Photo by David Lusvardi on Unsplash
The Nevada Department of Taxation (NDOT) recently released sales and tax data from the state’s legal cannabis market for both July and August 2020. Total retail sales rose to reach new record highs for the state’s market in both months, assisted by a continuing increase in Las Vegas tourism. Tax collection data indicates that wholesale trading and transfers also expanded to near-record levels by August. However, despite the increase in sales, Nevada’s Spot Index continued to trend downward for the most part in July and August. More recently, we have observed a delayed response to expanded demand and wholesale flower prices have trended upward.
Data from the Las Vegas Convention and Visitors Authority (LVCVA) for July and August shows tourism to Nevada’s largest local cannabis market expanded significantly from June, but remained far below normal, pre-COVID levels. Over 1.43 million and 1.53 million tourists visited Las Vegas in July and August, respectively, up from the over 1.06 million visitors counted in June. Still, July’s tourist figures are down 61% year-over-year, while August’s are off by 57%. 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.
While tourism to Las Vegas remains down significantly compared to prior to the pandemic, August’s visitor figures are roughly 10 times those recorded in May. We pointed out in previous discussions of cannabis sales in Nevada that locals appeared to have increased purchasing significantly. With tourism bouncing back notably relative to earlier this year, visitors undoubtedly provided an additional boost to sales, helping them reach new historic peaks.
July 2020’s monthly revenue numbers are up 30% year-over-year; August 2020’s numbers represent an increase of 26.7% from the same month in 2019. The year-over-year increases observed in these months exceed the roughly 20% annual upticks documented in January and February this year, prior to the coronavirus pandemic hitting the U.S.
Of July’s sales total, over $70.2 million was constituted by adult-use cannabis sales, or 90.1% of the total. In August, adult-use consumers accounted for over $75.5 million in sales, or 95% of the total.
Sales of cannabis to medical patients, as well as any revenues from other goods, increased to over $7.7 million in July, up from over $5.2 million in June. Medical cannabis sales then subsided to just under $4 million in August. Just like prior months this year, July’s and August’s medical sales remain a far cry from the over $11.8 million recorded in March 2020.
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 July rose by 13.4% from the prior month, to over $4.81 million, from over $4.24 million collected in June. Collections from the wholesale excise tax expanded by another 8.7% in August, to over $5.23 million.
August’s collections from the wholesale excise tax are the second-highest recorded in the history of Nevada’s legal adult-use market, after those from November 2019, indicating that supply-side trading and transfers returned to – and in most cases exceeded – pre-COVID levels. 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.