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September saw Arizona’s marijuana sales surpass $1 billion for the year following a pattern that both recreational and medical markets seemed to have stabilized over the previous few months. The state’s revenue department (ADOR) data for August and September reveals a consistent pattern, with medical sales remaining around one-third of recreational sales.
September’s medical sales were marginally below $27 million, down from $28.7 million in August. This represents the lowest in medical sales since the legalization of recreational marijuana in 2021. The last time medical sales surpassed $30 million was in June, and they have been consistently declining from the peak of $73.4 million in April 2021.
Contrastingly, recreational sales have remained robust, consistently surpassing $80 million since dropping below $90 million in May. August reported recreational cannabis sales at $85.8 million, followed by slightly more than $80 million in September. The recreational market has only failed to reach the $80 million mark twice —in May and June of 2022 at $79.3 million and $77.2 million, respectively.
However, those figures could alter because ADOR often modifies the figures from previous months with new reports. For example, the most recent announcement from ADOR raised July’s medical sales from $26.1 million to $27.3 million, while recreational sales changed from $77.4 million to $80.5 million.
As of September 2023, total medical marijuana sales for the year reached $267 million, while recreational sales amounted to nearly $797 million, culminating in a year-to-date total of almost $1.1 billion. Since the commencement of recreational cannabis sales in 2021, the industry has generated more than $4 billion, with approximately $2.5 billion attributed to adult-use sales.
The state has collected substantial taxes from both sectors, with $2.2 million and $2.4 million from medical cannabis sales in September and August, respectively, and $12.8 million and $13.7 million from recreational sales. Arizona applies a standard sales tax of 5.5% and a 16% excise tax on recreational sales. Medical patients only foot the standard 5.5% sales tax. Local jurisdictions add roughly 2% to all cannabis sales.
Around $174.5 million has been collected thus far in 2023 from the recreational sales excise tax. In 2021, recreational marijuana generated $33 million, and in 2022, the figure surged to $132.7 million. Since recreational cannabis legalization, the state has amassed more than $392 million in cannabis excise taxes.
The tax revenues are allocated to various sectors: 10% goes toward the justice reinvestment fund, which supports communities disproportionately impacted by cannabis criminalization; 34% goes toward community colleges; 31% goes toward public safety; and 25% goes to the Arizona Highway User Fund.
There were 121,047 qualified cannabis patient cardholders as of October 2023, compared to 123,795 in September. Before the introduction of recreational cannabis, there were 299,055 qualifying patients. The report also noted that 4,475 pounds of cannabis were purchased for medical purposes in October, down from 4,622 in September, bringing the total for the year as of October to 47,076 pounds.
The thriving marijuana industry in Arizona in a way depicts what is happening in many markets in which regulated cannabis sales are allowed and companies such as TerrAscend Corp. (TSX: TSND) (OTCQX: TSNDF) obtain licenses to commercialize innovative cannabis products.
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