Bill to move cannabis wholesale tax to point of sale aims to stabilize industry; retailers and independents warn of cost shifts

CARSON CITY — Assembly Bill 307, presented March 26, 2025, would change the state’s cannabis tax structure by eliminating the use of a legislatively determined "fair market value" assessed to cultivators and instead shifting taxation to the point of retail sale. Sponsor Assemblymember Danielle Gallant and industry witnesses framed the proposal as a fix to persistent arrears and a volatile wholesale valuation system.

Background and sponsor rationale

Under existing practice, as described at the hearing, cultivators pay a tax based on a statutory fair‑market value per pound — a figure that is updated quarterly — even when the cultivator has not yet been paid by wholesale buyers or retailers. Assemblymember Gallant said cultivators were being taxed on the assessed fair market value even while awaiting payment from retailers, creating cash‑flow pressure and unpaid tax arrears. Fiscal staff and the Department of Taxation reported that outstanding cannabis tax liabilities for open accounts fell from about $15.4 million to roughly $4.9 million over the session as enforcement and collections proceeded.

What AB307 would change

The bill (as amended conceptually at the hearing) would: remove the statutory fair‑market value assessment used to tax cultivators; shift the taxation event to point of retail sale so taxes are collected when consumers pay retailers; preserve a $5 million distribution to local jurisdictions for enforcement and funding related to legalization; and maintain funding to the Cannabis Control Board and other designated accounts. Sponsors said the change would be revenue neutral overall but reduce the pressure on cultivators forced to prepay tax obligations.

Support, opposition and neutral testimony

Supporters included vertically integrated operators and trade groups that said the bill would simplify compliance and reduce unhealthy arrears. Will Adler of GTI (Green Thumb Industries) testified in support, saying a single point of collection tied to actual sales would yield more reliable tax data.

Opponents included independent dispensaries and some producers who warned that the bill shifts the tax burden to retail customers and could increase retail prices if wholesale prices do not decline in response. David Goldwater, representing independent dispensaries, said the bill would effectively increase retail costs for stores that do not own production, and noted the market’s sizable black‑market competition. Industry counsel raised concerns that a retail‑point tax could reduce legal market competitiveness if price relief does not materialize.

Neutral testimony included county associations and local governments that emphasized the need to preserve distributions that support public services and enforcement. The Nevada Association of Counties said the sponsor’s amendment restoring those funds addressed county concerns and asked for clear allocation language.

Procedure and next steps

The committee heard presentations and public testimony; the Department of Taxation confirmed outstanding collections remain subject to current law and would still be collected unless a bill provision specifically forgave liabilities. With an agreed technical amendment on status of municipal distributions and Cannabis Control Board funding, sponsors said stakeholders had largely coalesced around a revenue‑neutral solution. The committee did not take a recorded vote at the hearing.

Selected direct quotes (from committee hearing)

"Cultivators are required to pay a tax on this fair market value... And then they have to pay that tax at the end of the month, whether they've actually received the money for the product," Assemblymember Danielle Gallant said when describing the current system's cash‑flow issue. (Transcript block s=9151.965)

"If the bill does lower cost for consumers, we'd be happy to be proven wrong," Harrison Vaughn, counsel for Deep Roots Harvest, said while opposing the bill on behalf of some independent operators. (Transcript block s=10185.375)

Evidence (selected transcript excerpts)

Topic intro: "We will go ahead and open the hearing on assembly bill 307," Chair Backus announced as the committee moved to its final bill of the evening. (Transcript block s=9069.851)

Topic finish: "Thank you. We can go ahead and close the hearing on Assembly Bill 307..." (Chair Backus) (Transcript block s=10638.845)

Ending

AB307 would restructure the timing and incidence of cannabis taxation. Sponsors, some operators and the Department of Taxation said the change would reduce industry arrears and align tax collection with cash receipts; other retailers and independent operators warned the change could shift costs to consumers or raise retail prices absent a corresponding wholesale price adjustment. The bill requires further drafting and fiscal review before any committee vote.