Arizona collects $208 million in marijuana excise tax so far in 2023 | Phoenix New Times
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Arizona’s excise tax on marijuana rakes in $208 million so far in 2023

Overall cannabis sales are likely to approach 2022 total of $1.4 billion, generating millions in tax revenue.
Though cannabis sales are slowing, it's still expected to approach the 2022 sales total of $1.4 billion in Arizona.
Though cannabis sales are slowing, it's still expected to approach the 2022 sales total of $1.4 billion in Arizona. O'Hara Shipe
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Both the recreational and medical marijuana markets continue to lose potency as they mature, though adult-use sales continue to far outpace what is sold to people who have medical marijuana cards.

Recreational sales began at the end of January 2021 and since that time, the individual markets have taken wildly divergent paths as medical sales regularly decline and recreational sales have become the dominant market as Arizona cannabis consumers become more accustomed to the novelty of legal sales.

The most recent report from the Arizona Department of Revenue accounted for sales data from June and July.

In June, medical cannabis sales dropped to slightly below $28 million, but the July total of $26.1 million is the lowest the medical market has seen since recreational sales began.

Out of the previous 30 months, medical sales have only been below $30 million five times, and all of those have been this year. Between January and July, there have only been two months with medical sales above that threshold, in March and April.

Medical sales have declined consistently since a peak of $73.4 million in April 2021. By July 2022, medical sales dropped below $40 million for the first time and the market has consistently lost ground to recreational, which has seen its own measured decline in the interim.

Recreational sales were initially estimated at more than $100 million in March, but ADOR revised that total down to $99.9 million. At the same time, it increased estimated sales in April from $86.5 million to $90.1 million.

The most recent report continues the trend of adjusting sales figures, even as overall sales drop.

Yet, despite the malaise, cannabis sales are likely to approach last year’s total of $1.4 billion, as sales year-to-date through July are around $207 million for medical and more than $621 million for recreational.

Since recreational sales began, the medical market has sold nearly $1.5 billion in product, while the recreational side has surpassed $2.2 billion.

Combined, cannabis sales have remained above a monthly $100 million mark since March 2021, although if the trends continue, it may not be long before sales drop below that total.

The last time recreational and medical sales were anywhere near equal was October 2021, when adult-use sales were $65.8 million and medical sales were $64.4 million. That was the first month that recreational sales outpaced medical sales.

Taxes collected on recreational sales in May were increased from $13.3 million to $13.9 million as of this report, but dropped in June and July to $13.6 million and $12.3 million, respectively.

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 excise tax on adult-use marijuana sales has yielded about $208.2 million so far in 2023. In 2021, recreational cannabis generated $32.9 for 11 months of sales, and in 2022 that number jumped to $132.8 million. Since the program launched, the state has collected more than $360 million in marijuana excise taxes.

One-third of those taxes are 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. That fund 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.

The Arizona Department of Health Services reports on medical cannabis program participation monthly and is generally two to three months ahead of ADOR.

As of July, there were 126,938 qualifying patient cardholders, and the downward trend continued to 124,496 in August from a high of 299,054 qualifying patients reported in January 2021 at the beginning of recreational sales.

In August, Arizona medical cannabis consumers purchased 4,719.26 pounds of marijuana in various forms. Year to date through August, that total is 37,979.71 pounds.

This story was first published by Arizona Mirror, which is part of States Newsroom, a network of news bureaus supported by grants and a coalition of donors as a 501c(3) public charity. Follow Arizona Mirror on Facebook and Twitter.
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