Cannabis sales in Arizona exceeded $1 billion dollars in 2022 as the state’s recreational marijuana market experienced strong growth in its second year of sales. Total weed sales came to $1.4 billion last year, according to data from the Arizona Department of Revenue, an amount roughly equal to the cannabis sales recorded in 2021.

Adult-use cannabis sales for 2022 reached $950 million, soaring to 70% of the state’s total marijuana sales for the year. Sales of medical marijuana were down significantly over the previous year, however, dropping to just over $500 million in 2022. 

Arizona’s recreational marijuana retailers closed 2022 with the strongest month of the year in December, ringing up about $86.6 in adult-use cannabis sales, up slightly from the $85.8 million recorded the month before. Sales of medical marijuana continued the downward trajectory prompted by the legalization of recreational cannabis, dropping slightly from $31.9 million in November to $31.1 million for the last month of 2022.

Arizona legalized recreational marijuana in 2020 with the passage of Proposition 207. Known as the Smart and Safe Act, the ballot measure was approved by 60% of the state’s voters. Licensed sales of recreational marijuana began in the state on January 21, 2021, less than three months after the ballot measure succeeded at the polls.

A separate ballot measure, Proposition 203, legalized the medicinal use of cannabis in Arizona in 2010 with just over 50% of the vote. The first licensed medical marijuana dispensary in the state began serving patients on December 6, 2012. Combined, the state’s medical marijuana and adult-use cannabis retailers have sold a total of $2.9 billion since recreational marijuana sales began two years ago.

More Reforms Still Needed in Arizona

Cannabis advocates in Arizona say that the state has made significant strides in reforming the state’s marijuana policy. But while sales have been strong the first two years of recreational marijuana sales, continued reform at the state and federal levels will be needed for the cannabis industry to become a major contributor to the state’s economy.

“We don’t see SWAT teams busting in the doors of dispensaries,” Aaron Smith, CEO of the National Cannabis Industry Association, said late last year. “But we do have problems with not being able to take tax deductions like a normal industry, or being able to have interstate commerce, which really creates a barrier to entry for a lot of folks.”

Despite the challenges, Smith says that Arizona is becoming a model for successfully transitioning to a regulated cannabis economy.

“Cannabis is used across demographics, boomers and millennials, and Gen Z, people over 21 are using responsibly and we’re glad to see that,” Smith said. “Arizona law is by and large working well.”

Legal Weed Brings New Tax Revenue

The legalization of cannabis has marked the creation of a new stream of tax revenue for the state’s coffers in Arizona. Tax revenue in December alone totaled nearly $23 million, bringing the total marijuana taxes collected by the state in 2022 to almost $270 million.

The state collects a 16% tax on recreational marijuana sales in addition to approximately 6% in sales tax. Medical marijuana patients pay only sales tax on their cannabis purchases. Local jurisdictions add additional taxes of about 2% to marijuana sales.

About a third of cannabis tax revenue collected in Arizona is reserved for community college and provisional community college districts, while 31% is dedicated to police, fire departments, fire districts and other first responders. A quarter of state marijuana taxes go to the Arizona Highway User Revenue Fund, while 10% is reserved for the justice reinvestment fund, which supports public health services, counseling, job training and other social services for communities that have been adversely affected and disproportionately impacted by decades of marijuana prohibition.

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