Cannabis Sales Soar in Arizona

Arizona’s cannabis landscape has transformed dramatically over the past decade, evolving from a strictly medical marijuana program to a flourishing recreational market. Now, as consumer demand soars and the industry adapts to changing regulations, the Grand Canyon State has emerged as a key player in the nation’s cannabis sector.

We’re going to delve into the growth of Arizona’s marijuana market, unpacking the notable shift in market dynamics and tracing the milestones that have shaped the state’s cannabis journey – and looking ahead to the potential for growth in the years to come.

How Big is Arizona’s Cannabis Market?

In 2022, Arizona’s cannabis market continued to grow, with total sales hitting $1.4 billion (an amount that is in line with the previous year’s figures). In total, cannabis sales across both medical marijuana and recreational cannabis markets have reached $2.9 billion since adult-use legalization in January 2021.
But interestingly, the actual make-up of Arizona weed sales within the market saw a remarkable shift.

Medical Marijuana Sales vs. Recreational Cannabis Sales in AZ

During 2021, medical cannabis sales propelled the industry forward, making up around 55 percent of the total AZ marijuana sales, equating to nearly $760 million. In contrast, 2022 saw the recreational cannabis sector skyrocket, claiming almost 70 percent of sales or over $950 million, as the medical market decreased to just above $500 million. December 2022 capped off the year with a new high in recreational sales, reaching approximately $86.6 million, slightly up from November’s $85.8 million. Medical cannabis sales, on the other hand, experienced a small dip between November and December 2022, from $31.9 million to $31.1 million.

Medical cannabis sales have been on a consistent downward trend since April 2021, with only a few exceptions. Sales peaked at $73.2 million that month but have yet to approach those levels since, except for July 2021, when they hit $71.6 million following a $5 million drop in June. The last time medical cannabis users spent over $50 million in a month was in April 2022.

Meanwhile, recreational sales have remained strong, with patients migrating to the adult-use market and manufacturers of high-potency medical products, such as edibles, pivoting toward the recreational demographic. The lowest monthly sales for adult use occurred in February 2021, the first full month of legal recreational sales, with around $40 million.

As of January 2023, ADHS reported that the total number of Arizona MMJ cardholders was 153,845, compared to 309,479 at the beginning of 2021. The statewide number of MMJ cardholders saw a dramatic decrease once recreational sales began in early 2021 – a shift that has also tended to occur in other states after the legalization of recreational cannabis.

As for the amount of medical cannabis sold, in January, consumers purchased 5,435 pounds of cannabis, 4,645 in “flower,” and the remainder in edibles or other forms. In January 2021, Arizona medical cannabis consumers purchased 18,708 pounds of product.

Cannabis Tax in AZ

Arizona levies a 16 percent excise tax on recreational cannabis sales in addition to the standard sales tax; medical patients pay roughly 6 percent in state sales tax. Local jurisdictions impose an additional 2 percent or so on all cannabis sales.

One-third of recreational tax revenue is allocated to community college and provisional community college districts, 31 percent to public safety—police, fire departments, fire districts, first responders—25 percent to the Arizona Highway User Revenue Fund, and 10 percent to the justice reinvestment fund, which supports public health services, counseling, job training, and other social services for communities disproportionately impacted by cannabis arrests and criminalization.

For cannabis advocates, the amount of money collected in excise tax is described as just one of the many benefits of widespread legalization.

A History of the Marijuana Market in Arizona

The marijuana market in Arizona has gone through significant changes over the years, evolving from a strictly regulated medical marijuana program to a thriving recreational cannabis industry.

Here’s a brief timeline of the key milestones in Arizona’s cannabis journey:

2010: Medical Marijuana Legalization

In November 2010, Arizona voters approved Proposition 203, the Arizona Medical Marijuana Act (AMMA), making Arizona the 15th state to legalize medical marijuana. The AMMA allowed qualifying patients with specific medical conditions to use cannabis for therapeutic purposes.

2012: First Medical Marijuana Dispensary Opens

In December 2012, Arizona’s first medical marijuana dispensary opened its doors, marking the beginning of a regulated medical cannabis market in the state. The market saw steady growth as more dispensaries opened and more patients joined the program.

2016: Failed Attempt to Legalize Recreational Cannabis

In November 2016, Arizona voters rejected Proposition 205, which sought to legalize recreational cannabis use for adults. The failure of this proposition delayed the expansion of the marijuana market in the state.

2020: Legalization of Recreational Cannabis

In November 2020, Arizona voters approved Proposition 207, the Smart and Safe Arizona Act, legalizing recreational marijuana use for adults aged 21 and older. The act allowed for the possession, consumption, and cultivation of cannabis and the establishment of a regulated adult-use market.

2021: Launch of Recreational Sales

On January 22, 2021, Arizona officially launched recreational cannabis sales, with many existing medical marijuana dispensaries receiving licenses to sell adult-use products. The market experienced rapid growth, with total sales reaching $1.4 billion in the first year of legal adult use.

2021-2022: Shift in Market Dynamics

As recreational sales took off, the medical marijuana market saw a decline in sales, with more patients choosing to access cannabis through the recreational market. By the end of 2022, recreational cannabis accounted for nearly 70 percent of total sales, while the medical market represented just over 30 percent.

Today, the marijuana market in Arizona continues to thrive, with an increasing number of dispensaries and products available to both medical patients and recreational consumers. With a strong regulatory framework in place and a steadily growing demand for cannabis, Arizona’s marijuana market is expected to continue its upward trajectory in the coming years.

Be a Part of the AZ Cannabis Movement

Whether you’re a dedicated advocate or you’re new to cannabis, Arizona is an excellent example of just how popular legalized marijuana can be.

Giving Tree Dispensary is an Arizona recreational dispensary and medical marijuana provider serving both MMJ patients and consumers of recreational cannabis in Phoenix. Our team is passionate about helping our customers find the ideal cannabis products to serve their needs and goals. We’re also dedicated supporters of efforts to further access high-quality marijuana for adults.

As one of the top-rated medical marijuana and recreational dispensaries Arizona has to offer, Giving Tree is your go-to source for premium products, cannabis education, and more. Visit our Valley dispensary today!

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