Arizona Cannabis: Recreational Sales Sky-High While Medical Sales Plummet

The two regulated cannabis markets in Arizona are currently heading in different directions.

For the Grand Canyon State’s newly launched recreational pot industry, business is booming. Arizona’s medical cannabis decade-old market, meanwhile, continues to see lagging sales.

Citing figures from Arizona’s Department of Revenue, the AZ Mirror reports that “sales of medical cannabis dipped to slightly less than $45 million in May, their lowest total since January 2021, when adults were first allowed to purchase marijuana for recreational use,” while “initial estimates from tax collectors peg recreational sales at $76.5 million, the fifth time adult-use sales surpassed the $70 million mark.”

In addition, the state Department of Revenue “revised April’s sales upward to $81.2 million, up from the initial estimate of $75.5 million, making it the best sales month yet for recreational cannabis,” according to the AZ Mirror, topping the previous record of $80.4 million in March.

But while recreational pot sales have continued to climb, medical cannabis sales have gone the other way.

“Medical cannabis sales dropped precipitously for the seventh month in a row to slightly less than $45 million in May, only the second time in the past year medical sales dropped below the $50 million mark,” the AZ Mirror reported. “Preliminary numbers for June indicate $33.7 million in medical sales with recreational sales already on pace to hit another record, with $66.4 million reported so far.”

Arizona legalized medical cannabis in 2010, and the first sales launched two years later. In 2020, voters there approved a ballot proposal that legalized recreational cannabis for adults aged 21 and older. Adult-use sales began in January 2021.

In the first year, medical cannabis sales still outpaced recreational sales. The state reported that its two cannabis industries combined to generate more than $1 billion in revenue in 2021, with medical sales generating $703,803,194 and recreational sales pulling in $528,001,278.

“Rarely does an industry produce over $1.2 billion in revenue in its first year. This number shows that the legalization of cannabis is something Arizonans believe strongly in and the many benefits it contributes to the state’s economy,” said Samuel Richard, the Executive Director of the Arizona Dispensaries Association (ADA), after those figures were released in January.

Much like in other states that have also legalized adult-use cannabis, Arizona’s new recreational law contains social equity provisions designed to provide individuals from communities disproportionately affected by the War on Drugs with opportunities to the regulated pot industry.

The state has planned to award dozens of dispensary licenses to individuals who were adversely impacted by erstwhile marijuana laws. And last summer, Arizona introduced classes for social equity applicants “to ensure that social equity applicants are prepared for the application process and the challenges of running a marijuana business,” the state’s Department of Health Services said at the time.

The classes entailed “two days of content and education focused on a number of aspects of operating an adult-use marijuana business, including legal requirements, business practices, regulatory compliance, and fundraising, as well as marketing and strategic growth.”

“The social equity ownership program is intended to promote the ownership and operation of licensed Marijuana Establishments by individuals from communities disproportionately impacted by the enforcement of previous marijuana laws,” the department said in the announcement last August. “Social equity license holders will be required to comply with all statutes and rules that govern Adult-Use Marijuana Establishment licenses, including obtaining approval to operate before opening their retail location. Additionally, social equity license holders will be required to develop and implement policies to document how the Marijuana Establishment will provide a benefit to one or more communities disproportionately affected by the enforcement of Arizona’s previous marijuana laws.”