July 29, 2019

Second Half of 2019 Will See Wholesale Tax Rates on Trim Decline Nearly 25%

For the second half of 2019, Nevada cultivators will be subjected to lower taxes compared to the first six months of the year, particularly on plant material sold and transferred for extraction and product manufacturing.

Nevada’s 15% excise tax on cultivators is calculated based on Fair Market Values (FMVs) for the various types of products sold or transferred internally by growers to processors or storefronts. The state Department of Taxation (NDOT) determines FMVs biannually. Cultivators are subject to a tax of 15% of the FMV for each pound, or other unit, of a respective product sold or moved to an associated license.

H2 2019’s FMV for flower was calculated at $2,300 per pound, down nominally from $2,303 per pound in the opening half of this year. Similarly, the FMV for “small bud” experienced a slight decrease, from $2,041 per pound in H1 to $2,000 per pound in H2, a decline of 2%.

While levies on flower and small bud will remain relatively stable for Nevada’s cultivators through the entirety of this year, significant reductions in the FMVs for various types of plant material destined for extraction will lighten the tax burdens of producers in H2.

The FMV for trim declined by 24.6% from H1 to H2, from $794 to $599 per pound. In the same span, the FMV for wet whole plants also fell by a comparable proportion – 24.1% – from $191 to $145 per pound.

FMVs for flower and trim approved for extraction have been set at $522 and $510 per pound, respectively, for H2 2019. Those figures are off by 38.6% and 17.3%, respectively, compared to those of the prior period.

As in the case of Colorado’s Average Market Rates (AMRs), Nevada’s FMVs are based on historical data – in this case on transactions from October 1, 2018 through the end of March 2019 – and do not necessarily reflect current market conditions accurately. It must also be noted that the methodology employed by NDOT in determining FMVs is different from that of Cannabis Benchmarks in calculating our price assessments.