Nevada lawmakers weigh scrapping the 15% wholesale cannabis tax for a higher retail tax as revenue falls

What happened

Nevada lawmakers are considering whether the state's cannabis tax structure needs an update as the industry matures, the Nevada Current reported. A subcommittee created during the 2025 Legislative Session presented its final report to the Interim Legislative Committee on Revenue last week.

The report studied the effects of eliminating the state's wholesale cannabis tax and raising the retail excise tax to make up the difference. According to the Nevada Current, the report stressed that it was only studying impact and was not recommending specific changes. The revenue committee took no action.

Why the state is looking at cannabis taxes

Revenue from Nevada's cannabis excise tax, which goes to the State Education Fund, peaked in 2021 and fell 40% by 2025, the Nevada Current reported. The subcommittee's report attributed the drop in part to price compression in a maturing market.

Prices have fallen sharply

The retail price of flower in Nevada went from $9.02 per gram in 2019 to $4.46 in 2025, a 50% drop, according to the report. Infused edibles fell from $19.77 per item to $11.81 over the same period, a 40% drop. Customers and transactions have increased even as prices declined.

Erica Scott, a Nevada Department of Taxation economist who chaired the subcommittee, said the falling prices could reflect several factors. She listed market maturation, more competition and production efficiencies, along with the availability of lower priced illicit products and intoxicating hemp.

How cannabis is taxed now

Since legalizing marijuana in 2017, Nevada has collected a 15% tax on the fair market value of wholesale cannabis and a 10% excise tax on recreational retail sales. Retail sales also carry state and local sales taxes ranging from 6.85% to 8.375%. Recreational buyers currently pay a combined retail rate of around 18%, and the wholesale tax is passed along in the retail price.

Cultivators have objected to the state's formula for fair market value, arguing it lags behind quickly falling prices and leaves them heavily overtaxed, the Nevada Current reported. Assemblywoman Danielle Gallant, a Henderson Republican, proposed in 2025 to eliminate the wholesale tax and raise the retail tax. Her bill did not advance, but study language was added to another cannabis bill, which created the subcommittee.

What the study found

Higher retail rates, especially in Clark County

The report found the state would need a retail tax of between 12% and 15% to offset the lost wholesale tax. Under that approach, consumers in Clark County, which has the highest local sales tax rate, would pay a combined 23% retail rate, with slightly lower rates elsewhere. Medical card holders are exempt from the state retail excise tax, so their prices would likely not change in the short term.

The state would also need to address how the change affects local governments, regulatory operations and the State Education Fund, which all receive money from the wholesale tax, according to the report.

What regulators expect

Scott said the assumption is that cultivators would keep the former 15% wholesale tax as profit rather than cut prices right away. Cannabis Compliance Board Executive Director Michael Miles told lawmakers it is "not guaranteed it's going to even out, but the idea is that it should even out." Miles also said Nevada is considered average or below average in cannabis tax rates nationally.

The intoxicating hemp question

The subcommittee estimated Nevada's intoxicating hemp market at about $45 million a year, though it noted data is scant. These THC edibles and drinks emerged from a 2018 federal Farm Bill loophole and are sold in smoke shops and gas stations. Clark County tried to crack down on unregulated products earlier this year, but Miles acknowledged it remains an ongoing issue. If the market continues, the subcommittee recommended tax parity between hemp and cannabis products.

What to watch next

• The revenue committee may revisit cannabis tax changes ahead of the 2027 Legislative Session.
• Several lawmakers asked for more data on consumer behavior and on what other states saw after raising retail excise taxes.
• Congress is expected to consider legislation to ban intoxicating hemp later this year, according to the Nevada Current.