A new Nevada state report confirms that the home to Sin City has been suffering a multiyear downturn in its cannabis trade, parallel to many other states that have seen marijuana sales slump since the end of the COVID-19 pandemic and quarantine-era government stimulus checks. But it also predicts a brighter tomorrow, with a shrinking illicit market long-term, which will mean growth for legal cannabis businesses.
The report, issued by the Nevada Cannabis Compliance Board and authored by consulting firm TPMA, found that legal marijuana sales in the state have seen a “noticeable decline since the industry’s peak in 2021.”
“Following overall market trends, monthly sales peaked in April 2021, followed by a slow decline and a recent leveling out,” TPMA reported. “While sales appear to have leveled out in the short term, projections … show a reversal of that trend, with growth estimated to continue through 2030, as well as a projected increase in the number of consumers.”
Market contraction
Monthly sales in April three years ago were about $95 million; that has since taken a nose dive to about $68 million as of Sept. 2023, the report noted.
The number of registered medical patients also decreased, falling 14% to 12,169, although medical sales typically comprise less than 1% of the overall cannabis market.
Taxable cannabis sales haven’t risen significantly since then either, according to data from the Nevada Department of Taxation. In June, adult-use and medical marijuana sales combined were $69.3 million, with monthly averages in the $70 million range. There was a sales bump in February – to $82.9 million – after the market faced a low point of $54.9 million in sales in December 2023.
One of the key challenges, according to the report, is that Nevada still has a significant illicit cannabis market, estimated to be worth roughly $242 million to $370 million. The state’s legal cannabis sales totaled $862 million in 2022.
The number of licensed marijuana businesses overall in Nevada dropped 12% between 2021 and 2023, TPMA reported, falling to 665 companies from a high of 754 in 2022. All license categories except retail dispensary reported declines. Licensed retailers increased from 84 in 2021 to 100 in 2023.
Despite fewer operators, production has continued to grow. The remaining cultivators ramped up production, to the point that the state is producing more cannabis goods than ever even as the market contracts, TPMA reported. Average monthly harvests in 2022 and 2023 “were nearly double” those of 2020 and 2021, reaching more than four million pounds last year.
The total estimated cannabis demand in Nevada, the report found, is between 3.2 million and 4.4 million pounds per year.
National confusion?
The report also offered several policy recommendations for Nevada regulators, before spinning off on an inaccurate tangent into federal marijuana reform and the ongoing rescheduling process by the Drug Enforcement Administration, through which cannabis could be moved from Schedule I to Schedule III.
The authors of the TPMA report appeared to conflate the rescheduling process with “de-scheduling,” which would remove marijuana from the list of controlled substances altogether, and with “federal legalization,” which multiple cannabis attorneys noted is not accurate.
Specifically, the report suggested that rescheduling would create a new “national cannabis marketplace” that would lead to the “elimination of state lines” for marijuana companies and cause an “explosion of cross-state commerce,” something that attorneys say is not true.
“The Compliance Board seems to equate the currently proposed rescheduling of cannabis with full de-scheduling, even though they are not remotely the same thing,” said Jason Horst, a California-based cannabis attorney and former president of the International Cannabis Bar Association.
“There is currently no serious movement towards descheduling of cannabis, which would decriminalize the plant at the federal level,” Horst said. “The vast majority of the Board’s analysis is unrelated to … how the legal landscape in the national cannabis market is actually poised to change. Ironically, the Board fails to even mention the one practical impact that most agree rescheduling will have on current state markets: the elimination of the federal tax burdens imposed by IRS Code 280E.”
The Nevada CCB noted in an emailed statement that TPMA authored the report, not the board, but noted that its staff had “connected with TPMA to add clarification that the legalization section reflects a point in time, rather than ongoing national discourse.”
A spokesperson for the agency also noted that it “conducted its own review earlier this year which serves as the primary resource on federal rescheduling/descheduling for the CCB.”
TPMA did not immediately respond to requests for comment on Tuesday.
