In the November 2020 election, Arizona became the 13th state to legalize recreational marijuana. Voters passed Proposition 207 by a 60% margin, allowing adults 21 and older to legally possess up to one ounce of marijuana (although no more than 5 ounces can be a concentrate or extract.) Applications for recreational dispensaries started being accepted and doled out by the Arizona Department of Health Services on January 19th. The State didn’t expect dispensaries to get up and running until about March, but some were already full-steam-ahead by late January. That’s by far the fastest of any state between voter approval and product hitting the shelves: less than two months between the Safe Arizona Act passing and sales beginning. In contrast, the state of Maine took just under four years to get things up and running.
As of January 22nd, recreational marijuana is officially available in Arizona. Many dispensaries, such as Territory and The Mint chose to begin their sales at 4:20 P.M. that day. State officials approved a total of 86 licenses by the evening. Some of those licenses were still being handed out day-of and more still are being processed. As long as the dispensary hasn’t had any previous and outstanding violations of the state’s rules on medical marijuana, applications have been smooth to get approval. Established medical dispensaries that opted to also get recreational licenses were the first to get the green light from ADHS and were permitted to apply early. That decision was made for a number of reasons. Primarily, the State wants local businesses to thrive and prefers to give them priority access. Smaller dispensaries might need a little bit of time to get things going and can’t advertise or expand as quickly as a large, already-established company coming in from out-of-state. The application to move into recreational sales costs a hefty $25,000. Additionally, the people who crafted Prop 207 figured that it would be faster to let companies that already have storefronts for their medical sales to begin to carry recreational marijuana in addition to the products they already have. The alternative could mean waiting years for businesses to develop. In that time, the Prop 207 proponents feared an illicit market would develop as it did in California, where Black Market pot sales remain sky-high.
Strong sales and long lines
There are about 120 existing medical dispensaries in the state. Many of those are owned by companies that have multiple locations – for instance, Curaleaf has 8 dispensaries in Arizona, all of which are now licensed to sell recreational weed; Harvest has 15 locations, of which 13 can now sell marijuana to anyone over the age of 21. Now that those businesses are open to the general public, crowds have been rolling in. The Harvest location in Scottsdale had a line wrapping halfway around the building Friday. Saturday, around 50 people waited outside in the rain, some for more than an hour, just to get into the Curaleaf in Phoenix. Marijuana sales in Arizona have been rising steadily for since they first started in 2012. Between 2019 and 2020, those sales spiked up 27%, from 83 tons to 106. Right now, there are nearly 300,000 people in the state with medical marijuana cards that allow them to purchase up to 2.5 ounces every two weeks. The recreational limit is set at one ounce, though there isn’t a limit on how frequently someone can visit a dispensary to purchase adult-use cannabis. Patients with a medical marijuana card are also permitted to buy higher-potency items. Recreational users are limited to 10mg of THC per serving in the edibles they can purchase. Under the Smart and Safe Arizona act, adult-use marijuana comes with a 16% excise tax. That falls in line with the state’s taxes on alcohol and tobacco. Patients with a medical marijuana card aren’t subject to that tax.
Projected revenue and tax distribution
A fiscal analysis for the Smart and Safe Arizona Act anticipated recreational cannabis would earn Arizona $166 million per year in tax and licensing fees after the program becomes fully operational. That money gets deposited to the Smart and Safe Arizona Fund, which is first used to pay administrative costs of the agencies that regulate it, such as Health and Human Services. From there,
- 33% of the funds go to community colleges
- 33.1% goes to local law enforcement and fire departments
- 25.4% is distributed to state and local transportation programs
- 10% heads to help with public health and criminal justice programs
- 0.2% is paid out to the Attorney General for enforcement. That would come out to $3,320,000 if the $166 million projection remains accurate.
Of the regular state and local taxes applied, the fiscal analysis anticipates money earned would reach about $88 million within the next few years. That money would go to general use. Prop 207 also mandated a single transfer of $45 million from the Medical Marijuana Fund for the Department of Health Services, a tuition program for universities, and an impaired driving program. The new market is also expected to create more jobs as it expands. To date, over 9,000 people work in dispensaries in Arizona. As more dispensaries open or as those that already exist expand, that number should steadily rise. Prop 207 still maintains employers’ ability to enforce zero-tolerance policies for workplaces that classify themselves as drug-free. Employers can still bar employees from using, possessing, transporting, or cultivating cannabis.
Arizona Dispensaries Association
Many of the state’s dispensaries are part of the Arizona Dispensaries Association, which describes itself as the “united voice of Arizona’s cannabis industry.” The group came about to help fight back against legislators who worked to limit access to medical cannabis. The ADA says certain lawmakers attempted to criminalize patients or subject dispensaries and cultivators to high taxes so they couldn’t succeed. From there, the group represented pediatric patients, lobbied for legislation regarding testing, and funded 2019 that upheld protections for cannabis extracts in Arizona. Now, the group plans to continue fighting in whatever capacity is necessary to protect access to recreational cannabis. It also hopes that with police no longer pursuing marijuana charges, the court system will be freed up to focus on what the group describes as “real crime.”