The state of Arizona has already raised more than $2 million in taxes on marijuana this year, less than two months after adult-use cannabis sales began in late January. The total includes more than $1.3 million in taxes on medical marijuana sales and more than $226,000 in taxes on recreational cannabis, according to data from the Arizona Department of Revenue. The state also collects an excise tax on cannabis as well as a transaction privilege tax (TPT), bringing the estimated total taxes collected so far this year to more than $2 million.

During the month of February, Arizona dispensaries sold more than 214,500 total ounces of medical marijuana products, including cannabis flower, edibles, and concentrates. Detailed data about dispensary sales for recreational marijuana are not available. Although the 2010 law that legalized medical marijuana requires such information to be collected by the Arizona Department of Health Services (DHS), last year’s voter initiative legalizing adult-use cannabis does not have similar requirements.

“Since this information is not reported to the Department, we will not be able to produce reports for adult-use sales data,” said DHS spokesperson Holly Poynter.

Nonetheless, the amount of taxes collected on recreational cannabis represent a multi-million dollar market, according to Demetri Downing of the Marijuana Industry Trade Association.

“There are a few million dollars being recognized already by the taxes,” explained Downing. 

“Actually, the numbers are a little lower than I thought they would be.”

Legal recreational sales began on January 22, less than three months after voters approved the Smart and Safe Arizona Act in November with approximately 60% of the vote. Under the law, adults 21 and older are permitted to buy and possess up to one ounce of cannabis flower or up to five grams of concentrates. Several existing medical marijuana dispensaries began adult-use sales on the first day, although many others did not begin recreational cannabis sales until February. 

Downing said that he expects to see adult-use cannabis sales increase as more dispensaries begin serving the recreational market. Lilach Power, who runs Giving Tree Dispensary in Phoenix, said her shop eased into the process.

“We had to take it slow,” said Power. “We went adult-use a little before we all thought.”

Power said that her business has had to adjust to new processes for adult-use sales, including learning how to complete new tax forms. In order to deal with the spike in business, which included a three-fold increase in foot traffic, Power hired 19 new employees for one shop. All the work and preparation have been worth the reaction from the shop’s customers.

“They are so happy,” Power said. “It’s like a kid in an ice cream shop.”

Despite the onset of recreational cannabis sales, the number of registered medical marijuana patients in Arizona climbed to in excess of 300,000 in February, the highest ever recorded. However, February 2020 sales of medical marijuana were down about 10% from the previous year, the first month-over-month drop recorded in the history of the program.