Cannabis is officially a billion dollar business in the state of Arizona.

Voters in the Grand Canyon State passed a measure at the ballot in 2020 that made recreational pot legal for adults ages 21 and older. Medical cannabis, meanwhile, has been legal in the state since 2010.

That made 2021 the first year with both markets open for business, and the results were lucrative for Arizona.

According to figures released by the state Department of Revenue, medical and recreational cannabis sales combined to generate more than $1.23 billion in revenue last year.

“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), as quoted by azfamily.com.

The Department of Revenue provided a detailed breakdown of the sales data, revealing that recreational adult-use pot brought in $528,001,278 in revenue, while medical cannabis generated $703,803,194.

According to the figures, November brought in $60,299,191 in adult-use sales, making it the highest-grossing month for recreational pot. It was also the only month of the year in which recreational sales topped $60 million. 

April was the top month for medical cannabis, with $72,944,477 generated then. Complete sales figures for December were not provided.

Moreover, the state raked in $196,447,570 in taxes on the combined sales last year, and that does not include sales in December. 

According to the Arizona Department of Revenue, “there is a transaction privilege tax (TPT) rate and an excise tax (16 percent) on the retail sales” of adult use recreational cannabis in the state.

In 2020, 60 percent of Arizona voters approved Proposition 207, a ballot initiative that legalized recreational pot use in the state. (Arizona was one of four states that year where voters approved legalization measures at the ballot, joining Montana, South Dakota and New Jersey in moving to end prohibition.) 

In August, Arizona launched a social equity program for aspiring cannabis dispensary owners as part of Prop 207’s commitment to “promote the ownership and operation of marijuana establishments and marijuana testing facilities by individuals from communities disproportionately impacted by the enforcement of previous marijuana laws.”

Through the program, the state’s Department of Health Services will award 26 dispensary licenses to applicants who come from communities most adversely affected by anti-drug policies.

“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 of Health Services explained. “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.”

But that effort has also faced scrutiny, with a group of female investors filing a lawsuit in November targeting the program. The plaintiffs, a pair of organizations known as the Greater Phoenix Urban League and Acre 41, assert that the rules governing the program are inconsistent with the goals of Prop 207.

Defendants in the suit are the state of Arizona, Republican Gov. Doug Ducey, the state Department of Health Services and Don Herrington, the director of the Department of Health Services.

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Policymakers in Arizona unveiled rules last week for a social equity cannabis program aimed at giving communities most affected by pot prohibition opportunities in the state’s newly regulated recreational cannabis market.

The Arizona Daily Star reported that the state’s Department of Health Services issued the final draft of its report on the social equity ownership program last Thursday. 

According to the Daily Star, the “major changes” issued by the department include “clearing up language around the transferability of a social equity license,” by barring “applicants from entering into prior agreements with larger retailers to sell or take over an applicant’s license.”

The Department of Health Services also voted to lower the initial application fee to $4,000 from $5,000, according to the Daily Star.

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,” according to the state’s Department of Health Services.

“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,” the department stated. “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.”

The program is born out of Proposition 207, which was passed by Arizona voters last year and legalized recreational marijuana use for adults in the state. Proposition 207 also contained a requirement for the state to “promote the ownership and operation of marijuana establishments and marijuana testing facilities by individuals from communities disproportionately impacted by the enforcement of previous marijuana laws.”

Twenty-six licenses will be issued through the program, and the department said it will begin accepting applications in December. 

Applicants must satisfied all of the requirements for the program, which include the following: the application “must list each individual who is a principal officer or board member of the applying entity”; “[no] one can be a principal officer or board member on more than two applications”; “each principal officer or board member must attest that they do not have an excluded felony offense”; “at least 51% ownership of the applying entity must belong to principal officer(s) or board member(s) who have documentation of completing a Department required training course and who meet at least 3 out of the 4 social equity eligibility requirements”; and “documentation must be provided confirming that these individuals cannot be removed from their positions without their written consent or a court order.”

In addition to the social equity ownership program, the state’s new marijuana law also includes a remedy for individuals previously busted for cannabis.

In August, the the Superior Court of Arizona in Maricopa County said that “an average of 650 people a week are filing petitions with the Superior Court of Arizona in Maricopa County to have felony marijuana-related convictions wiped off their records.”

The county explained that, under Proposition 207, “residents may petition the court to have their marijuana conviction expunged.” 

“Since filing started in July 2021, the Superior Court of Arizona in Maricopa County has granted 3,643 petitions for expungement,” the court released in a statement. “If a court grants a request to expunge a marijuana-related criminal charge, the case file and law enforcement records will be sealed, the conviction and sentence will be vacated along with any outstanding court debt imposed in connection with the expunged charge, and the defendant’s civil rights will be restored as to the marijuana-related charges.”

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