The Success of Arizona Legal Cannabis Market

Stephen Andrews
13 Dec 2021

Arizona broke speed records between approving a fully regulated cannabis market in November 2020 elections and commencing with recreational product retails January this year. The Grand Canyon state can now look back at the first fruits of its hard labor. October has been its most successful month yet, with sales topping nearly $58 million in marijuana, edibles, resins, and other items approved for adult use. According to state tax figures, recreational and medicinal sales both performed exceptionally well over a 10-month period this year, generating more than $1.1 billion.

For the month of October, the Arizona Department of Revenue reported it collected almost $4.9 million in recreational sales taxes, known as the transaction privilege taxes. Recreational retail in Arizona also has an excise tax of 16%, which means the same niche of products generated an additional $9.7 million for the month.

Medical products generated $5.2 million in October, a slight downtrend from the spring months when this figure often stood at more than $6 million per month. 

Judging the numbers, Arizona still has a slightly larger medical market. January through October, Arizonians spent about $641 million in medical marijuana purchases, while expenditure on adult-use products reached $466 million, together surpassing a $1 bn figure way before year-end. After Christmas, this figure will likely surpass $1.3 billion. 

Overall, cannabis brought over $175 million in tax revenue for the state budget between January and October. According to Arizona Mirrors, which first reported on this story, "nearly $41 million of that has gone to the state's general fund, while $23 million has gone to cities where the sales were made. Another $6.6 million has gone directly to fund public schools."

When Arizonians first voted on the ballots in 2016 to decide whether they wanted a legal cannabis market, the initiative shockingly failed. The voting turned successful in California, Nevada, Massachusetts, and Maine that same year.

Fast forward to 2020, Arizona voters approved recreational marijuana use for adults under Proposition 207. The first cannabis shops in the state opened by the end of January this year. 

According to Arizonian law, adults aged 21 and above can possess up to an ounce of weed and can homegrow up to six cannabis plants for personal use. Smoking in public spaces or operating a vehicle is against the law. 

The Arizona Department of Health Services is responsible for screening candidates who want to set up legal cannabis shops across the state. The early applicant window for launching a cannabis business was set between January 19 and March 9. Still, the reviewing board granted licenses within days of opening the application process and only less than three months since the passing of Proposition 207. 

I only think it's fair to say Arizonians can lecture others on how to launch a legal cannabis market with such zeal and success.

Stephen Andrews