Sales of adult-use cannabis in Arizona hit a record $72 million in March, while purchases of medical cannabis dropped for the fifth month in a row. Regulated sales of recreational pot began in Arizona in January 2021, less than three months after the state’s voters approved a cannabis legalization measure in the November 2020 general election.

The Arizona Department of Revenue this week reported sales and tax revenue figures for March 2022 in the agency’s updated monthly report. The department also revised the reported sales for February 2022, increasing the total by several million dollars.

Sales of recreational pot in Arizona amounted to $72.3 million in March, increasing by more than $2 million over the previous month. Sales of adult-use cannabis were also up more than $2 million in February, following a slight dip in sales in January compared to the month before.

Sales of medical pot dropped to $49.4 in March, marking the first time sales of medicinal cannabis fell below $50 million since sales of recreational pot began last year. Medical sales hit their highest total of nearly $73 million in March 2021, dropping to more than $60 million per month over the next six months. Since October, sales of medicinal cannabis have dropped by more than $1.5 million every month as sales of recreational pot increased. Combined medical and adult-use cannabis sales came to $121.8 million in March.

The Department of Revenue also raised its reported figures for regulated cannabis sales for February. Sales of medical pot were increased for the month by $1.2 million to $53.7 million, while reported adult-use cannabis purchases were adjusted upward by $2.3 million, bringing the new monthly total to almost $71 million. The figure for total cannabis sales for February was revised up to $123.8 million.

Pot Sales Bring Tax Revenue to State Coffers

Cannabis taxes collected were also reported by the department. Arizona levies an excise tax of 16% on recreational pot and customers also pay the state sales tax rate of 5.5%. Medical weed patients pay the sales tax but not the excise tax. City and county sales taxes are also assessed on cannabis purchases.

In March, weed taxes collected totaled $21.3 million, including $4.1 million from sales of medicinal cannabis. Sales tax collected on recreational pot purchases came to $5.6 million, while the excise tax on adult-use cannabis generated $11.6 million in revenue.

“The legalization of cannabis in Arizona has been a boon for our economy and the state tax coffers,” Arizona Dispensary Association executive director Sam Richard said in statement quoted by the Arizona Mirror. “The financial benefits are important, but the social impact cannot be understated, as citizens no longer have to live in fear of having their lives disrupted by low level marijuana arrests and convictions.”

Last month, a report from the Institute on Taxation and Economic Policy found that Arizona and five other states raised more tax revenue from cannabis taxes than they did from taxes on alcohol. Together, the 11 states that have legalized sales of adult-use cannabis received about $3 billion in excise taxes on cannabis, while alcohol sales generated around $2.5 billion in tax revenue.

In 2021, Arizona raised $105 million from cannabis taxes, compared to $92 million in alcohol taxes. California received about $832 million in cannabis taxes, approximately twice the revenue generated by alcohol taxes. In Colorado, cannabis taxes totaling $396 million eclipsed alcohol taxes by a magnitude of eight times.

“This is still a small part of state budgets, but it’s a very quickly growing area. There aren’t many revenue sources that grow year over year. This has been a several-year trend now,” Carl Davis, one of the authors of the ITEP study, said in statement quoted by The Hill. “The early states, what you see is revenue start low and grow very, very quickly.”

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