Will Medical Marijuana Sales Fall as Recreational Cannabis Stores Open?

Marijuana sales in the state of Arizona are maintaining their overall growth and development thanks to the massive explosion in recreational marijuana sales. But as adult recreational cannabis sales soar, medical cannabis revenues have taken a nosedive since last year.

Arizona’s two controlled marijuana markets are currently moving in opposite directions.

CANNABIS INDUSTRY IN ARIZONA

Business is booming for Grand Canyon State’s newly formed recreational cannabis industry. Meanwhile, Arizona’s 10-year-old medical marijuana market continues to see slow sales.

According to reports from the AZ Mirror, sales of medical marijuana in the state fell to just under $45 million in May, citing Arizona Treasury Department figures, the lowest since January 2021 when adults began buying recreational cannabis while initial estimates by tax collectors place recreational cannabis sales at $76.5 million, marking the fifth time that adult-use cannabis sales have surpassed the $70 million mark.

According to AZ Mirror, the Arizona State Treasury Department also revised April sales upwards to $81.2 million, up from the original estimate of $75.5 million, making it the best-ever leisure sales month -Marijuana makes, beating the previous record of $80.4 million in March.

While recreational cannabis sales continue to rise, medical marijuana sales have trended in the opposite direction.

According to ADHD (Arizona Department of Health Services) reports, 9,273 pounds of medicinal cannabis were sold in January this year, but those sales quickly fell to just 5,600 pounds in July.

MEDICAL CANNABIS INDUSTRY

Medical cannabis sales fell sharply in May for the seventh straight month to just under $45 million, marking only the second time in the last year that medical cannabis sales have fallen below the $50 million mark, the reported AZ mirror. They added that initial figures for June show $33.7 million in medicinal cannabis sales with recreational cannabis sales already on track to set another record, with over $60 million to date. Dollar.

Medical marijuana was legalized in Grand Canyon State in 2010; however, the first sale was launched two years after legalization. And in 2020, state voters approved a ballot proposal that would make recreational marijuana legal for anyone age 21 or older. Adult cannabis sales began in January 2021.

Medical cannabis sales still outpaced recreational cannabis sales in the first year. According to the state, medical and recreational cannabis sales combined generated more than $1 billion in revenue in 2021, with medical cannabis sales totaling $703,803,194 and recreational cannabis sales totaling $528,001. Earned $278.

Sales in excess of $1.2 billion is an extremely rare first-year production for the industry. After those numbers were released in January, Samuel Richard, executive director of the Arizona Dispensaries Association (ADA), said they showed that cannabis legalization was something Arizonans strongly believe in and would benefit the state’s economy offer advantages.

RECREATIONAL CANNABIS AND TAXES

While tax revenues from recreational sales are strong, medical sales are still down. In April, taxes totaled $22.5 million on both drug and recreational product sales, with roughly equal amounts on sales taxes from both programs and the 16 percent marijuana excise tax on sales of leisure items were omitted.

Additionally, local governments add about 2% extra to all marijuana purchases.

Voters approved Proposition 207 in 2020, which legalizes cannabis for adult use and defines the public use of taxes derived from recreational sales. One-third of the funds will be allocated to community colleges and provisional community college districts; 31% for public safety (police, fire, fire districts and first responders); 25% to the Arizona Highway User Revenue Fund; and 10% to the Justice Reinvestment Fund, which is used to provide public health services, counseling, job training and other social services to communities negatively and disproportionately impacted by marijuana arrests and criminalization.

THE NEW DIRECTION OF THE CANNABIS INDUSTRY IN ARIZONA

Similar to other states that have legalized adult-use marijuana, Arizona’s new recreational cannabis laws include social justice provisions intended to provide opportunities for the controlled cannabis industry for people from communities disproportionately affected by the War on Drugs.

The administration intends to issue dozens of dispensary licenses to individuals who have suffered the ill effects of previous cannabis regulations. Additionally, the Arizona Department of Health stated at the time that the workshops were conducted “to ensure that Social Justice applicants are prepared for the application process and the hurdles of running a marijuana business.”

The workshops consisted of two days of training and content focused on a variety of segments of running an adult-use cannabis company, including business practices, marketing, regulatory requirements and compliance, and fundraising and strategic growth.

According to the department’s statement last August, the goal of the social property program is to encourage people from communities impacted by the enforcement of previous marijuana laws to own and operate licensed marijuana facilities. The holder of a social equity license must comply with all laws and regulations governing adult cannabis use, including obtaining a license to operate prior to opening a retail business. In addition, social justice license holders are required to create and implement policies that demonstrate how the marijuana industry will benefit one or more populations who have been disproportionately disadvantaged by the enforcement of Arizona’s previous marijuana laws.

FINAL EFFECT

With the increase in recreational cannabis sales directly impacting medical cannabis revenue (when you see it going down), one might almost suspect that even medical cannabis patients are now choosing recreational cannabis, since it’s probably easier to access than waiting for your doctor for approvals and prescriptions. It also reflects how people in Arizona feel about recreational cannabis after eagerly voting for its legalization in 2020.

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