Recreational Cannabis Sales Soar Nationwide as Arizona’s Medical Market Fades into Irrelevance

Arizona’s medical marijuana market has experienced a significant downturn, dropping below 100,000 qualifying patients for the first time in over a decade. As of July, the number of registered patients stood at 94,754, down from 100,753 in May and 97,610 in June. This decline highlights the shift towards the adult-use recreational market, which has become the dominant force in the state’s cannabis landscape.

In the first half of 2024, Arizona ranked eighth among states in recreational cannabis sales, although the market hit a two-year low in June. Sales for medical marijuana also fell sharply, with June revenues dropping to $18.2 million, a significant drop from May’s $20.7 million. Comparatively, the peak for medical sales occurred in April 2021, when revenues reached $73.4 million.

Purchases of medical cannabis declined markedly in June, with consumers purchasing 4,390 pounds, a decrease from 4,764 pounds in May. This trend continued into July, where purchases fell to just 4,285 pounds. For the year, total medical sales amount to 32,972 pounds.

The recreational market faced its challenges as well, with sales decreasing from $85.8 million in May to $73.8 million in June. This marked the first time recreational sales dipped below $80 million since June 2022. The top month for adult-use sales occurred in March 2023, when revenues soared to $103.5 million.

Overall, Arizona’s cannabis market has consistently generated around $1.4 billion in annual sales for the past three years. However, the adult-use market is poised to continue capturing the majority of profits as consumer preferences shift. According to Green Market Report, Arizona’s adult-use sales for the first half of 2024 reached $586 million, trailing behind states like California and Michigan.

Recent data from Headset indicates that the total Arizona cannabis market has declined by approximately 14.5% over the past two years. This mirrors trends seen in Colorado, which reported a year-over-year decrease of about 17.6% in July.

Under Proposition 207, Arizona imposed a 16% excise tax on recreational cannabis sales, alongside the standard sales tax of about 6% for medical patients. Local jurisdictions also add approximately 2% to this tax. In terms of tax revenue, recreational sales generated $13.7 million in May, which dropped to $11.8 million in June, combining for totals of $22.2 million and $19.25 million across both markets.

The allocation of tax revenue from recreational sales directs one-third to community colleges, with additional funding aimed at public safety and targeted programs for communities disproportionately affected by past marijuana enforcement.