A person buys marijuana at the Essence cannabis dispensary, Saturday, July 1, 2017, in Las Vegas. Nevada dispensaries were legally allowed to sell recreational marijuana starting at 12:01 a.m. Saturday. (John Locher, The Associated Press)

Nevada marijuana sales eclipse $33 million for August 2017

Nevada marijuana sales are sizzling.

Dispensaries sold more than $33 million in recreational cannabis products in August, the state’s second month of adult-use sales, according to The Cannabist’s calculations on tax data provided by a state official during a visit to Colorado last week.

While monthly tax revenue figures have yet to be officially released, Deonne E. Contine, executive director of the Nevada Department of Taxation, disclosed the tax collection data Friday during the Denver Marijuana Management Symposium. She confirmed the numbers with The Cannabist following her presentation.

The August totals represent a nearly 24 percent jump from the $27.1 million in sales logged in July.

Nevada collected about $4.8 million in tax revenue for medical and recreational sales during August, Contine said. Of that total, about $3.35 million was attributable to taxes collected on recreational marijuana products.

“Recreational sales have been a game-changer for us,” said Andrew Jolley, owner of The+Source, which operates two dispensaries, one in Las Vegas and the other in Henderson, where just last week the city council approved sales of recreational marijuana.

“Like Colorado (which implemented adult-use marijuana sales in January 2014), we saw an immediate demand from locals on July 1,” Jolley told The Cannabist on Monday. “Our (Las Vegas) store saw about a four-times increase in the number of customers overnight, and it pretty much stayed that way.”

Jolley, who also helms the Nevada Dispensary Association, attributed the August sales increase to market-expansion factors expected for a new retail sector: more stores, increased marketing and a better-informed public.

“I think you’re seeing the dispensaries (that) cater to tourists increase rapidly in the past three months as tourists understand that retail sales are allowed in Nevada,” he said.

At the two-month mark, Nevada’s market appears to be more robust than that of recreational marijuana trailblazer Colorado. Not adjusting for factors such as seasonality or number of stores in operation, Nevada’s $33.5 million in retail sales more than doubles the estimated $15 million in recreational sales made in Colorado during February 2014, its second month of retail sales.

Like Colorado, Washington and other states that legalized recreational use of cannabis, the most significant factor in Nevada’s initial sales growth will be the transfer of sales from the illegal market to the regulated market, said Adam Orens, a founding partner of the Denver-based Marijuana Policy Group, an economic and policy consulting firm specializing on the marijuana industry.

“Nevada, like Colorado and Washington, is entering a period where they will have very fast market growth,” Orens said. “(Nevada is) currently in a bit of a sweet spot, because California isn’t fully online yet.”

California, which passed a recreational marijuana legalization measure in November 2016, is expected to have legal adult-use sales starting in January 2018.

It’s unclear how much of the market California could leach from other recreational marijuana states, Orens said. However, Nevada’s market could be bolstered by a sizable tourist contingent that already likes to splurge on entertainment.

“I wouldn’t be surprised if those inter-month growth rates … go even higher in the coming months,” he said, noting that the projections would be dependent upon how smoothly the distribution channels are running.

Shortly after legal sales began on July 1, Nevada marijuana shop owners expressed concern about dwindling supplies amid a distribution bottleneck and subsequent legal battle. Nevada’s marijuana regulations gave liquor wholesalers exclusivity in distributing marijuana; however, none completed the licensing process by the time sales began.

Nevada regulators enacted emergency rules that opened up the distribution channels to non-liquor wholesalers. The distribution dispute is now before the Nevada Supreme Court.

The sales calculations made by The Cannabist and other publications are estimates, as the tax forms remitted to the state for the prior month’s sales could include variance based on incomplete or late returns.

Nevada officials have said they expect taxes levied on wholesale and retail marijuana sales to generate $119.5 million in revenue for the state during the next two years.

This story is developing and will be updated.