SURVEY

L

egalized sales of adult-use marijuana began in July 2017, coinciding with the start of the 2018 fiscal year (“FY”).
The purpose of this economic and fiscal benefits analysis (“the Study”) is to quantify the benefits associated with

the marijuana industry (“the Industry”) from FY2018 through FY2024 (“the study period”), now that it has been in
operation for nearly a year. This also allows for a certain amount of comparison to the 2016 study Nevada Adult-Use
Marijuana Economic & Fiscal Benefits Analysis (“the Original Study”) prepared for The Coalition to Regulate Marijuana
Like Alcohol in July 2016 by RCG Economics (“RCG”) and the Marijuana Policy Group. To accomplish this, RCG
collected data from various secondary sources, as well as conducting a survey of member-firms (“the Survey”) of the
Nevada Dispensary Association (“NDA”). The NDA is the marijuana industry’s state-wide trade association. In this
section we briefly discuss the state of the Industry after one year of operation as well as the Survey.

A. THE INDUSTRY
The Nevada Department of Taxation (“Taxation”) supplied data on active marijuana licenses in the state, as reported
by local jurisdictions as of December 2017 (see Table II-1). As one would expect, the table shows that Clark County
has the greatest number of licenses by far, accounting for 74 percent of the state’s current supply, which is in line
with its share of the state population. Washoe County holds about 15 percent of the state’s licenses, also on par with
its 15 percent of state population. The remaining 11 percent of licenses were shared among Nye County, Churchill
County and Carson City. There is now one location in Elko County that was not in operation at that time the data
from Taxation was disseminated.
The table also shows the breakdown of licenses by type. The greatest number of licenses have been awarded to
cultivation facilities throughout the state, making up about 39 percent of the total. Production facilities account for
the second greatest share at 27 percent of licenses. Dispensaries represent only 20 percent of licensees. Much of the
reason for this is that municipalities have attempted to control the number of dispensaries in an effort to limit their
conspicuousness in communities. Cultivation and production facilities, on the other hand, are easier to obscure as
they tend to be located in industrial parks with less obvious signage.

B. MARIJUANA INDUSTRY SURVEY
As part of the Study, RCG conducted the Survey to better measure the benefits of the Industry to the State. The
Survey was disseminated via an online instrument and was conducted between April and May 2018. The terms of
our contract with the NDA limit our ability to share the detailed data gathered. This was done to protect the

II-1

 MARIJUANA ECONOMIC & FISCAL BENEFITS ANALYSIS: NEVADA
identities of the firms that participated; however, below we do discuss certain selected summary statistics regarding
the Survey. Additionally, RCG can furnish a blank copy of the Survey questions upon request.
Forty business entities participated in the Survey. They accounted for 60 of Nevada’s 309 marijuana licenses (19
percent of total). These firms were made up of cultivation, manufacturing/production, distribution and retail
facilities. The survey did not include any laboratory facilities. By license type, 33 percent of licenses were for
marijuana cultivation, 25 percent for production, 12 percent for distribution and 30 percent for dispensaries. These
figures suggest a slight skew toward cultivators and away from dispensaries.
These firms reported 1,319 total workers at the end of December 2017. They also reported total revenues of $182.5
million in calendar year 2018. This equated to an average of $5.1 million per firm for the calendar year for firms
reporting revenue. Based on results presented in the next section, the survey-taking firms account for
approximately 22 percent of total jobs within the Industry and 30 percent of its total output. These figures suggest
that the survey-taking firms produce slightly more than their fair-share of the Industry’s output.
Among the firms surveyed, RCG also found that adult-use, or recreational use, made up 63 percent of reported sales,
with medicinal sales accounting for the remaining 37 percent.
RCG found that many firms in the Industry did not hire their own workers. This was done to better comply with
federal laws, which still prohibit the use of marijuana. Based on the Survey, we found that 32 percent of firms relied,
at least in part, on employment agencies and other outside firms to employ their workers.
Regardless of who employed workers, RCG asked respondents whether they had plans to use more workers in the
next fiscal year. Seventy-six percent of firms reported that they were, indeed, planning on hiring additional workers,
compared to 24 percent that had no plans to do so. This suggests at strong growth in the Industry over the next FY.
Also as part of the survey, RCG asked firms to provide a breakdown of their expenses. There were enough responses
to provide a partial set of results, which are based on the survey and the results of the analysis discussed in the
following section (see Table II-2). Figures are in 2018 dollars.

II-2

 MARIJUANA ECONOMIC & FISCAL BENEFITS ANALYSIS: NEVADA
Table II-1: Active Marijuana Licenses, by Location and Type: Dec-17
Location
Carson City
Carson City
Churchill
Fallon
Clark
Henderson
Las Vegas
Laughlin
Mesquite
North Las Vegas
Spring Valley
Nye
Amargosa Valley
Beatty
Pahrump
Washoe
Incline Village
Reno
Sparks
Sun Valley
Verdi
Washoe Valley
Total

Cultivation
4
4
0
0
88
3
46
1
1
37
0
11
1
1
9
17
0
9
6
0
1
1
120

Laboratory
0
0
0
0
8
0
8
0
0
0
0
0
0
0
0
2
0
0
2
0
0
0
10

Production
3
3
0
0
64
2
31
1
1
29
0
5
1
1
3
11
0
5
5
0
1
0
83

Distributor
4
4
0
0
23
0
15
0
1
7
0
3
0
0
3
4
0
2
2
0
0
0
34

Dispensary
2
2
1
1
47
5
35
1
1
4
1
1
0
0
1
11
1
4
4
2
0
0
62

Total
13
13
1
1
230
10
135
3
4
77
1
20
2
2
16
45
1
20
19
2
2
1
309

Source: Department of Taxation

Table II-2: Industry Expense Breakdown, by Selected Type: 2018 – 2024
Business Expense Type
Facility Rent/Lease Costs (if lease):
Payroll / Personnel Expenses
Marketing & Advertising Expenses
Electric Utility Expenses
Attorneys' Fees Expenses
Capital Outlay Expenses*
Total of Selected Expense Types**
Total Expenses

Total Costs
$206,167,000
$796,220,000
$123,207,000
$100,324,000
$80,061,000
$486,334,000
$1,792,313,000
$3,195,586,000

Annual Costs
$29,452,000
$113,746,000
$17,601,000
$14,332,000
$11,437,000
$69,476,000
$256,045,000
$456,512,000

*Note: Capital outlays based on first year of legalized sales and, thus, may overestimate future outlays.
**Note: Totals may not sum exactly due to rounding.
Sources: RCG Economics, IMPLAN

II-3

 MARIJUANA ECONOMIC & FISCAL BENEFITS ANALYSIS: NEVADA
III. ECONOMIC BENEFITS ANALYSIS (“EBA”)
A. OVERVIEW

T

he following pages summarize RCG’s findings and conclusions regarding the potential economic benefits
associated with the Industry to the State of Nevada between 2018 and 2024. Adult-use marijuana sales began

July 2017 at the start of FY2018.
The Study attempts to quantify these economic benefits to the state, based on the creation of jobs, as well as the
generation of wages and economic activity (output/spending).

B. STATEMENT OF METHODOLOGY
RCG estimated three types of economic benefits to the State of Nevada: direct, indirect and induced. The concept of
a direct benefit is relatively straightforward. However, concepts of indirect and induced benefits, while critically
important in assessing the totality of benefits associated with new economic activities, are often misunderstood in
economic analysis. Fundamentally, these secondary and tertiary benefits are based on an extension of the direct
expenditures/spending associated with adult-use marijuana purchases. Each type of benefit is briefly summarized
below.
Direct benefits are due to the retail purchases of marijuana; the jobs created to support the retail stores; and
the labor income (employee compensation, proprietor income and benefits paid) – essentially the direct
benefits associated with marijuana regulation.
Indirect benefits are the local purchases of goods and services resulting from the initial direct spending
caused by marijuana retail spending. For example, the retail dispensaries’ spending on marijuana cultivation,
office supplies, rent, utilities, food manufacturing and the like will cause suppliers to replenish inventories,
etc. These sales are counted as an indirect economic benefit.
Induced benefits are the output, employment and labor income growth generated by the employees of
marijuana retailers and their local suppliers as they consume goods and services in the Nevada economy.
Put another way, induced benefits are benefits from labor income spent by direct and indirect employees.
For example, a new employee to the area works as a salesperson at one of the marijuana retailers. The
portion of his or her personal income will be spent locally, will cycle through the region, and will be

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 MARIJUANA ECONOMIC & FISCAL BENEFITS ANALYSIS: NEVADA
exchanged among local merchants; thus, inducing additional new spending (retail, food, gas, etc.) and
employment in the region.
Estimates of the direct, indirect and induced benefits to output and employment benefits as well as direct labor
income benefits, are based on results from the widely accepted IMPLAN (IMpact Analysis for PLANning) economic
input-output model. The IMPLAN model has been in use since 1979. The model accounts closely follow the
accounting conventions used in the “Input-Output Study of the U.S. Economy” by the U.S. Bureau of Economic
Analysis. The results show the benefit of the Industry on overall economic activity and employment. This EBA was
prepared under various limiting assumptions acknowledged and presented herein:
Substitution Effects: This analysis does not factor in any changes to purchases of other goods and services on
which marijuana expenditures might alternatively have been spent. Without factoring in consumers’
substitutions between goods and services, the EBA measures economic benefits of the Industry to the
Nevada economy.
Supply/Demand Pooling: For all direct retail sales, Nevada requires that Industry demands be accommodated
in-state. However, for indirect demand, such as for cultivators, we have assumed that demands will be
accommodated in-state to the greatest extent possible. Thus, all needs that can possibly be met by in-state
producers/suppliers will be met by these producers/suppliers. If demand is greater than supply, local
producers/suppliers will meet as much of that demand as possible and the remaining demand will be met
from outside the region. Since this minimizes imports, it would maximize local economic activity and the
resulting multipliers.
Economic Leakage: RCG’s analysis also recognizes as important, “leakage” from the study region (Nevada)
due to spending on purchases outside of the region. Economic leakage refers to revenues that flow out of a
local or regional economy to finance the purchase of goods and services from outside sources (imports)
instead of being purchased locally. In a highly developed and urbanized economy, like Los Angeles, for
example, a large share of the goods and services consumed are purchased from local producers and
suppliers.
In this Study, all estimates (except employment) are in inflation-adjusted 2018 dollars.
Three categories are estimated for each type of benefit. They include:
Changes to output/spending (equivalent to Gross Product)

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 MARIJUANA ECONOMIC & FISCAL BENEFITS ANALYSIS: NEVADA
Changes to employment (measured in terms of annual full-time equivalents, or “FTEs” for annual jobs or
person-years for the full 2018-2024 study period totals, which are equal to average FTEs multiplied by the
seven years in the analysis)
Changes to labor income (employee compensation, proprietor income and benefits paid)

C. DETAILED EBA RESULTS
The most straightforward way to understand the Industry in Nevada is by referencing taxable sales. This last point of
sale at a dispensary includes costs that have accumulated all the way through the supply chain, from the initial
cultivation of the plant to testing of the product, to production and manufacturing of marijuana-derived products, to
their distribution and finally to the sale to consumers.
RCG used this process as the basis for its methodology. The marijuana cultivation industry as it pertains to Nevada is
described as “Marijuana, grown under cover” by the North American Industry Classification System (“NAICS”). Both
IMPLAN and the State of Nevada use NAICS codes to classify industries as well, which makes it relatively
straightforward to analyze an industry. RCG followed the method IMPLAN prescribes for this type of verticallystructured analysis, which it calls “margining.” This method breaks an industry up into each part of its supply chain, as
described above, and examines the economic benefits associated with each step.
RCG intervened in the model to ensure that the steps would reflect the reality of the Nevada marijuana market. This
required RCG to change the retail output to the correct industry, based on the state’s NAICS for marijuana
dispensaries. We also set the local purchasing percentage to 100 percent for all industries within the chain, as
required of the industry by state law.
Results of this EBA update are based largely on state data from Taxation as well as the Survey. Taxation is reporting
statewide taxable marijuana sales at the retail level that effectively include all sales at dispensaries on a monthly
basis. There were ten months of data available at the time of this writing. Therefore, RCG extrapolated the last two
months of the fiscal year’s (“FY”) sales, based on a six-month rolling/moving average. This will likely result in a
conservative estimate of actual FY-end sales.
RCG also produced estimates for seven years in order to match the seven-year study period in the Original Study.
This helped make the current results more comparable to the Original Study. We also used the same growth
assumptions as in the Original Study. This means that RCG assumed a 70 percent capture of the black market in the
first year, growing to 90, then 95 percent in following year. There is some speculation that these capture rates are
overestimated based on the first year of sales. If the legalized market’s capture rate was actually lower than 70
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 MARIJUANA ECONOMIC & FISCAL BENEFITS ANALYSIS: NEVADA
percent in the first year, this assumption would underestimate future growth. However, we prefer to err on the side
of conservatism in this case and, therefore, accept these growth rates.
After the market reaches saturation at 95 percent, it is expected to grow with the rate of population growth, plus
tourist growth plus any shift in preferences. However, we assumed no shift in preferences for the term of this study.
Table III-1 shows the benefits of the Industry to Nevada for FY 2018 – 2024. Table III-2 illustrates the effects of the
Industry to Nevada for 2024 only. That year’s economic benefits should be a fairly good indicator of the annual
benefit of legal marijuana sales because it shows what the Industry should look like after sales have stabilized. In
general, the results of the Original Study were designed to be conservative. That appears to be borne out by these
results, based on the first year of data. Table III-3 illustrates the economic effects of the Industry on Nevada for
2018 only.
One note to include is that the output/spending figures include Sales & Use tax, as well as excise taxes collected, as
per IMPLAN1. The Sales & Use tax has been in use in Nevada for a long time and so was included in the Industry’s
spending/output as prescribed. However, the new excise tax is somewhat unique in that it only applies to the
cultivation industry in this one case—marijuana—and; therefore, is as yet unlikely to be captured by the IMPLAN
model. For this reason, we did not include the excise tax in the industry spending prior to the analysis to avoid
overestimating the marijuana market’s effects on the economy. We added the excise tax revenues to the direct and
total output only after the analysis.

Summary of the Total Benefits of the Regulated Marijuana Industry: 2018 – 2024
DIRECT BENEFITS
An estimated $4.9 billion of direct output/spending activity is projected to be generated in the Nevada
economy during the first seven years of marijuana regulation (see Figure III-1).
RCG forecasted that marijuana regulation will potentially support about 47,900 person-years of direct jobs
in Nevada. This estimate does not factor in indirect and induced jobs.
Marijuana regulation is estimated to generate approximately $2.6 billion in direct labor earnings (payroll)
during the seven-year study period.

1 Retail Margin: The markup to the price of a product when a product is sold through a retail trade activity. It is calculated as sales

receipts less the cost of goods sold. Sales and excise taxes collected by the retailer are generally shown as a part of the retail
margin (From IMPLAN glossary).

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 MARIJUANA ECONOMIC & FISCAL BENEFITS ANALYSIS: NEVADA
INDIRECT AND INDUCED BENEFITS
A projected $3.1 billion of indirect and induced output activity is forecasted in the Nevada economy from
the first seven years of marijuana regulation.
The Industry is projected to support 19,600 person-years of indirect and induced jobs in Nevada.
The Industry is estimated to generate approximately $993.4 million in indirect and induced labor income
during the seven-year study period.

TOTAL BENEFITS
“Total economic benefits” are the sum of direct, indirect and induced benefits.
An estimated $8.0 billion of total output activity is projected to be generated for the Nevada economy
during the first seven years of adult-use marijuana regulation.
The Industry is forecasted to support about 67,500 person-years in jobs in Nevada in the seven-year study
period.
Marijuana regulation is estimated to generate approximately $3.6 billion in direct, indirect and induced
labor income during the seven-year study period.

Summary of the Total Benefits of the Regulated Marijuana Industry: 2024
DIRECT BENEFITS
By 2024, an estimated $748.6 million of direct output activity is projected to be generated in the Nevada
economy every year due to adult-use marijuana regulation (see Figure III-2).
RCG forecasted that by 2024, the industry will potentially support approximately 7,300 direct FTE jobs in
Nevada per year. This estimate does not factor in indirect and induced jobs.
By 2024, the Industry is expected to generate approximately $395.7 million in direct labor income per year.

INDIRECT AND INDUCED BENEFITS
By 2024, a projected $470.5 million of indirect and induced output activity is forecasted to be generated in
the Nevada economy each year.

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 MARIJUANA ECONOMIC & FISCAL BENEFITS ANALYSIS: NEVADA

By 2024, the Industry is forecasted to support 3,000 indirect and induced FTE jobs in Nevada every year.
By 2024, the Industry is estimated to generate approximately $150.5 million in indirect and induced labor
income per year.

TOTAL BENEFITS
“Total economic benefits” are the sum of direct, indirect and induced benefits.
By 2024, an estimated $1.2 billion of total output activity is projected to be generated for the Nevada
economy each year due to marijuana regulation.
By 2024, the Industry is forecasted to support about 10,200 FTE jobs in Nevada per year.
By 2024, the Industry is estimated to generate approximately $546.2 million in direct, indirect and induced
labor income each year.

Summary of the Total Benefits of the Regulated Marijuana Industry: 2018
DIRECT BENEFITS
In 2018, an estimated $607.7 million of direct output activity is estimated to be generated in the Nevada
economy due to marijuana regulation (see Figure III-3).
RCG calculated that the industry will potentially support approximately 5,900 direct FTE jobs in Nevada in
2018. This estimate does not factor in indirect and induced jobs.
In 2018, the Industry is expected to generate approximately $321.2 million in direct labor income.

INDIRECT AND INDUCED BENEFITS
In 2018, an estimated $381.9 million of indirect and induced output activity is expected to be generated in
the Nevada economy.
In 2018, the Industry is expected to support 2,400 indirect and induced FTE jobs in Nevada.
In 2018, the Industry is estimated to generate approximately $122.2 million in indirect and induced labor
income.
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 MARIJUANA ECONOMIC & FISCAL BENEFITS ANALYSIS: NEVADA
TOTAL BENEFITS
“Total economic benefits” are the sum of direct, indirect and induced benefits.
In 2018, an estimated $989.7 million of total output activity is estimated to be generated for the Nevada
economy due to marijuana regulation.
In 2018, the Industry is expected to support about 8,300 FTE jobs in Nevada.
In 2018, the Industry is estimated to generate approximately $443.3 million in direct, indirect and induced
labor income.
There is a caveat in the employment results. There are two reasons RCG did not report income per worker. It is
inappropriate to calculate income per worker as the ratio of total income benefits-to-total employment benefits.
First, IMPLAN calculates total jobs: full- and part-time. Because the results were largely based on the IMPLAN social
accounting matrix, these results reflect the same nature of full- and part-time job mixing. Due to the method and
tools that IMPLAN provides for the FTE (or person-year) job conversion, the apparent job-to-income ratio is not
meaningful.
Using a straight calculation for average labor income in 2024 yields a result of approximately $53,500 per worker
per year. However, every FTE is counted as one job per year by definition rather than total jobs per year as originally
calculated, which is approximately 1.1 jobs per FTE job. Therefore, using the FTE (or person-year) employment
figure results in an overestimate of average income per job. The second reason is that labor income includes
proprietor income and, therefore, does not reflect only employee compensation.
For example, imagine a retailer were to create two jobs – one 30-hour per week job and one 10-hour per week job. If
the 30-hour per week worker is paid $40,000 annually, while the 10-hour per week worker is paid $10,000,
annually, that would equate to an average of $25,000 per year over the two jobs. However, as an FTE, it would
equate to one job at $50,000 per year. This would incorrectly double the combined average annual wage for these
two employees from $25,000 to $50,000.

Multipliers
Table III-4 illustrates the output, employment and labor income multipliers associated with the Industry. Multipliers
are based on the “ripple effect” of economic change. They translate the benefits of a change in the direct variable on
the other variables. In other words, multipliers generally estimate the “waves” of economic activities’ or events’
direct output/spending, employment and labor income. The multipliers in the table show the ratio of total benefits to
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 MARIJUANA ECONOMIC & FISCAL BENEFITS ANALYSIS: NEVADA
direct benefits, based on the results of the IMPLAN model. For example, this table shows that for every dollar
“directly” spent on retail marijuana, an additional $0.63 of output/spending is generated (sum of indirect and
induced benefits) in the Nevada economy.

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 MARIJUANA ECONOMIC & FISCAL BENEFITS ANALYSIS: NEVADA
Table III-1: Total Economic Benefits from Marijuana Industry: 2018 – 2024
Impact Type
Direct Benefit
Indirect Benefit
Induced Benefit
Total Benefits
Multipliers

Spending/Output Employment Labor Income
$4,941,486,000
47,900
$2,611,560,000
$976,677,000
6,600
$325,634,000
$2,129,035,000
13,000
$667,731,000
$8,047,198,000
67,500
$3,604,925,000
1.63
1.41
1.38

Sources: RCG Economics, IMPLAN. Numbers may not calculate exactly due to rounding.

Table III-2: Total Economic Benefits from Marijuana Industry: 2024
Impact Type
Direct Benefit
Indirect Benefit
Induced Benefit
Total Benefits
Multipliers

Spending/Output Employment
$748,644,000
7,300
$147,968,000
1,000
$322,553,000
2,000
$1,219,165,000
10,200
1.63
1.41

Labor Income
$395,656,000
$49,334,000
$101,162,000
$546,153,000
1.38

Sources: RCG Economics, IMPLAN. Numbers may not calculate exactly due to rounding.

Table III-3: Total Economic Benefits from Marijuana Industry: 2018
Impact Type
Direct Benefit
Indirect Benefit
Induced Benefit
Total Benefits
Multipliers

Spending/Output Employment
$607,710,000
5,900
$120,113,000
800
$261,831,000
1,600
$989,654,000
8,300
1.63
1.41

Labor Income
$321,173,000
$40,047,000
$82,118,000
$443,338,000
1.38

Sources: RCG Economics, IMPLAN. Numbers may not calculate exactly due to rounding.

Table III-4: Economic Multipliers Relative to Marijuana Industry: 2018 – 2024
Impact Type
Multiplier

Spending/Output
1.63

Employment
1.41

Labor Income
1.38

Sources: RCG Economics, IMPLAN

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 MARIJUANA ECONOMIC & FISCAL BENEFITS ANALYSIS: NEVADA
Figure III-1: Total Economic Benefits from Marijuana Industry: 2018-2024
$9,000,000,000
$8,000,000,000
$7,000,000,000

2018 Dollars

$6,000,000,000
$5,000,000,000
$4,000,000,000
$3,000,000,000
$2,000,000,000
$1,000,000,000
$0
Spending/Output

Direct
Benefit

Indirect
Benefit

Induced
Benefit

Total
Benefits

$4,941,486,000

$976,677,000

$2,129,035,000

$8,047,198,000

Sources: RCG Economics, IMPLAN

Figure III-2: Total Economic Benefits from Marijuana Industry: 2024
$1,400,000,000
$1,200,000,000

2018 Dollars

$1,000,000,000
$800,000,000
$600,000,000
$400,000,000
$200,000,000
$0

Spending/Output

Direct
Benefit

Indirect
Benefit

Induced
Benefit

Total
Benefits

$748,644,000

$147,968,000

$322,553,000

$1,219,165,000

Sources: RCG Economics, IMPLAN
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 MARIJUANA ECONOMIC & FISCAL BENEFITS ANALYSIS: NEVADA
Figure III-3: Total Economic Benefits from Marijuana Industry: 2018
$1,200,000,000
$1,000,000,000

2018 Dollars

$800,000,000
$600,000,000
$400,000,000
$200,000,000
$0
Spending/Output

Direct
Benefit

Indirect
Benefit

Induced
Benefit

Total
Benefits

$607,710,000

$120,113,000

$261,831,000

$989,654,000

Sources: RCG Economics, IMPLAN

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 MARIJUANA ECONOMIC & FISCAL BENEFITS ANALYSIS: NEVADA
IV. FISCAL BENEFITS ANALYSIS (“FBA”)
A. OVERVIEW

T

he Industry is producing economic activity in Nevada, which will fiscally benefit state and local governments.
This FBA presents estimates of tax revenues potentially generated by the Industry for the seven-year period

from 2018 – 2024 (see Table IV-1). The FBA does not estimate the public service or other costs associated with the
Industry (e.g., public safety, health and human services, schools, parks, transportation and utilities).
These tax revenues discussed in this section will be produced via the following streams:
Retail sales and use tax revenue from the sale of marijuana.
Excise tax revenues from the wholesale of marijuana.
Excise tax revenues from the retail sale of marijuana.
State Commerce Tax revenue generated by retailers, manufacturers and cultivators with gross revenues in
excess of $4,000,000 for the tax year.
Modified Business Tax (“MBT”) revenues by retailer, manufacturers, and cultivators with gross wages in
excess of $50,000 for the tax quarter.
Business license fees paid by retailers (not including cultivators or manufacturers). We also did not include
one-time application fees.
RCG found that the Industry could potentially produce in excess of one billion dollars in fiscal benefits to the State
and its local jurisdictions over the study period. This figure is not directly comparable to the findings of RCG’s
Original Study because today’s tax structure has changed relative to two years ago. The retail excise tax had not yet
been suggested prior to the completion of the Original Study. Additionally, local sales and use tax rates have risen in
the last two years, increasing sales and use revenues as well. The licensing fee structure has been overhauled as well.
Finally, the Commerce Tax and the MBT tax collections are also higher now because the structure of the marijuana
market is different than assumed in the Original Study. That study assumed a competitive market within each sector
of the marijuana industry. However, with local jurisdictions limiting the number of dispensaries, revenues and
employment costs will be higher than originally anticipated on a per-store basis because each location will have a
greater market share than expected. In turn, each location will more easily break the MBT and Commerce Taxes’
floor thresholds.

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 MARIJUANA ECONOMIC & FISCAL BENEFITS ANALYSIS: NEVADA
B. RETAIL SALES AND USE TAX ESTIMATE
In Nevada, retail sales are subject to a combined minimum tax rate of 6.85 percent plus various county option taxes.
Not all counties have chosen to enact a county option sales and use tax. The revenues generated from the combined
minimum tax go to the State General Fund, school funds and city/county relief funds. This FBA does not estimate the
total amount of tax revenue redistributed back to each county. The sales and use tax analysis herein is focused on
revenue generated by the components of the minimum tax rate and the aggregated county option taxes (see Table
IV-2).
RCG calculated the sales and use tax benefits based on the taxable retail sales reported by Taxation and projected
by RCG as described above. Based on these annual sales, we applied a share to each county based on its share of
marijuana licenses in the state. RCG then applied each county’s tax rate to its sales to calculate the revenue
produced in each county by retail marijuana sales. This method weights the sales and use revenues by each county’s
tax rates.
The total estimated retail sales and use tax revenues generated in Nevada by the Industry is projected at $349.4
million during the study period. Of that total, the estimated county option sales and use tax revenue generated by
Nevada’s counties is $57.9 million (see Table IV-3).

C. WHOLESALE & RETAIL EXCISE TAX ESTIMATE
A 15 percent excise tax is applied to the sale of marijuana by cultivation facilities in the State. The tax is projected to
generate $212.3 million over the seven-year period. An additional 10 percent excise tax is applied to the sale of
marijuana by a dispensary in the State. The tax for this excise tax is projected to generate $336.2 million during the
study period. Altogether, the two excise taxes are projected to generate a total of $548.5 million dollars over seven
years (see Table IV-4).
These figures are based on Taxation statistics over the first 10 months of FY2018. As with the Industry’s taxable
retail sales, the final two months of the year were based on a rolling average. The subsequent years’ values were
calculated based on the same growth rates as used for taxable retail sales as well.

D. COMMERCE TAX ESTIMATE
In Nevada, a tax is required to be paid by a business entity engaging in business in the State. The so-called Commerce
Tax is applied to the “amount obtained by subtracting $4 million from the Nevada gross revenue of the business

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 MARIJUANA ECONOMIC & FISCAL BENEFITS ANALYSIS: NEVADA
entity for the taxable year and multiplying that amount by the rate set forth in NRS 363C.310 to 363C.550,
inclusive, for the business category in which the business entity is primarily engaged” (NRS 363C.300). Under NRS
363C.097 “the business entity shall be deemed to be primarily engaged in the business category in which the highest
percentage of its Nevada gross revenue is generated.”
RCG’s Commerce Tax analysis is focused on the revenue generated by marijuana businesses that are retailers,
manufacturers, distributors and cultivators or a mix of these four types of marijuana businesses. The Survey shows
that because many of these firms are vertically integrated, the industry that is applicable is the retail industry, which
carries the highest tax rate among these industry types. RCG used results from the Survey we conducted to
calculate these results. The Commerce Tax is calculated by fiscal year, which spans July to June in Nevada.
Therefore, the first set of Commerce Tax data, which were for FY2017 (July 2016 – June 2017), do not include
recreational marijuana sales, which began the next day. We conservatively doubled each firm’s reported revenues
from the Survey to increase this low figure, then applied the appropriate Commerce Tax rate based on the firm’s
NAICS classification. Based on this result, RCG calculated a weighted effective tax rate of 0.059 percent. Again, this
is a conservative estimate because we expect that the weighted effective tax rate to increase significantly once
recreational sales are included. However, the Commerce Tax is by far the smallest overall tax relative to the
Industry, producing less than one percent of expected tax revenues over the study period—a total of about $2.5
million (see Table IV-5). Thus, this conservative estimate will have a negligible effect on the total revenue estimate.

E. MODIFIED BUSINESS TAX ESTIMATE
In Nevada, the MBT is required to be paid by a business entity engaging in business in the State. The MBT is imposed
“on each employer at the rate of 1.475 percent of the amount by which the sum of all the wages, as defined in NRS
612.190, paid by the employer during a calendar quarter with respect to employment in connection with the
business activities of the employer exceeds $50,000” (NRS 363B.110.1). Businesses are entitled to subtract
modified business tax due by an amount equal to 50 percent of the Commerce Tax paid in the preceding year, and
the deduction may only be applied for any of the four calendar quarters following the end of the preceding for which
the Commerce Tax was paid (NRS 363B.110.4).
In the marijuana industry, as discussed above, RCG discovered that many firms do not directly employ their own
employees. In an effort to deal with federal law, many firms rely on outside employment agencies to “employ” their
workers. The marijuana firms, in turn, compensate those agencies for their employment services. However,
regardless of who technically pays workers, the workers are employed by some entity in the state and their labor is
subject to the MBT at some point. Therefore, it is not material to these calculations whether marijuana-selling firms
pay employees directly. If we have an estimate for total compensation, we can come up with a reasonable estimate
for the MBT.
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 MARIJUANA ECONOMIC & FISCAL BENEFITS ANALYSIS: NEVADA

As with the Commerce Tax, RCG obtained information on MBT tax payments by Industry firms. Based on the Survey,
we found that firms are paying an effective tax rate of approximately 1.29 percent on their payrolls. We expected
this number to be smaller than the 1.475 percent rate in the law due to the $50,000 threshold per quarter. RCG
applied this effective rate to the direct labor income estimates produced in the EBA (less proprietor income), then
deducted 50 percent of the expected Commerce Tax revenues. Our analysis has shown that total MBT revenue for
the Industry will potentially total $19.0 million over the study period (see Table IV-6).

F. BUSINESS LICENSING FEES
There are two types of licensing fees that the marijuana industry pays at the local level: application fees and licensing
fees. The application fees are one-time fees that municipalities require to set up a marijuana business. The licensing
fees are generally a recurring fee that allow these firms to continue operating within local jurisdictions. In this Study,
we focus on the latter type. The application fees are relatively small, and as one-time fees, do not accumulate over
time. The licensing fees; however, should be substantial.
The State allows municipal governments to tax marijuana firms at up to three percent of their total sales. Local
governments, in the meantime, have developed ordinances to take advantage of this ability. From our research, RCG
found that municipalities are planning on taxing sales on cultivators, manufacturers and retailers, generally at the
maximum allowable rate of three percent determined by the State. This three percent tax rate is only entering
implementation after roughly a year of the marijuana market’s operation. Therefore, RCG assumed no revenues
from these fees in FY2018.
RCG estimates that during the seven-year study period, the Industry will generate $112.0 million in Nevada
business licensing fees to various jurisdictions (see Table IV-7).

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 MARIJUANA ECONOMIC & FISCAL BENEFITS ANALYSIS: NEVADA
Table IV-1: Total Fiscal Benefits from Marijuana Industry: 2018 – 2024
Tax
Estimated Total Sales and Use Tax Revenue
Estimated Wholesale Excise Tax Revenue
Estimated Retail Excise Tax Revenue
Total Nevada Commerce Tax Revenue
Total Nevada Modified Business Taxes
License Fee Revenue
Total Fiscal Benefit

Revenue
$349,434,000
$212,260,000
$336,232,000
$2,511,000
$19,073,000
$111,973,000
$1,031,483,000

Source: RCG Economics. Numbers may not sum exactly due to rounding.

Table IV-2: Applicable Sales & Use Tax Rates: 2018
Description
Minimum Statewide Tax Rate
State Sales and Use Tax
Local School Support Tax
Basic City-County Relief Tax (city governments)
Supplemental City-County Relief Tax (city governments)

Tax Rate
2.00%
2.60%
0.50%
1.75%

Option Taxes
County Option Sales Taxes

0.0%-1.415%

Combined Sales & Use Tax

6.85% - 8.265%

Source: NV Department of Taxation.

Table IV-3: Sales & Use Tax Revenues: 2018 – 2024
Tax
State Sales and Use Tax
Local School Support Tax
Basic City-County Relief Tax
Supplemental City-County Relief Tax
County Option Sales Taxes
Total Sales and Use Tax Revenue – 7 Years

Sales and Use Tax
$85,116,000
$110,651,000
$21,279,000
$74,477,000
$57,910,000
$349,434,000

Sources: RCG Economics, IMPLAN, NV Department of Taxation. Numbers may not sum exactly due to rounding.

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 MARIJUANA ECONOMIC & FISCAL BENEFITS ANALYSIS: NEVADA
Table IV-4: Wholesale & Retail Excise Tax Revenues: 2018 – 2024
FY
2018
2019
2020
2021
2022
2023
2024
Total

Wholesale Excise
$26,104,000
$29,354,000
$30,523,000
$30,969,000
$31,380,000
$31,772,000
$32,158,000
$212,260,000

Retail Excise
Total Excise
$41,350,000
$67,454,000
$46,498,000
$75,852,000
$48,350,000
$78,873,000
$49,057,000
$80,026,000
$49,708,000
$81,088,000
$50,329,000
$82,101,000
$50,940,000
$83,098,000
$336,232,000
$548,492,000
Sources: RCG Economics, NV Department of Taxation. Numbers may not calculate exactly due to rounding.

Table IV-5: Commerce Tax Revenues: 2018 – 2024
FY
2018
2019
2020
2021
2022
2023
2024
Total

Industry Spending
$523,386,000
$588,545,000
$611,991,000
$620,937,000
$629,171,000
$637,026,000
$644,765,000
$4,255,821,000

Commerce Tax
$309,000
$347,000
$361,000
$366,000
$371,000
$376,000
$380,000
$2,511,000

Source: RCG Economics. Numbers may not calculate exactly due to rounding.

Table IV-6: Modified Business Tax Revenue: 2018 – 2024
FY
2018
2019
2020
2021
2022
2023
2024
Subtotal
Deduction
Total

Employee Compensation
$215,852,000
$242,725,000
$252,394,000
$256,084,000
$259,479,000
$262,719,000
$265,910,000
$1,755,163,000

MBT
$2,500,000
$2,811,000
$2,923,000
$2,966,000
$3,006,000
$3,043,000
$3,080,000
$20,329,000
$1,256,000
$19,073,000

Source: RCG Economics. Numbers may not calculate exactly due to rounding.

IV-6

 MARIJUANA ECONOMIC & FISCAL BENEFITS ANALYSIS: NEVADA
Table IV-7: Total Licensing Fee Revenues: 2018 – 2024
FY
2018
2019
2020
2021
2022
2023
2024
Total

Licensing Fees
$0
$17,656,000
$18,360,000
$18,628,000
$18,875,000
$19,111,000
$19,343,000
$111,973,000

Source: RCG Economics. Numbers may not calculate exactly due to rounding.

IV-7