Sales of cannabis in Arizona have exceeded $1 billion this year, according to data from the state Department of Revenue. Total marijuana sales eclipsed the billion-dollar mark in September, marking the third straight year the state’s weed sales have reached the seven-digit milestone.
So far this year, Arizona’s sales of adult-use cannabis have totaled $797 million, while medical marijuana sales reached $267 million, bringing the total for 2023 through September to $1.1 billion. The state’s overall cannabis volume since recreational marijuana sales began in January 2021 has now reached $4 billion, with sales of adult-use cannabis contributing $2.5 billion to the total.
Arizona voters legalized the medical use of marijuana in Arizona in 2010 with the approval of Proposition 203, which received just over half of the vote. The first licensed medical marijuana dispensary in the state began serving patients on December 6, 2012.
Recreational marijuana was then legalized in the state with the passage of Proposition 207 in 2020. Known as the Smart and Safe Act, the ballot measure was approved by 60% of voters. Regulated sales of recreational marijuana began on January 21, 2021, less than three months after the ballot measure succeeded at the polls.
Arizona Department of Revenue (ADOR) cannabis sales data from August and September of this year show that medical marijuana accounted for about one-third of the state’s total sales, according to a report from the Arizona Mirror. The ratio of medical marijuana sales to sales of adult-use cannabis continues a trend the state has seen over the last year, leading to the lowest total recorded sales of medical marijuana ever.
Sales of medical marijuana in September were just under $27 million, down from $28.7 million the previous month. September’s figure marks the lowest monthly total for medical cannabis sales since regulated sales of adult-use cannabis began nearly three years ago. The last time monthly medical marijuana sales topped $30 million was in June. Medical marijuana sales have steadily declined in Arizona since the peak of $73.4 million in April 2021. Total medical weed sales have not exceeded $40 million in a single month since June.
Sales of adult-use cannabis totaled $85.8 million in August and just over $80 million in September. Recreational cannabis sales hit their highest monthly total in March of this year at $100 million. Sales of recreational pot have exceeded $80 million per month since dropping below $90 million in May. Since first reaching $80 million in March 2022, sales of adult-use cannabis have only failed to reach that level twice—in May 2022 at $79.3 million and June 2022 at $77.2 million.
Eivan Shahara, the CEO of Mint Cannabis, a multistate operator that opened its sixth dispensary in Arizona last week, says that the state’s dip in cannabis sales coincided with changes in the way consumers are shopping.
“In terms of consumer spending, we’re seeing cannabis customers visit our dispensaries more frequently with smaller basket sizes. During the pandemic, we saw customers visit less frequently but with larger basket sizes,” Shahara writes in an email to High Times. “We’re responding to this trend by continuing to offer day-of-the-week deals, stock up and save promotions, giveaways, and buy-one-get-one offers to drive additional traffic and sales at our locations. We have also responded by incorporating more conveniences like online ordering and drive-thru pick up.”
Weed Taxes Generate Millions
Arizona levies a 16% tax on recreational marijuana sales in addition to approximately 6% in sales tax. Medical marijuana patients pay only sales tax on their purchases of cannabis. Local jurisdictions add additional taxes of about 2% to recreational marijuana sales.
About a third of cannabis tax revenue collected in Arizona is dedicated to community college and provisional community college districts, while 31% is dedicated to law enforcement, fire departments, fire districts and other emergency first responders. A quarter of state marijuana taxes go to the Arizona Highway User Revenue Fund, while 10% is reserved for the justice reinvestment fund, which supports public health services, counseling, job training and other social services for communities that have been adversely affected and disproportionately impacted by nearly a century of cannabis prohibition.
So far for 2023, the state has collected $174.5 million in excise taxes on recreational marijuana. During the 11 months of regulated sales in 2021, taxes on adult-use cannabis generated $32.9 million for the state’s coffers. The total spiked the following year, with the excise tax on recreational weed jumping to $132.8 million. Overall, the excise tax has generated more than $391 million in revenue for Arizona since regulated sales of adult-use cannabis began.
Arizona collected $13.7 million in August and $12.8 million in September from taxes on recreational marijuana sales. So far in 2023, the excise tax on adult-use cannabis has generated $174.5 million in revenue. Tax revenue on medical marijuana came to $2.4 million in August and $2.2 million in September.
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