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Arizona's weed entrepreneurs sold $1.9 billion of marijuana last year — That's a lot of blunts
Consumer spending on cannabis — both recreational and medical — was measured by Headset, a Seattle, Washington-based market research company that specializes in studying the marijuana industry.
Medical marijuana has been sold in Arizona since 2010 but recreational cannabis products have been sold to the general public who are at least 21 years old for the first time last year.
Arizona saw more demand for cannabis than other states in the first year of legalization — a sign of industry success, according to the report.
“The trajectory of growth for the first year of operation is very impressive," the report's author Andy Fuller said.
Nevada, for instance, just broke $1 billion in sales last year, four years after recreational cannabis was legalized in the state back in 2017.
One factor could be that Arizona law allows a much wider range of products to be sold than its counterparts.
Here, you can buy not just raw marijuana flower buds to smoke at home, but also a dizzying array of tinctures, THC, and CBD-infused food products, concentrates, topical creams, capsules, and even pre-rolled marijuana blunts.
Demitri Downing, a consultant and CEO of the Marijuana Industry Trade Association, called the nearly $2 billion figure a “very good indicator” for the industry in Arizona. But, he emphasized, the full scope of the cannabis market is not reflected in consumer sales.
“The economic impact of the cannabis industry as a whole is really yet to be measured,” he said.
“The rest of the story is all the components.”
Downing is referring to the network of marijuana-affiliated companies that rely on an ecosystem of vendors, suppliers, transportation, manufacturing, warehouse storage, logistics, and marketing.
This doesn't include employee payroll for all the marijuana dispensary workers, warehouse associates, and even security guard contractors who check identification at the front door of retail sales locations. Analysts estimate that in other, more established markets like Colorado and California, the economic impact of the industry ranges in the tens of billions.
Headset, the market research company, looked at strictly recreational and medical consumer sales to come up with its grand total. The company says it uses a variety of point-of-sale data sources to come up with its figures.
Its sales number for Arizona is higher than the $1.2 billion in taxable cannabis sales that the Arizona Department of Revenue reported last month. The state agency has cautioned that its sales figures are still estimates.
Arizona's Revenue Department did not immediately respond to requests to clarify why its estimates are so much lower than the industry projections.
A spokesperson for Headset told Phoenix New Times in a statement that its research department is wary that the taxes collected so far by the state's Department of Revenue do not reflect total sales.
"As the program is new, [the state agency] is still working with providers to help them understand how much taxes are owed," said company spokesperson Morgan Hurley.
"We received confirmation in June 2021 and January 2022 that the tax revenues are incomplete as collections are still ongoing, even for previous months."
According to both the state and the new market research report, total monthly cannabis sales peaked in March 2021, then dipped slightly and stabilized at around $170 million a month by the end of the year.
Purchases of flower — a broad term for dried, smokable pot — accounted for around 47 percent of sales over the course of the year. But its share of the sales is slowly decreasing, according to Headset’s data analysis.
More Arizona consumers are buying vapor pens and edibles, as well. And the prices of most goods — from flower to concentrates — decreased over the course of the year, with the exception of vapes and tinctures.
Sam Richard, director of the Arizona Dispensaries Association, said in a statement that the sales numbers spotlighted “the wild success of the Arizona market.”
Downing, leader of the Marijuana Industry Trade Association, said that he thought that, despite some “hiccups and nuances to be corrected,” the successful first year was a credit to the state’s rollout.
“I think the tax rate was well-thought-out to encourage people to participate,” he said, comparing Arizona’s regulations to those in California, which levies an additional cultivation tax on growers.
Arizona does still have a 16 percent excise tax on retail sales, as well as a transaction privilege tax. Medical marijuana is only subject to the state sales tax, 5.6 percent, and varying local sales tax.
And the success of the first year of recreational cannabis has brought in big dollars to the state: Nearly $200 million in total taxes, according to the Department of Revenue, with more on the way.
It meant that Arizona had proved itself to be a "new frontier" for the cannabis industry, the report concluded.
From the unassuming exteriors of marijuana dispensaries, it's hard for newcomers to imagine the ambiance inside can be welcoming or even chill. Plus, of course, it's hard to envision the wide range of products for any and all needs that awaits.
The experience can be overwhelming for a newbie, who doesn't know what to expect. Displays showcase a dizzying array of products, ranging from marijuana buds, concentrates, and edibles to cartridges, paraphernalia, and more.
Anyone unfamiliar with cannabis may not know where to start.
Rob Lemberes, chief operations officer at The Flower Shop, which is currently remodeling its three stores in east Phoenix, Ahwatukee, and Mesa, offered some ideas.
“Don't be afraid to do a little bit of research and look at what you think you want,” Lemberes said, adding it helps when customers enter with an idea of what they are looking for.
Also, don't feel rushed just because there is a line, he explained. Take time to get the most out of being in the store.
Many first-time dispensary customers are people turning 21, people such as Emily Fehrenbach.
Since her recent milestone birthday, she has been to Territory Dispensary in Chandler, now Zen Leaf, three times. Like others reaching legal age, she had no experience with cannabis products. Her main intention was relaxation.
“The first time I didn't know what I was doing and I didn't know what to get. So I just went up and talked to the guy and told him what I was looking for,” she said.
“It was a good experience overall.”
Dispensaries can carry a wide variety of products, some more unusual than others.
“I was shocked at how many different selections I could choose from. They had a lot of products ranging in the strength of the strain. That was interesting to me,” Fehrenbach said.
After her few trips, Fehrenbach explained she will definitely be going back and is interested in going to different dispensaries.
Theo Ash, who turned 21 last fall, has yet to go to a dispensary, mainly because he hasn't felt the need.
“If I was dealing with a chronic injury or just stress, and I got into cannabis, obviously I would need a place to start,” Ash said. “I wouldn't really know what to do or what I needed to get.”
He said the dispensary, along with some internet research, is a good place to start.
You can skip the line by ordering ahead.
“It would be more comfortable if I went in [to the dispensary] and I just sounded like I knew exactly what I was talking about. I would prefer that but it's just not a realistic starting place.”
Lingo can range from indica, sativa, and hybrid when talking about types of strains, to shatter, crumble, wax and dabs, in reference to cannabis concentrate. Then there are all the accessories that go with different products such as cones, dab rigs (for concentrates), bongs, and various electric vaporizers.
This can be overwhelming for anyone unfamiliar, so here are some of the more common terms a newbie might hear.
Flower/ Bud: What most people think of when they think of weed. The bud of the plant is ground up and smoked.
Edibles- THC-infused food or drink items. Commonly gummies, chocolates, and brownies are available, but products like soda and savory foods can be found as well.
Concentrates- The extracted cannabinoids and terpenes from the plant. Cannabinoids are psychoactive ingredients, while terpenes give different strings different smells or tastes. Concentrates can come in different textures and forms—some need to be heated for consumption while others don't. The kind that does not need heat can be infused into edibles.
Cartridges - Another form of concentrate that is used with battery-powered vaporizers. They work like e-cigarettes.
Indica - An overarching classification for some marijuana strains. They are generally known to be more relaxing and can give a sleepy effect.
Sativa- An overarching classification for some marijuana strains. They are generally known to be more stimulating.
Hybrid- Strains of plants that are a mix of Indica and Sativa.
Once the lingo is mastered, then the new customer has to get used to the layout.
The packaging is sleek and even fun. Now that is legal thought and branding can be put into these products as much as any other.
"It is a lot different than what you would expect if you only saw drugs on TV," he said.
Lamberes said another group new to dispensaries is middle-aged adults. Kimberly Donohue, a new Phoenix resident, who is temporarily escaping the Midwest winter, could be a part of this new customer base, but isn't so sure yet.
Donohue hasn’t used cannabis products mainly because she doesn't know how they will affect her. For now, she and feels like she is able to relax without that little extra something.
“The whole thought of it is a little intimidating,” she said.
She has never gone to a dispensary, nor has much knowledge of cannabis products.
“I would have to rely on the expertise of the staff for sure,” she said. Donohue, like many others, would be interested in products in order to get a better night’s sleep.
For her, the other major plus to legalization is knowing what you are getting.
“That makes me feel more confident in what I'm purchasing,” she said.
While she does not consume cannabis products currently, she is open to trying it in the comfort of her home when she and her husband retire in the near future.
If that sounds like you, don’t be afraid to do research and try something out if it is intriguing. And enjoy the experience. That's what marijuana consumption is all about.
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