Why are Arizona Retail Cannabis Sales Declining? PHOTO: Andrew Seaman/Unsplash
October 18, 2021

The Arizona Department of Revenue (ADOR) recently published August cannabis sales and tax collection data. Adult use sales commenced in January 2021 and ADOR provides adult use and medical sales estimates from that point. The table below shows adult use and medical sales from January 2021 through August 2021, as well as total monthly sales.

[Editor’s Note: ADOR provides two separate estimates of adult use sales, one based on collections from the Transaction Privilege Tax (TPT) and another based on collections from an Excise Tax, both of which are applied to retail purchases of adult use cannabis. Previously, Cannabis Benchmarks reported adult use sales estimates based on the TPT. However, we have switched to reporting the adult-use sales estimates derived from the Excise Tax under advisement from ADOR. According to a September 8 email from a spokesperson for ADOR, “the Adult Use TPT tax base allows for some deductions that the Marijuana Excise tax does not. I would suggest you use the Excise tax as the closer number for taxable sales.”]


August adult use sales, at $53.8 million, fell 8.4% from July. Medical sales, at $61.5 million, fell 11.1% from July. Adult use sales made up 46.7% of all sales in August, up from 45.9% in July. Medical sales were 53.3% of total August sales.

Adult use sales comprised 22% of total sales in January, even though they only began on January 22, and it was expected adult use sales would soon overtake medical sales. In the period since January 2021, however, adult use sales have made up between 42% to 47% of total sales. Both medical and adult use sales are subject to Transaction Privilege Taxes and adult use retail sales are subject to a further 16% excise tax, which likely accounts in part for the lack of migration from medical to adult use seen in other states new to adult use legalization.

The Arizona Department of Health Services (ADHS) has issued its September Report on the state’s medical cannabis program. The number of qualifying patients fell by 4% from 313,001 in August down to 299,997 in September. Year-on-year, the number of qualifying patients has risen 7.2%.

ADHS also provides information on sales volume of cannabis flower, edibles, and “marijuana other” – extracts and non-edible infused products – to registered patients.

September flower sales volume was 9,317 pounds, down 151 pounds or 1.6% from 9,468 pounds in August. Year-on-year, flower volume has fallen 42.3%.

September edibles sales were 152 pounds, down 9% from August edibles sales of 167 pounds. Edibles sales are down over 57% year-on-year.

September sales volume of “other” products fell 4.3% month-on-month to 1,166 pounds, with August sales volume at 1,219 pounds. “Other” product sales volume is down over 30% year-on-year.

Total weight sold in September was 10,635 pounds, down 2% from 10,853 pounds in August. Total volume sold has fallen 41.5% year-on-year.

ADOR adult use and medical data do not reflect a strong migration from medical use to adult use, which might be put down to higher taxes on adult use sales. The year-on-year drop in volume of products sold, as reported by ADHS, suggests that the medical market may have been satisfying significant demand from general consumers who obtained patient registrations prior to adult-use legalization.