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In July, Arizona’s reeling medical marijuana market dropped below 100,000 qualifying patients, bringing into stark relief the steady decline of the medical program as the adult-use, recreational market continues to dominate.
Arizona also cemented its place in the hierarchy of states with legalized cannabis, coming in eighth in sales for the first six months of 2024, though it hit a two-year low in June.
According to reports by the Arizona Department of Health Services , the total number of registered cannabis patients in the state dropped from 100,753 in May to 97,610 in June and further to 94,754 in July.
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When recreational sales began in January 2021, there were nearly 300,000 qualifying patients in Arizona’s original cannabis market that began in 2012 after the passage of Proposition 203 in 2010.
A commensurate drop in sales has followed, with the Arizona Department of Revenue reporting that medical sales dropped below $20 million for the month of June — to $18.2 million — after reaching only $20.7 million in May.
The best month for medical sales took place in April 2021, with revenues of $73.4 million, but the market has been on a downward trajectory in the ensuing three-plus years.
In June, Arizona medical cannabis consumers purchased 4,390 pounds of marijuana in various forms, down from 4,764 reported in May; purchases dipped further in July to just 4,285 pounds. Year-to-date total sales in pounds so far is 32,972 pounds.
The recreational market dropped about $12 million in sales from $85.8 million in May to $73.8 million in June, the lowest total since February 2022, when sales were right around $73 million. June was also the first month recreational marijuana dropped below the $80 million threshold since June 2022, when it hit $77.9 million.
The best month for adult-use sales was March 2023, when ADOR reported a total of $103.5 million.
Combined annual sales for the Arizona cannabis market have been about $1.4 billion three years in a row , and the trend will likely continue with the adult-use market taking the lion’s share of the profits.
According to information compiled by Green Market Report , Arizona’s adult-use sales were eighth in the country behind Washington, Colorado, Missouri, Massachusetts, Illinois, Michigan and California.
Total recreational sales for the first half of 2024 were $586 million, with California leading the way with $2.08 billion and Michigan coming in second with $1.6 billion.
Cannabis data firm Headset reports that the combined Arizona market has declined about 14.5% over the past two years, similar to that of Colorado, which saw sales of slightly less than $100 million in July, a decrease of about 17.6% over the previous year.
Under the terms of Proposition 207, which voters approved in 2000, the state collects a 16% excise tax on recreational sales in addition to the standard sales tax; medical patients pay roughly 6% in state sales tax. Local jurisdictions charge an additional 2% or so for all marijuana sales.
The recreational market generated about $13.7 million in tax revenues for May and dropped to $11.8 million in June, with totals for both programs combining for $22.2 million and $19.25 million respectively.
One-third of revenue raised by the excise tax is dedicated to community college and provisional community college districts; 31% to public safety, including police, fire departments, fire districts and first responders; 25% to the Arizona Highway User Revenue Fund; and 10% to the justice reinvestment fund, which is dedicated to providing public health services, counseling, job training and other social services for communities that have been adversely affected and disproportionately impacted by marijuana arrests and criminalization.
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