In March 2018, Arizona saw record sales of adult-use marijuana. However, medical cannabis purchases dropped five months in succession. Regulated sales of recreational pot began in Arizona in January 2021, less than three months after the state’s voters approved a cannabis legalization measure in the November 2020 general election.

The Arizona Department of Revenue this week reported sales and tax revenue figures for March 2022 in the agency’s updated monthly report. Also, the department revised February 2022’s reported sales to increase the amount by several millions of dollars.

The March sales of Arizona’s recreational cannabis reached $72.3 million, an increase of more than 2 million from the prior month. After a slightly lower January sales figure, adult-use marijuana sales were up by more than 2 million in February.

The March sales of medical marijuana fell to $49.4 which was the lowest monthly sales since recreational cannabis sales began in 2013. In March 2021 medical sales reached their highest level of almost $73 million. However, they dropped to over $60 million per month in the six following months. Sales of medical marijuana have fallen by $1.5 million per month since October as recreational cannabis sales increased. In March, $121.8 million was spent on combined adult and medical cannabis.

For February, the Department of Revenue reported an increase in sales of regulated cannabis. Medical pot sales increased by $1.2million to $53.7million, and adult-use marijuana purchases were adjusted upwards by $2.3million, taking the total monthly to $71 million. Total cannabis sales in February were revised to $123.8million.

Pot sales generate tax revenue for the State coffers

The department also reported the collected cannabis taxes. Arizona has an excise rate of 16% for recreational marijuana. Additionally, customers must pay the 5.5% sales tax. The sales tax is not payable by medical weed patients. Cannabis purchases are subject to sales tax in the city and county.

The March weed tax collection totaled $21.3million, with $4.1 million coming from the sale of medical cannabis. The sales tax paid on recreational marijuana purchases was $5.6 million. However, the revenue from excise taxes on adult-use cannabis came in at $11.6 million.

“The legalization of cannabis in Arizona has been a boon for our economy and the state tax coffers,” Arizona Dispensary Association executive director Sam Richard said in a statement quoted by the Arizona Mirror. “The financial benefits are important, but the social impact cannot be understated, as citizens no longer have to live in fear of having their lives disrupted by low level marijuana arrests and convictions.”

According to an Institute on Taxation and Economic Policy report, Arizona and five other states have raised more taxes from cannabis taxes last month than the alcohol tax. The 11 legalizations of adult-use marijuana have collectively generated about $3 billion in taxes, and $2.5 billion in revenue from alcohol sales.

Arizona generated $105million from marijuana taxes in 2021 compared with $92 million for alcohol taxes. California received $832million in cannabis taxes. This is approximately double the amount generated by alcohol taxes. Colorado’s total cannabis tax revenue of $396million was eight times greater than that generated by alcohol taxes.

“This is still a small part of state budgets, but it’s a very quickly growing area. There aren’t many revenue sources that grow year over year. This has been a several-year trend now,” Carl Davis, one of the authors of the ITEP study, said in a statement quoted by The Hill. “The early states, what you see is revenue start low and grow very, very quickly.”