The Arizona Department of Revenue (ADOR) published cannabis tax collections and estimated sales information for February 2022, when combined adult use and medical sales were $121.2 million, down 2% from an upwardly revised $123.7 million in January 2022. Year-on-year, the first full year of adult use sales shows an increase of 27.8% in total sales, an increase in adult use sales of 72.8%, and a decrease of 4.7% in medical sales. The adult use market share has climbed in the majority of months over the first year of sales and recently jumped over the 50% mark. As with other states with well-established medical markets in which an adult use market is introduced, the adult use market slowly bleeds away medical use market share.
The lower January and February 2022 sales figures are likely a function of sharply lower cannabis prices in part, as well as perhaps indicating Arizona, like other states, may be seeing a seasonal demand trend, in which sales dip slightly after the holiday season.
Arizona February medical sales were $52.5 million, down 6.5% from a downwardly revised $56.1 million in January 2022 and down 4.7% from an upwardly revised $55 million in February 2021. Medical sales were 43.3% of total sales in February 2022, down from 45.4% in January 2022 and down from February 2021’s medical market share of 58.1%.
These data provide some evidence of medical consumers migrating to the adult use market, despite the 16% excise tax imposed on adult use consumers. Depending on their purchasing frequency and how much they spend, former medical consumers find the adult use market less expensive than maintaining registered patient status.