Regulated sales of marijuana in Arizona topped $1.4 billion last year, according to state data, marking the third year in a row that licensed weed sales have exceeded $1 billion in the Grand Canyon State. Sales of recreational marijuana totaled more than $1 billion in 2023, while sales of medical cannabis brought in nearly $350 million, the Arizona Mirror reported on Tuesday.

Arizona’s continued strong weed sales were welcome news for the state’s licensed cannabis businesses. Luke Flood, senior vice president and West regional leader for multistate operator Curaleaf, said, “Arizona has been a strong success story for us, and has become one of the top markets in the country for Curaleaf.” 

“Since the launch of adult use, we have seen a lot of consolidation in the market on the retail side, along with a multitude of new third-party brands and products coming into the market, resulting in a wider selection for consumers at an affordable price,” Flood wrote in an emailed statement. “Uniquely, Arizona offers one of the lowest prices per gram at the retail level in the country.”

Adult-Use Sales Dominate the Arizona Market

Adult-use cannabis sales came to $1.1 billion in 2023, according to data from the Arizona Department of Revenue (ADOR), or about 72% of the year’s total sales. The year before, recreational marijuana sales contributed 70% of the yearly total. In 2021, the year adult-use cannabis sales began in Arizona, recreational weed made up only 45% of the state’s total cannabis market.

“Reaching $1.4 billion in sales is a huge milestone for the state and I think it speaks to the wider efforts of de-stigmatization surrounding the plant,” Josh Hirschey, president of Arizona-based concentrate manufacturer Timeless, said in a statement.

“The consumer demand for high-quality cannabis is there and Arizona brands are strategic in navigating natural limitations to normalize the plant,” he added.

Monthly sales of recreational marijuana have totaled between about $80 million and $93.5 million since July 2022, peaking in March 2023 at $100 million. In January, adult-use sales dropped to $76.8 million, the first time in 18 months the figure was below $80 million.

Medical cannabis sales totaled $348 million last year as the market for medicinal weed in Arizona continues to decline. Medical sales hit a monthly sales record of $73.4 million in April 2021 and have steadily decreased nearly every month since then.

The decline in medicinal cannabis sales has coincided with a drop in the number of registered patients in Arizona’s medical marijuana program. Last month, the total number of medical marijuana cardholders was 111,168, down from the peak of 299,054.

Weed Taxes Fund Social Services

Arizona levies a 16% excise tax on adult-use cannabis sales in addition to the usual sales tax. Medical patients pay the sales tax of about 6%, depending on the area. Additionally, local jurisdictions add a tax of about 2% to all weed sales. 

Last year, cannabis excise taxes totaled $172.8 million. Since recreational marijuana sales began in January 2021, the marijuana excise tax has generated $451 million in revenue for the state.

Approximately one-third of Arizona’s marijuana tax revenue is earmarked for community college and provisional community college districts and 31% is dedicated to fire departments, fire districts, law enforcement and other first responders. One-fourth of state cannabis taxes are reserved for the Arizona Highway User Revenue Fund, while 10% is dedicated to the justice reinvestment fund supporting public health services, counseling, job training and other social services for communities that have been disproportionately affected by the War on Drugs.

Although Arizona’s cannabis market has begun to stabilize, many of the state’s weed retailers are still optimistic about this year. Eivan Shahara, CEO of Mint Cannabis, said the business is “anticipating an even busier 2024, as we prepare to employ more people to serve more customers at our additional dispensary locations.”

“The marijuana industry is blossoming into a significant job creator,” Shahara wrote in an email to High Times. “It’s estimated that the cannabis industry employs about 500,000 full-time equivalent positions in the U.S., with about 280 new jobs being added daily. This showcases a promising trend, as more than 100,000 new jobs were established in the previous year, making the cannabis industry one of America’s fastest-growing job sectors.”

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Lawmakers in Washington State “recently passed a bill granting an exemption from the 37% excise tax for medical marijuana patients and designated providers,” according to Forbes.

The passage of the measure eliminates  what has been characterized as “one of the highest tax rates imposed on medical marijuana products.” 

The bill, HB 1453, was originally introduced last year. 

Per an official legislative summary of the proposal, the bill aimed to provide “a tax exemption from the 37 percent cannabis excise tax for qualifying patients and designated providers with a recognition card on purchases of cannabis products that are labeled as Department of Health (DOH) compliant product and tested in accordance with the DOH’s rules.”

“There is levied and collected a cannabis excise tax equal to 37 percent of the selling price on each retail sale in Washington of cannabis concentrates, useable cannabis, and cannabis-infused products. This tax is separate and in addition to general state and local sales and use taxes that apply to retail sales of tangible personal property, and is not part of the total retail price to which general state and local sales and use taxes apply,” the summary said. “The tax must be reflected in the price list or quoted shelf price in the licensed cannabis retail store and in any advertising that includes prices for all cannabis products. All revenues collected from the cannabis excise tax must be deposited each day in the Dedicated Cannabis Account.”

The summary continued: “A tax exemption is provided to qualifying patients and designated providers who hold a recognition card, from the 37 percent cannabis excise tax, on their purchases of cannabis products that are labeled as a Department of Health (DOH) compliant product and tested in accordance with the DOH’s rules. Each seller making exempt sales must maintain information establishing eligibility for the exemption in the form and manner required by the Washington State Liquor and Cannabis Board (LCB). The LCB must provide a separate tax reporting line on the excise tax form for exemption amounts claimed.”

The Seattle law firm Harris Sliwoski provided more background on the measure and its journey through the Washington legislature, noting that the 37 percent tax imposed an unnecessary burden on patients.

“On March 6, 2024, the Washington Senate passed HB 1453 which will provide an exemption from the 37% excise tax for medical cannabis patients and designated providers. The bill now waits for signatures and executive action to become law. First introduced in 2023, HB 1453 sought to harmonize the existing medical exemptions from general sales and use taxes with the 37% excise tax on cannabis sales,” the law firm explained. “Medical cannabis patients and providers face a significant financial burden when patients and providers are unfairly taxed the same as recreational consumers. Primarily, medical cannabis is not recreational or a luxury, but a necessity for many people who suffer from chronic pain, epilepsy, PTSD, and other conditions. Medical cannabis is often the only effective treatment that allows them to function and improve their quality of life. Medical cannabis patients and providers must already jump through additional regulatory hoops to stay compliant with the LCB and the DOH and the imposition of additional taxes only exacerbates this hardship. Medical cannabis patients and providers follow strict rules and guidelines to access the medicine not required by recreational cannabis users and providers, and it is unjust to further penalize those medical patients and providers.”

As the firm pointed out, the 37% tax was all the more onerous given that medical cannabis is both “already expensive and not covered by insurance or public health programs.”

“Adding a tax aimed at recreational sales on top of that makes it even more unaffordable for many patients who are already struggling financially. This can force them to reduce their dosage, switch to cheaper but less effective products, or even turn to the recreational market which does not have the same DOH requirements and compliance standards,” the firm said. “Taxing medical cannabis patients the same as recreational consumers is a form of discrimination that harms their health and well-being. It also goes against the principle of harm reduction, which is one basis of medical cannabis legalization policy.”

The bill will now head to the desk of Democratic Gov. Jay Inslee. If he adds his signature, the bill “will take effect ninety (90) days after the adjournment of the current legislative session and will provide medical cannabis patients and providers a much-needed tax exemption for their medicine,” Harris Sliwoski said.

“Washington lawmakers have finally acknowledged that medical cannabis should be treated as a medicine, not a commodity, and exempted from the 37% excise tax along with the current exemption from general and local sales and use taxes,” the firm added. 

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Following the introduction of Senate Bill 486, a cannabis legalization bill first introduced two months ago, the Wisconsin Department of Revenue released a fiscal report of the impact of legalization.

So far, SB 486 has received one Senate reading on Oct. 9, two additional cosponsors, and a fiscal estimate first published on Oct. 25.

Wisconsin has no data to build off of any existing cannabis industry but it used data from neighboring states of Michigan, Illinois, and Minnesota to get a better idea of the effects and potential benefits of legalization. “All three states generate revenues through a variety of permits/licensing fees and excise taxes on retail sales (medical exempted), in addition Illinois imposes an excise tax on sales by growers to retailers,” the report stated. “Minnesota which legalized marijuana this year offers no historical data to estimate sales and tax revenues.”

The report stated that a 15% excise tax revenue in Wisconsin could generate up to $24.6 million in the first year, followed by $48.6 million in the second year, and $60.1 million in the third year. Additionally, a 10% excise tax on cannabis retailers could net up to $19.1 million in the first year, $47.3 million in the second year, and $64.9 million in the third year.

A 5% state general sales tax on cannabis would also show a collection of $9.5 million in the first year, $23.6 million in the second year, and finally $41.7 million in the third year.

Wisconsin also lumps together county tax estimates, along with a “stadium tax,” or baseball stadium tax for the counties of Milwaukee, Ozaukee, Racine, Washington, and Waukesha. Together, this 9.6% state sales could collect up to $0.9 million in the first year, $2.3 million in the second year, and $3.1 million in the third year. Additionally, the report mentions Milwaukee-specific sales tax of 2.5%, for $0.2 million in the first year, $0.6 million for the second, and $0.8 million for the third.

Rough totals per year include $54.3 million for the first year, $122.8 for the second year, and $170.5 million for the third year.

The fees include administrative and staffing requirements, which would cost $4 million to implement, and an additional $4.5 million for expanding staff later on.

The legalization effort was launched by Sen. Leader Melissa Agard and Rep. Darrin B. Madison, Agard announced SB 486 in September. “I’ve said this time and time again, we know that the most dangerous thing about cannabis in Wisconsin is that it remains illegal.” Agard said in a press statement. “For the past decade, I have worked to undo Wisconsin’s antiquated and deeply unjust marijuana policies and put our state on a prosperous path forward.”

SB 486 would legalize possession of cannabis for residents over 21 years of age, and establish a regulatory foundation for cultivation, production, and sales.

Agard noted that people in Wisconsin are traveling to other local states to get access to cannabis products. “Right now, we are seeing our hard-earned money go across the border to Illinois, Michigan, and Minnesota to the tune of tens of millions of dollars each year,” Agard said. “That is money we could be reinvesting to help support our friends and neighbors and make our state a place where people want to live, work, and play.”

Madison also said in a statement that it is the right of citizens to be able to purchase and consume cannabis safely without fear of criminalization. “According to the ACLU, Black people were 4.24 times more likely to be arrested than white people in Wisconsin during 2018,” Madison said. “Similar disparities exist in convictions, leading to immeasurable harm to black communities in Wisconsin. The bill we’ve introduced today lays a solid foundation for those that have been harshly convicted for non-violent possession charges and the ramifications of those convictions.” 

Earlier this year in March, a report showed that the state of Illinois has collected $36.1 million in tax revenue from Wisconsin residents crossing state lines to purchase cannabis legally. “It should upset every Wisconsinite that our hard earned tax dollars are going across the border to Illinois,” Agard stated. “This is revenue that could be going toward Wisconsin’s public schools, transportation infrastructure, and public safety. Instead, Illinois is reaping the benefits of Republican obstructionism and their prohibitionist stance on marijuana legalization.”

Later in August, Agard congratulated the state of Minnesota on the launch of legal cannabis sales, and called for the same to happen in Wisconsin soon as well. “Wisconsin is an island of prohibition. Now, approximately 700 miles of Wisconsin land borders a state with legal cannabis,” Agard said. “Choosing to ignore this issue, as my Republican colleagues continue to do, is not a winning position.”

Wisconsin is making progress, but it’s not likely that SB 486 will pass due to strong opposition from legislators. But those individuals’ opinions don’t match that of Wisconsinites, with 64% of registered voters supporting legalization, according to a November 2022 poll. In those results, 82% of Democrats said they supported legalization, along with 75% of independents, but only 43% of Republicans. In order for SB 486 to proceed, it must be approved by the legislature, which currently consists of a Republican majority.

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Heady Vermont reports that sales that month amounted to $6,477,957, which also represented a “a slight uptick in rate of sales growth, around 6.9% from January to February.”

The outlet has more details on the figures from February:

“The state’s mandatory 14% cannabis excise tax, which must be applied to all adult use cannabis purchases at retailers, brought in $906,914 in February. An additional 6% state sales tax, which must also be leveraged on cannabis products, generated another $388,677. To date, cannabis retailers in Vermont have sold $24,404,171 worth of cannabis products and collected $3,416,584 in excise tax since the state’s adult use market saw a modest launch last fall, with just three Vermont dispensaries licensed and open on October 1. Since October, that number has increased to nearly 50 retail establishments, with 52 Vermont dispensaries currently approved for licensure as of last week’s monthly meeting.”

Vermont’s adult-use cannabis market launched in October of last year after lawmakers in the state passed a law in 2020 establishing regulations for legal weed sales.

The state had essentially legalized recreational cannabis in 2018 when lawmakers ended the ban on personal possession and cultivation, but that measure failed to establish the framework for a market. 

The state’s Republican governor, Phil Scott, signed both of those bills.

“This new bill requires cities and towns to authorize these businesses before retail establishments may open. It ensures local zoning applies to cannabis cultivation and production. It dedicates 30% of the excise tax, up to $10 million per year, to education and prevention efforts. And the sales and use tax on cannabis would fund a grant program to expand afterschool and summer learning programs,” Scott said after signing the 2020 legislation. “Additionally, the FY21 budget includes language I proposed to move toward a universal afterschool network, which is based on a successful model from Iceland and is focused on preventing drug use and improving academic and social outcomes.”

In his statement at the time, Scott also called on lawmakers to continue to improve the law.

“Their work is not done,” he added. “The Legislature needs to strengthen education and prevention – including banning marketing that appeals in any way to our kids – otherwise they are knowingly failing to learn the lessons of the public health epidemic caused by tobacco and alcohol.”

“This has been a top priority for the majority in the Legislature for four years, but their work is not complete. They must ensure equity in this new policy and prevent their priority from becoming a public health problem for current and future generations. For these reasons, I am allowing this bill to become law without my signature,” Scott continued.

After the first legal stores opened for business in the fall, the state said that the stores sold $2.6 million worth of cannabis products in October.

Lawmakers in Vermont have continued to push for reform of the state’s drug laws. In March, they introduced several different bills that would have legalized psychedelics such as mushrooms, among other drugs.

One of the bills introduced would decriminalize all drugs. 

The text of the measure reads: “This bill proposes to change the penalties for possession of a personal use supply of drugs from a misdemeanor or low-level felony to a civil offense subject to a $50.00 penalty. A person cited for such an offense may avoid paying the penalty by agreeing to participate in a screening for substance use disorder treatment and related services. The bill would also establish the Drug Use Standards Advisory Board for the purpose of determining the benchmark personal use dosage and the benchmark personal use supply for regulated drugs with a goal of preventing and reducing the criminalization of personal drug use. Individuals previously arrested for or convicted of possession of a regulated drug in an amount under the benchmark personal use supply amount would also be eligible for immediate sealing of criminal history records. Additionally, to prevent overdose, the bill would also authorize the operation of drug-checking programs to allow individuals to obtain analysis of a regulated drug previously obtained by an individual for purposes of determining the chemical composition of the substance and identifying chemical contaminants. The bill would establish a pilot project to support the development and operation of such programs.”

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Vermont’s adult-use cannabis industry took off with a bang. According to the Vermont Department of Taxes, Vermont cannabis stores sold $2.6 million worth of product in October, the first month of legal cannabis sales.

“It really is just kind of tracking pretty closely with what our projections were,” Brynn Hare, executive director of the Vermont Cannabis Control Board told Seven Days. “If you carry those numbers out—if we continue to get licenses out, we get the tourist revenue that we were anticipating into the state—then I think we’re on track to hit our projection for [fiscal year 2023].”

According to James Pepper, chair of the Vermont Cannabis Control Board—$2.1 to $2.4 million in excise taxes could be collected during the first nine months of cannabis sales. That translates to around $233,000 to $267,000 per month. “They look pretty much like our projections were accurate,” Pepper said.

Seven Days reports that Vermont legislature’s Joint Fiscal Office predicted higher numbers, with annual sales estimates ranging from $3.3 million to $9.1 million, translating to monthly excise tax revenues of $275,000 to $758,000.

In 2020, Vermont became the 11th state to tax and regulate cannabis. Two years later, sales figures are beginning to show the rewards. Adult-use cannabis sales officially launched in Vermont recently, with stores in three communities opening their doors to customers.

The three retailers to open this weekend were FLORA Cannabis in Middlebury, Mountain Girl Cannabis in Rutland, and CeresMED in Burlington, according to the Associated Press, which noted that a “fourth business has been licensed to sell recreational pot but isn’t ready to do so yet.” 

Vermont’s 2018 law, which was signed by Republican Gov. Phil Scott, did not establish a regulatory framework for an adult-use cannabis market, making Vermont an outlier compared to other states with legal cannabis. That changed two years later in 2020, when lawmakers in the state approved a bill that set up a regulated marijuana industry.

Vermont’s Cannabis Tax Structure

Officials also say the state has collected $329,231 in excise tax revenue—set at 14%—in the past two months since sales began. Patrons must also pay Vermont’s 6% sales tax on general sales, which amounted to another $144,000 for the state.

“Those numbers are actually right on track with our projected numbers from our financial model,” Nellie Marvel with the Vermont Cannabis Control Board told WCAX. The state now has two dozen stores and Marvel says they are expecting tax dollars to steadily increase. “The number of retailers that are open, the price of cannabis—and the price of cannabis, of course, is a function of the number of cultivators that are licensed, the size of their harvest—and the state’s tourism numbers.”

Under Vermont law, a portion of the excise tax revenue is allocated to fill any deficit in the control board’s budget. Regarding the rest of the excise tax revenue, 70% goes to the state general fund, and 30% goes towards substance abuse and prevention funds. Cannabis sales tax revenue is earmarked for after-school and summer learning programs.

According to the latest count, the control board approved licenses for 36 cannabis shops throughout the state.

Cannabis stores are stocking up in anticipation of busier days during the holidays. “Wednesday was awesome,” Sarah Coshow, director of retail operations at Green State Dispensary, told My Champlain Valley. “Everyone preparing to go home to the family. They did a lot of preparation by standing in line and picking up some pre-rolls and edibles.” 

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Cannabis tax revenue in Massachusetts is performing better than projected, over four years into the state’s adult-use market. According to the most recently available data, Massachusetts reported collecting $74.2 million in marijuana excise taxes—much more than the $51.3 million in alcohol excise taxes that were collected. 

Alcohol sales continue the downward trend that began two decades ago, according to data collected by Gallup polling, despite a temporary sharp uptick in alcohol sales amid COVID. Analysts have wondered if there is a correlation between cannabis reform and alcohol sales.

The trends seen in Massachusetts are no different. Fortune reports that alcohol excise taxes imposed on each gallon of alcohol produced also remained flat over the last five years, at $0.55 per gallon of wine, and $4.05 per gallon of hard alcohol. 

Massachusetts collected over $112 million in adult-use cannabis sales excise tax revenue in 2021—206 percent higher than projected—according to a Monthly Public Meeting presentation from data from the state’s Cannabis Control Commission. 

“This number also underscores the entire agency’s tireless efforts, particularly those of our hardworking staff, to thoughtfully regulate a safe, accessible, and effective adult-use marketplace that keeps critical tenets of our mission—public health, public safety, and equity, among others—front of mind,” Commission Executive Director Shawn Collins said in a statement on January 25. 

The state charges an excise tax of 10.75 percent on the projected retail price of recreational cannabis in addition to a 6.25 percent state sales tax, plus a local tax of up to three percent. 

Cannabis sales are doing much better than anticipated, despite all of the hiccups along the way such as COVID. But analysts say the surge in cannabis sales in Massachusetts comes at no surprise.

Vivien Azer, a Wall Street research analyst and managing director at Cowen who covers the emerging cannabis sector told local news station WCBV that when states convert from medical cannabis to adult-use, it typically leads to a doubling or even tripling of revenues “almost overnight.”

Kicking off recreational cannabis sales in any state is something of a spectacle to be celebrated.

Mikayla Bell, community outreach manager for NETA, one of the largest cannabis retailers in the state. “I think that people are looking for an alternative to make them feel better,” Bell told WCBV. “Oftentimes people are turning to alcohol for relief. And now they found another product with without the hangover, without the calories.”

Cannabis sales in Massachusetts high a milestone last September when sales in the state eclipsed $2 billion.

During the first year of cannabis sales, from November 2018 through 2019, 33 cannabis retailers generated $393.7 million in gross sales. Sales for all of the 2019 calendar year reached $444.9 million. 

In 2020, 91 adult-use cannabis retailers tallied $702 million in gross sales, despite being closed for two months due to the pandemic.

Most states impose a relatively high excise tax rate on cannabis. California’s cannabis tax hike didn’t go over well with legacy growers, for instance. But cannabis isn’t the only industry that faces steep taxes.

Alcohol taxes in Massachusetts could soon see a hike as well. State Representative Kay Khan filed a bill to double the excise taxes on beer, wine and liquor with H 2973. The state spends $2.6 billion each year to combat alcoholism and addiction, and should consider making the industry pay for that themselves.

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The excise tax, as it is now, is devastating small businesses. This craft cultivator is pushing for reform.

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