Arizona Weed Sales Top $1 Billion in 2022

Cannabis sales in Arizona topped $1 billion in 2022 as the state’s recreational marijuana market experienced strong growth in its second year of sales. Total cannabis sales last year were $1.4 billion, according to the Arizona Department of Revenue, an amount roughly in line with cannabis sales recorded in 2021.

Adult cannabis sales in 2022 hit $950 million, growing to 70% of the state’s total marijuana sales for the year. However, medical marijuana sales were down significantly year over year, falling to just over $500 million in 2022.

Arizona recreational marijuana retailers ended 2022 with their strongest month of the year in December, posting about $86.6 in adult cannabis sales, up slightly from $85.8 million in the previous month means. Medical marijuana sales continued the downward trend sparked by the legalization of recreational cannabis, declining slightly from $31.9 million in November to $31.1 million in the final month of 2022.

Arizona legalized recreational marijuana in 2020 with the passage of Proposition 207. The ballot measure, known as the Smart and Safe Act, was passed by 60% of the state’s voters. Licensed sales of recreational marijuana began in the state on Jan. 21, 2021, less than three months after the election ballot measure won.

A separate voting measure, Proposition 203, legalized the medicinal use of cannabis in Arizona in 2010 by just over 50% of the vote. The first licensed medical marijuana dispensary in the state began serving patients on December 6, 2012. Combined, medical and adult-use cannabis retailers have sold a combined $2.9 billion since recreational marijuana sales began two years ago.

More reforms are needed in Arizona

Cannabis advocates in Arizona say the state has made significant strides in reforming the state’s marijuana policy. But while sales were strong in the first two years of recreational marijuana sales, more state and federal reforms will be needed for the cannabis industry to make a significant contribution to the state’s economy.

“We don’t see SWAT teams breaking into dispensary doors,” Aaron Smith, CEO of the National Cannabis Industry Association, said late last year. “But we struggle with not being able to take tax deductions like a normal industry or being able to do interstate trade, which is really a barrier to entry for a lot of people.”

Despite the challenges, Smith says Arizona is becoming a model for successfully transitioning to a regulated cannabis economy.

“Cannabis is being used responsibly across all demographics, Boomers and Millennials and Gen Z, people over 21, and we’re excited to see that,” Smith said. “Arizona law, by and large, works well.”

Legal weed brings new tax revenues

The legalization of cannabis has marked the creation of a new stream of tax revenue for the Arizona state coffers. In December alone, tax receipts totaled nearly $23 million, bringing the total marijuana taxes collected by the state in 2022 to nearly $270 million.

The state collects a 16% tax on sales of recreational marijuana in addition to about 6% sales tax. Medical marijuana patients only pay sales tax on their cannabis purchases. Local jurisdictions levy additional taxes of about 2% on marijuana sales.

About a third of cannabis tax revenue collected in Arizona is reserved for community college and community college provisional districts, while 31% is for police, fire, fire districts and other first responders. A quarter of state marijuana taxes go to the Arizona Highway User Revenue Fund, while 10% is reserved for the Justice Reinvestment Fund, which supports public health services, counseling, job training, and other social services for communities adversely and disproportionately affected by decades of marijuana use -ban.