Last month, I read “Pew report details challenges in predicting pot revenue cautions against tying it to essential spending” by Michelle Rindels and the article stuck with me. It’s informative in highlighting the Pew Research Issue Brief, Forecasts Hazy for State Marijuana Revenue, August 2019. The brief has been covered by several media outlets since then.
At a glance, the central thesis — a critical funding item, like education, should not be dependent on a revenue source as volatile as cannabis — seems prudent. However, in reviewing the source material from Pew, there are lessons to be learned from neighboring states in allowing cannabis revenue to be prioritized for education.
Both Colorado and California account for any volatility by ensuring cannabis revenues are collected and segregated into a separate fund and then spent in the following year. Doing so ensures education is not subject to a revenue shortfall, even if cannabis tax collections fail to meet projections.
Nevada should adopt a similar system, which would help current legislators keep the promise they made to voters and prevent future legislators from looting education funds. If cannabis revenues exceed expectations and our schools get the money they need, surplus revenue should be preserved in an interest-earning rainy-day fund. If cannabis revenues fall short, then other sources could be tapped to fund education fully.
Nevada can learn something from the second critical issues raised by Pew as well. California has a robust black market despite a legal cannabis market because over taxation and regulation drives consumers to support it. Nevada has an opportunity, much it like it did with sports betting, to establish price points and conveniences that make the legal market for cannabis preferable to the black market.
Responsible regulation, taxation, and spending policies will make cannabis a dependable source of revenue for education going forward. Our firm sees Nevada as uniquely positioned to make cannabis an organic part of Las Vegas and Reno experience as cannabis becomes more mainstream nationwide. We also have an opportunity to become a national leader by nimbly adapting to the opportunities and challenges of this nascent and dynamic industry. If we do, then this industry will help us fund better-paid teachers, well-equipped schools, and rewarding educational opportunities to improve our ranking in the nation.
Glenn Truitt is the founding legal partner of Ideal Business Partners, a boutique firm that lifts up businesses with legal, financial, and strategic solutions. He worked with state regulators and officials, county administrators, and municipal leaders in Nevada and California to develop law and policy surrounding legalized cannabis.