Arizona Medical Marijuana Market Sees Sharp Decline Following Adult-Use Legalization Photo by Josh Appel on Unsplash
March 16, 2021

The Arizona Department of Health Services (ADHS) recently released its monthly report on the state’s medical cannabis program for February 2021, the first full month in which adult-use and medical cannabis sales took place simultaneously in the state. Adult-use sales figures have not yet been released, but February’s medical cannabis sales volumes figures show sharp declines from the month prior. Additionally, significant year-over-year downturns in sales volume were reported for the first time since the inception of the state’s medical cannabis program in 2011.

As of February, Arizona’s medical cannabis program counted 301,612 patients on its rolls. That figure is up by 0.9% from the 299,054 patients registered in the program at the end of January. The rate of increase in patients documented in February is down compared to the 1.3% rise recorded in January. The number of registered patients in Arizona in January 2021 is also up by 33.1% year-over-year, from 226,677 in February 2020.

According to ADHS numbers, 11,885 pounds of cannabis flower were sold through the state’s dispensaries in February, a figure that is down by 25.8% compared to the 16,022 pounds retailed to registered patients in January. February 2021’s flower sales volume is down by 11.2% from 13,385 pounds in the same month the year prior.

The ADHS report also includes sales volume figures for edibles and “marijuana other,” which constitutes extracts and non-edible infused products. February saw 227 pounds of edibles sold to patients, down by 23.1% from 295 pounds sold the month prior. February 2021’s edibles sales volume is down year-over-year by 50.4%, from 458 pounds in the same month a year ago. An annual downturn in monthly edibles sales volume was reported each month in 2020, but the magnitudes of the decreases observed last year were not as large as February 2021’s.

1,294 pounds of “marijuana other” products were retailed to patients in Arizona in February, compared to 1,759 in January, a decrease of 26.4%. February 2021’s sales volume is up by 24.1% year-over-year, from 1,043 pounds in February 2020. Sales volume in this product category exploded in 2020, expanding by 92% compared to 2019. As such, while the growth rate in sales volume documented in February 2021 is significant when considered in a vacuum, it represents a large slowdown in purchasing by patients, as observed in other product categories.

Combined sales volume of all product types reached 13,406 pounds in February, down by 25.8% from January’s total sales volume of 18,076 pounds. February 2021’s cumulative sales volume is down 9.9% relative to a year prior, when dispensaries sold 14,886 pounds of product to patients.

We noted last month that the opening of adult-use sales in the state on January 22 appeared to have impacted demand in the medical market in the closing days of that month, with daily transaction figures declining noticeably. February 2021’s data shows a clear effect on patient purchasing due to adult-use legalization. On Fridays in February 2021, the number of transactions recorded by dispensaries reached roughly 35,000 – 37,500, down from around 42,500 – 45,000 transactions documented on the first two Fridays in January, prior to the commencement of sales to general consumers.

Again, the large month-over-month downturns noted in the preceding discussion apply to sales to registered medical cannabis patients only. Adult-use sales figures have not yet been made available by Arizona officials and, once they are, total sales volumes will certainly outpace those from prior months, resulting in tighter supply. Some licensed operators in the state are expanding their production operations, but with such projects just getting underway, it will be some time before new supply enters the market.