Arizona Recreational Marijuana Sales Break New Record, Medicinal Sales Decline Again

Arizona recreational marijuana sales break new record, medicinal sales decline again

Sales of medical marijuana fell for the eighth month in a row and the eleventh time in the previous year, totalling around $31 million in October 2022.

Alternatively, the Arizona Department of Revenue reports that sales of cannabis for adult use, which was authorised by voters in 2020, reached a record high of over $85.4 million in the same month.

Similar to what has happened in other jurisdictions where medicinal markets have been eclipsed by recreational sales in the aftermath of legalisation, the medical programme in this state is collapsing.

Sales in October were $31.4 million, down over $1 million from September’s $32.5 million, according to the most current report from ADOR. The ADOR increased their forecast for September sales from $30.9 million to $31.9 million.

Sales for recreational use by adults increased by over $5 million in October, from an estimated $80.4 million in September. (The most recent data shows a $5 million increase from earlier projections for the month of September.) Revenue for the month of August was just under $78 million.

Since bottoming out at $68.5 million in January 2022, recreational sales have been on the upswing. For the third and fourth time in 2022, sales of marijuana for adults-use topped $80 million in September and October.

The Arizona cannabis market is on track to easily surpass the $1.4 billion sold in 2021, with sales of more than $1.2 billion through October 2022. More than $2.6 billion has been transacted in the Arizona cannabis sector since recreational sales began in January 2021.2

Between January and October, the government took in a total of $22.5 million in tax money from recreational sales and $13.6 million from medical sales.

In addition to the regular sales tax, the state also collects an excise tax of 16% on recreational purchases; patients with a medical marijuana card pay a Transaction Privilege Tax of around 6% at cannabis retailers. All marijuana sales are hit with a 2% or so surcharge by the local government.

The Arizona Highway User Revenue Fund receives 25% of the recreational tax revenue, public safety receives 31%, community colleges and provisional community college districts receive 30%, and the justice reinvestment fund receives 10%.

The justice reinvestment fund provides public health services, counselling, job training, and other social services to communities that have been adversely and disproportionately impacted by crime.

As has been the case in some jurisdictions that have legalised adult-use cannabis years after creating medical cannabis markets, the medical market has continued to lose both revenue and participants.

Medical programme updates are typically released once a month by the Arizona Department of Health Services, which is in charge of cannabis regulation in the state, a month before the ADOR updates are made public.

As of November 2022, the total number of cardholders was 156,647. Qualified patients, designated carers, dispensary agents, facility agents, and lab agents are the five types of cardholders in the state.

According to ADHS, industry personnel need the facility agents’ designation in order to operate in dispensaries, medical marijuana outlets, facilities, or adult-use outlets after Proposition 207 legalised recreational use in the state.

In 2021, lawmakers made it possible for people to work in “dual licenced” stores, which are able to offer both medical and recreational products, without having to pay for two separate licences.

ADHS spokesman Tom Herrmann told the Arizona Mirror via email that “because facility agent cards are less expensive and can be used more flexibly, we’ve seen a huge increase in the number of facility agent cards and a decrease in the number of dispensary agent cards.”

There are 156,647 medical cards in all, with 130,696 corresponding to legitimate patients, and 24,785 to people working in dispensaries and other healthcare facilities.

These figures are in sharp contrast to the medical marijuana market prior to the legalisation of recreational sales in 2021.

ADHS reported 309,479 active medical cardholders in January 2021. Before the facility agent designation, there were 299,054 qualifying patients and 9,489 dispensary agents.

In spite of a 166,000-person decline in eligible patients, more licences have been issued to the industry’s workforce as a result of the new framework.

Medical marijuana sales were 5,606 pounds in November, with 4,814 pounds sold as “flower” and the remaining pounds sold as edibles and other forms of the drug. Customers in Arizona who use medical marijuana spent $18,708 on the drug in January 2021.

Not only does Arizona have a failing medicinal marijuana programme, but so do many other states. When adult recreational use was legalised in Michigan in 2019, the state’s medical market experienced a similar decline.

Michigan’s medicinal cannabis programme has 184,564 eligible patients and 19,916 primary carers as of the end of November 2022, a considerable decrease from the nearly 284,100 patients and 40,200 carers in early 2019, before the launch of recreational sales in that state.

Since then, the medicinal cannabis industry in Michigan has been steadily declining, with nearly a quarter fewer eligible patients projected by 2022.

The sales of flowers for adult use in Michigan jumped from around 25,000 pounds in January to almost 59,000 pounds in November.

An oversupply of cannabis on the market and a thriving black market (or “legacy” market) are blamed for the decline.

The state of Michigan anticipates cannabis sales of over $2 billion by 2023.

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