Despite recreational and medical losses in August, a new report from the Arizona Department of Revenue (ADOR) indicates that the state’s total cannabis sales for the first eight months of the year are about to pass $1 billion, likely to approach or even surpass 2021’s $1.4 billion by the end of 2022.
While Arizona’s medical cannabis market began in 2012, following 2010’s passage of the Arizona Medical Marijuana Law, recreational cannabis wasn’t approved by voters in the state until 2020, when they passed Proposition 207, the Arizona Smart and Safe Act.
The state’s medical and recreational sales each dropped about $3.5 million each from July to August, but the losses were ultimately offset by revised July totals, equaling roughly the same $7 million amount. Even so, total cannabis sales surpassed $980 million in Arizona for the first eight months of 2022.
A lot has changed in just a year. In October 2021, Arizona’s medical sales were almost identical to its recreational sales, at $65.1 million and $65.6 million respectively. Since then, recreational sales have continued to climb, while medical sales have fallen.
“Programs have charted dramatically different trajectories, with the recreational program now outperforming medical sales by more than $40 million,”the AZ Mirror says. September 2021 was the last month medical cannabis sales were more than recreational sales.
The medical market continued its steady plunge in August of this year, dropping from $37.3 million in July sales to $34.1 million the following month. Similarly, adult-use sales have also seen a decline since the April high of $81.2 million, along with a rebound in July (revised numbers show Arizonans bought $78.1 million). That number dropped to about $74.5 million in August.
Total tax revenue for medical and recreational sales in August 2022 came in at approximately $20.5 million, with about $11.9 million for the 16% cannabis excise levied on recreational sales.
The taxes are divided by Proposition 207: One-third of taxes go to community college and provisional community college districts; 31% foes to public safety, including police, fire departments, fire districts and first responders; 25% goes to the Arizona Highway User Revenue Fund; and 10% goes to the justice reinvestment fund, which provides services for communities who have been adversely affected by cannabis arrests and criminalization.
The Arizona Department of Health Services (ADHS) also releases monthly reports on the medical cannabis program, including sales by the pound and the number of qualifying patients in the state. The report comes one month ahead of the ADOR financial reports, often providing insight around upcoming medical cannabis sales numbers.
The September ADHS report indicates a continued decline in participation and sales for the Arizona medical cannabis program. The report also notes that, from August to September, the number of Arizona medical cannabis card holders fell from 144,678 to 136,010. In June, the number of active cardholders was 191,682.
In January, the ADHS says patients purchased 9,273 pounds through nearly 600,000 transactions. The number of pounds has dropped to nearly half that amount, at 5,601 pounds.
While August 2022 saw a brief dip in both recreational and medical sales, experts expressed optimism about the recreational side of the industry after 2021’s final tally was released.
“Rarely does an industry produce over $1.2 billion in revenue in its first year. This number shows that the legalization of cannabis is something Arizonans believe strongly in and the many benefits it contributes to the state’s economy,” said Samuel Richard, the executive director of the Arizona Dispensaries Association (ADA), after those figures were released in January of this year.
