The Arizona Department of Revenue (ADOR) recently published cannabis tax collection information for September. Arizona’s tax collection history dates back to January 2021, when adult-use sales commenced. ADOR also reported medical cannabis sales for September.
Arizona total sales, adult-use and medical, reached $113.3 million in September. Adult-use sales were $55.7 million and medical sales were $57.6 million, making for a total sales drop of 5.5% versus August combined sales of $119.9 million. This is second month in a row of lower total sales, as well as declining sales in both the medical and adult-use markets.
Adult-use sales were 49.2% of total sales in September, a 2.4% increase over the August adult use share. In other states that have passed adult use sales with a well-developed medical use market, we see adult-use eventually outpace medical sales, but Arizona has yet to see this development with its adult-use market just 11 months old.
The table above depicts medical and adult use sales, the adult use percentage of total sales, and total sales. The adult use sales as a percentage of total sales increased in most months, but has yet to breach the 50% mark. Adult uses sales increased in the first six months but leveled off in the following months as post-pandemic employment began rising.
Total sales increased in the first five months after adult use sales began but fell back in tandem with higher employment data. Some market observers have attributed record legal cannabis sales in 2020 in part to workers staying home during the pandemic. In 2021, the unemployment rate in Arizona peaked at 6.9% in February and as of October unemployment is at 5.2%. We may also be seeing some seasonal demand trends manifesting in Arizona’s market. Sales in many legal markets have been observed to rise through the summer to peak in July or August, then decline in the autumn months.
Arizona Spot price remained rather flat during the pandemic, trading between $1,250 and $1,350 per pound, but began rising soon after adult use legalization was approved by voters in November 2020. Spot rallied from November 2020 through the end of April 2021, hitting near $2,070 per pound. As the pandemic effects started to recede, the spot price declined to nearly $1,750 per pound in July. As monthly sales remain strong overall, the spot price has started to track higher. Arizona does not have outdoor growing, thus our price assessment consists of greenhouse and indoor grown prices. As a result, we might expect prices to remain higher than those in nearby states where outdoor flower is factored into price assessments.
The Arizona Department of Health Services recently reported October data from the state’s Medical Marijuana Program. The total number of qualifying patients fell to 287,110, down by 12,887 qualified patients since September 2021, but down just 605 patients since October 2020. In fact, qualified patient numbers rose monthly after adult use began in January, peaking in July at 313,906. It is just in the past three months that qualified medical patient numbers have begun to fall.
The October medical cannabis transaction summary reports 9,144 pounds of flower – simply termed “marijuana” in the report – was sold to qualified patients, 173 pounds less than September 2021, but 47% less than the 17,286 pounds sold a year ago, prior to adult use legalization. The data suggests customers who previously accessed the medical market are now purchasing from the adult use sector.
ADHS also reports sales figures for edibles and “marijuana other” (extracts and non-edible infused products). October saw 151 pounds of edibles sold to patients, down from 152 pounds sold in September 2021, but down 58.5% from a year ago. Marijuana other sales were 1,168 pounds in October 2021, up two pounds from September 2021 sales, but down 58% from October 2020 ‘other’ sales.
Total monthly sales to patients came in at 10,463 pounds in October 2021, 173 pounds less than September 2021 and 42% lower than October 2020.
As the data makes clear, the total number of medical marijuana patients making purchases is shrinking, as are all types of product purchases, which may be due to the ease of access to adult use product and the proliferation of less expensive product types.