Photo by Robert Bye on Unsplash
The Nevada Department of Taxation (NDOT) recently released sales and tax data from the state’s legal cannabis market for May 2020. Total retail sales bounced back in May, even as tourism to Las Vegas remained down by over 95% compared to typical levels for the second straight month. Nevada began reopening its economy in early May. Cannabis retailers, previously limited to sales via delivery only from late March through early May, were allowed to offer curbside sales and pickup services, which appears to have been the primary factor in boosting revenues.
Data from the Las Vegas Convention and Visitors Authority (LVCVA) for May shows tourism to Nevada’s largest local cannabis market remained extremely depressed. 151,300 tourists visited Las Vegas in May, up 41.5% from the month prior, but still down by 96% year-over-year. 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.
According to NDOT data, Nevada cannabis retailers generated over $51.4 million in revenue in May, up 22.6% from over $41.9 million in sales in April. Those figures include both retail sales of adult-use and medical cannabis. May 2020’s sales are down by 17.1% year-over-year, compared to over $62 million in cumulative revenue recorded in the same month in 2019. The months prior to March this year saw year-over-year sales increases of around 20%.
May 2020’s total retail revenues are in line with those recorded in late 2018 and early 2019, prior to a boost in sales in the spring of last year that saw retail revenues rise to around $60 million monthly. As noted above, however, the fact that sales topped $50 million with out-of-state tourism to Las Vegas still essentially nonexistent bodes well for the state’s market. It seems clear that allowing curbside pickup sales in early May provided a significant boost to Nevada’s industry, relative to being restricted to delivery sales in April. May’s sales also suggest an expansion of in-state demand relative to pre-COVID times, a trend observed in nearly every state with legal cannabis since the pandemic began impacting the U.S.
Of May’s sales total, almost $46.2 million was constituted by adult-use cannabis sales, or 89.8% of overall monthly revenues. March and April saw adult-use sales make up over 96% and 93% of all sales, respectively. May 2020’s retail revenues from the adult-use market are up by 18.1% month-over-month, but are down by 9% year-over-year.
Sales of cannabis to medical patients, as well as any revenues from other goods, increased by about 85% from April to May, from over $2.8 million to over $5.2 million, respectively. Just like last month, May’s medical sales are still a far cry from the over $11.8 million recorded in March of this year, despite the notable uptick.
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 May rose by 30.7% from the prior month, to over $3.73 million, from over $2.86 million collected in April. The increase in collections from the state’s wholesale excise levy indicates that the overall volume of product traded and transferred by cultivators to retailers and processors expanded notably in May.
May’s receipts from this tax are the highest since the almost $4.52 million collected in January 2020. From February through April, receipts from the wholesale excise tax hovered between about $2.6 and $2.9 million, indicating depressed wholesale activity during the uncertain period when the virus and accompanying restrictions arrived.
Nevada’s Spot Index continued to slide downward in May, despite the bounce back in sales. It fell by 2% over the course of the month. For May overall, the state’s composite average price per pound was down by 5.9% from the average price per pound in April.