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The Nevada Department of Taxation (NDOT) recently released sales and tax data from the state’s legal cannabis market for October and November 2020. Total retail sales jumped to a new record in October, then declined in November, in line with trends in Las Vegas tourism. Tax collection data indicates that wholesale trading and transfers expanded in October, but contracted dramatically in November. Combined with the upward trend in Nevada’s Spot Price during that period, wholesale tax data and strong retail sales suggest that supplies in the state are tightening.
Data from the Las Vegas Convention and Visitors Authority for October and November shows that sales trends in those months corresponded to tourism trends. Over 1.85 million tourists visited Las Vegas in October, up from the over 1.7 million visitors counted in September. October’s Las Vegas visitor numbers, like cannabis sales that month (at least so far), were the peak for 2020. Tourist volume slipped in November along with sales, to over 1.51 million visitors counted.
We have noted before that sales in Nevada during the summer of 2020 indicated significant expansion of purchasing by locals, as tourism was extremely depressed at that point. Recent historical data shows that in normal circumstances anywhere from between about 3.2 million and 3.7 million tourists visit Las Vegas in any given month, suggesting that sales could see a significant boost once the COVID-19 pandemic subsides and restrictions on businesses are lifted.
According to NDOT data, Nevada cannabis retailers generated the following monthly revenue figures in the most recent three months for which data is available. The sales numbers below include both retail sales of adult-use and medical cannabis.
Monthly sales numbers in October topped the prior peak of over $79.5 million recorded in August. Sales decreased in November; along with tourism to Las Vegas dropping, that month saw a resurgence of the virus in much of the country, with increased restrictions possibly impacting demand as well.
October 2020’s monthly revenue numbers are up 31.3% year-over-year; November 2020’s represent a 23.3% increase from the same month the year prior. The year-over-year increase observed in October exceeds the roughly 20% annual upticks documented in January and February this year, prior to the coronavirus pandemic hitting the U.S., while November’s is more in line with pre-COVID annual growth rates.
Of October’s sales total, almost $75 million was constituted by adult-use cannabis sales, or 91.3% of the total. Almost $67 million in sales to general consumers in November made up 89.3% of total sales.
Sales of cannabis to medical patients, as well as any revenues from other goods, increased to over $7.1 million in October, up from over $5.2 million in September. Medical cannabis patients then purchased over $8 million worth of product in November.
On the production side, Nevada’s 15% wholesale excise tax applies to transfers of product in both the adult-use and medical sectors of the state’s legal cannabis industry. Receipts from the state’s supply-side excise tax in October rose by 15.5% from the prior month, to over $5.98 million. They then dropped 30.3% in November, to over $4.16 million.
Nevada’s Spot Index has been on the rise since September 2020. In October, the state’s composite price climbed 6.6% from the month prior. It then rose by 8.1% in November. The dramatic contraction in wholesale trading and transfers, along with the sustained increase in the state’s Spot, suggests that supplies may be tightening in response to strong sales. However, future data releases from the state will bear out whether November’s observations are the beginning of a trend in that regard.