Even though its adult-use market has only been open for three years, Arizona is seeing a slowdown in cannabis sales, much like other, more mature recreational states across the country.
In 2023, Arizona retailers have generated $1.13 billion in total cannabis sales through October, the latest data available from the state Department of Revenue. This represents a 4% decline compared to last year at this time, when retailers finished 2022 with more than $1.41 billion in sales, and puts the state on pace for possibly its lowest sales total in the program’s brief history (Arizona retailers generated just under $1.37 billion in sales in 2021, despite adult-use sales seeing a soft launch in late January of that year).
Arizona is following a similar trend as states like Colorado, where the medical market operates in tandem with the recreational market: medical sales are declining by about 34.5% over the past year, while recreational sales are growing by roughly 14.6%.
The rec market had its highest month of sales all-time at $92.3 million in March 2023; the medical market reached an all-time low of $25.3 million in October 2023.
As of November 2023, Arizona had about 118,000 registered medical patients, down substantially from its peak of over 300,000 in 2021.
The existing medical licensees enjoyed assurances that the state would only issue a small number of additional licenses, focused on social equity businesses, with the transition to an adult-use market — avoiding the saturation seen in states like Oregon and California, but limiting the opportunity for new businesses to enter the market without an existing licensee as a partner.