Cannabis Sales Stabilize as Third Anniversary of Recreational Use Nears
- Arizona’s recreational and medical marijuana markets have been somewhat stable with adult-use sale being at least double of the heavily regulated medical industry. Recreational sales have been hovering around $85 million for the past three months, while medical sales dipped to $25.3 million with medical sales consistently being one-third of recreational sales.
- Since the start of recreational sales in January 2021, the cannabis industry has generated over $4 billion in revenues, with about $2.5 billion coming from recreational sales. Through October 2023, medical cannabis sales totaled more than $294 million and Arizonans purchased more than $890 million in recreational marijuana, for a total year-to-date of nearly $1.2 billion.
- The state collects a 16% excise tax on recreational sales in addition to the standard sales tax, while medical patients pay roughly 6% in state sales tax. Through October 2023, the excise tax on adult-use marijuana sales has yielded about $142.5 million. A portion of these taxes go towards community college and provisional community college districts, public safety, the Arizona Highway User Revenue Fund, and the justice reinvestment fund.
Arizona Cannabis Market Trends
For the past three years, Arizona’s adult-use and medical cannabis sales have stabilized, with recreational sales consistently doubling those of the tightly controlled medical sector.
In October, for the third consecutive month, recreational sales were around $85 million, while medical marijuana sales decreased to $25.3 million.
In 2023, medical sales have been approximately one-third of recreational sales, resulting in the lowest figure for medical use sales since the introduction of the recreational program in January 2021.
Decline in Medical Sales
Since May 2023, medical sales have not gone beyond $30 million and haven’t passed the $40 million mark since June 2022. The decline in medical sales has been persistent since its peak of $73.4 million in April 2021.
The medical program continues to lose participants due to the expiration of two-year medical cards and the high cost of maintaining medical qualification, including a $150 biannual certification fee.
Recreational Sales Progress
Recreational sales varied between $80 million and $93.5 million since July 2022, except for a record high of $100.2 million in March 2023.
As of October 2023, medical cannabis sales reached over $294 million while Arizonans purchased more than $890 million in recreational marijuana, totaling nearly $1.2 billion for the year. Since the start of recreational sales in January 2021, the cannabis industry has generated over $4 billion, with approximately $2.5 billion from recreational sales.
Taxation and Revenue
In October, the state collected $2 million in taxes from medical sales and $13.6 million from recreational sales. The state imposes a 16% excise tax on recreational sales on top of the standard sales tax, while medical patients pay around 6% in state sales tax.
Through October 2023, the excise tax from adult-use sales has contributed roughly $142.5 million. In 2021, recreational cannabis brought $32.9 million for eleven months of sales, and it rose to $132.8 million in 2022.
A third of these taxes are allocated to community college districts, 31% to public safety, 25% to the Arizona Highway User Revenue Fund, and 10% to the justice reinvestment fund for providing public health and social services for communities impacted by marijuana criminalization.
Medical Cannabis Program Status
The Arizona Department of Health Services reports monthly on medical cannabis program participation. As of November, there were 118,541 qualifying patient cardholders, a decrease from 121,047 in October. Medical cannabis consumers in Arizona purchased 4,468 pounds of marijuana in November, down from 4,475 reported in October, with a year-to-date total of 51,543 pounds.
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