Poor Ratio of Cannabis Cultivator to Dispensary is Not Helping Nevada’s Shortage of Marijuana

A poor ratio in Nevada of legal marijuana growers to dispensary stores is adding to the shortage of cannabis problem. The immediate issue facing the state is that the distributors cannot transport marijuana legally because they do not have the correct licensing yet, however a declared state of emergency should resolve that problem relatively soon. The lack of cultivators though could be a more long term problem.

Dispensaries in Nevada are facing a pot shortage and lost sales could result in less funding for the state’s schoolchildren.

Recreational pot is taxed at 33% to 38%, depending on local regulations. A 10% sales tax goes to the Nevada’s rainy day fund, but a 15% cultivation tax on cannabis sales goes to the public education budget.

If the supply problem isn’t remedied, it could take some serious bake sales to make up for the lost baked sales.

Nevada isn’t alone in allocating some of its pot tax revenue to education. Of the other four states where recreational marijuana is legal, Colorado, Oregon, and Washington all direct some funds to schools.

“In Colorado, we have more than two-and-a-half times as many cultivators as dispensaries, and in Washington, there are one-and-a-half more. In Nevada, there is a lower ratio, it is about one to one. Based on these numbers, it will put a big strain on supply because demand is about to grow tremendously,” he said.

It didn’t take long for legalized marijuana to run into problems in Nevada. It’s only been available since July 1, after the state was one of four to approve recreational pot use in November.

The industry has a lot of momentum and a projected worth of $50 billion by 2026, though anti-marijuana sentiments at the federal level could threaten that growth.

Despite the state’s budding industry having only a precious few days to capitalize on that momentum, the Nevada Dispensary Association estimates it generated $3 million in sales and $1 million in state tax revenue between July 1 and July 4 alone. The association added that Nevada is on track to pull in $30 million in revenues by the end of the year.

“It’s already affected business, not being able to re-stock. This is the game we play, but at least they let us play,” Reno dispensary owner Jeff Grossman told USA Today.

The supply problem has little to do with wilting plants and a lot to do regulations that give alcohol wholesalers exclusive distributor rights. Although 47 dispensaries obtained licenses to sell cannabis in Nevada, regulators have yet to approve any wholesalers’ distributor applications.

The Nevada Tax Commission is expected to vote Thursday on whether to expand the applicant pool beyond alcohol distributors, namely to those who already have clearance to distribute medical marijuana in the state.

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Source: MJFeed

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