Marijuana Sales Plummet in Arizona Amidst Declining Recreational Demand

Arizona’s marijuana market experienced a significant decline in early fall, with September recording the lowest combined sales of 2024, according to preliminary tax collection data.

Recreational marijuana sales in September reached $67.3 million, while medical sales totaled just $15.8 million, bringing the combined sales to $83.1 million. This figure marks a nearly $9 million decrease from August when recreational sales were $74.8 million and medical sales were $17.8 million.

The downward trend has persisted over several months. Recreational sales peaked in March at $89.4 million before entering a steady decline. Medical sales have seen an even steeper drop, plummeting from $24.3 million in March to a record low of $15.8 million in September—a 35% decrease.

Throughout September, Arizonans have purchased nearly $920 million worth of marijuana products, comprising $732.5 million in recreational and $187.4 million in medical cannabis. If this trend continues, total sales are likely to fall short of last year’s $1.4 billion.

These sales activities have generated $199 million in tax revenue, which includes $122.4 million from excise taxes, $61 million from recreational sales taxes, and $15.5 million from medical marijuana taxes.

Under Proposition 207, approved by voters in 2000, Arizona imposes a 16% excise tax on recreational sales in addition to the standard sales tax, while medical patients face roughly 6%. Local entities also add around 2% in taxes on all marijuana sales.

Revenue from excise taxes is allocated effectively: one-third goes to community colleges and districts, 31% to public safety, 25% to the Arizona Highway User Revenue Fund, and 10% to the justice reinvestment fund, which supports social services in communities adversely affected by marijuana-related enforcement.

The current sales dynamics contrast sharply with the market conditions when recreational sales launched in 2021. Initially, medical marijuana dominated, but in 2024, recreational sales have outpaced medical sales by roughly a 4-to-1 ratio.

State officials indicate that these figures are subject to adjustments as late tax returns are processed. The Arizona Department of Revenue routinely updates previous months’ data in its subsequent reports.