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The Arizona Department of Health Services has issued its end-of-year report for 2020, and to the surprise of virtually no one, medical marijuana sales increased year-over-year, for the eighth year in a row.
Arizonans purchased 106 tons of cannabis products from dispensaries in 2020, according to the report, and all signs point to much higher numbers in 2021.
That’s due largely to the fact that recreational cannabis is now legal for adults to buy as of January 22, 2021.
Between MMJ and recreational pot, dispensary companies in the state are planning to grow two-to-three times as much marijuana in 2021, but the reality of recreational in the state remains to be seen, said Sam Richard, executive director of the Arizona Dispensaries Association. Some of the revenue growth will be due to higher prices in the initial months of recreational sales, he added.
“Largely, the trajectory of the growth in medical sales will likely taper off” while the new combined industry reaches new frontiers, he said. Last year’s 106 tons in sales is close to the weight of a fully loaded space shuttle on its way to the space station, and while the medical program is “approaching cruising altitude,” the industry as a whole is set to travel much further.
Still, Arizona’s medical program is more “robust” than that of other states when they transitioned to recreational, and Richard expects a lot of “die-hard” medical consumers to keep their cards. (There’s a financial incentive for heavier users to keep their cards; cardholders who spend $100 a month or more at dispensaries would save good money over a year by avoiding the 16 percent excise tax on recreational products.) In fact, Arizona’s medical program was more popular than ever in 2020. The cardholding patient population grew to 295,295 by December 2020 and is likely over 300,000 today.
That’s a 34 percent increase over 2019. To compare, the number of patients grew by a (still-respectable) 25 percent from 2018 to 2019.
Demitri Downing, executive director of the Marijuana Industry Trade Association, said there are several ways to measure the Arizona marijuana market, but that saying sales will double “is conservative.”
“Certainly, the profits will double,” he said. “Triple, maybe more, depending on how supply and demand play out. The economics of marijuana is a brand-new discipline.”
Besides the grand totals, the DHS 2020 end-of-the-year report contains several other noteworthy facts:
* Legal marijuana sales in 2020 didn’t rise in any impressive amount, even though the pandemic reportedly has pushed many Americans to consume more alcohol, marijuana, and other drugs. Sales were up 29 percent in 2020 over the previous year. Yet 2019 saw a hefty 25 percent increase over 2018.
* Growth in Arizona dispensary sales has exceeded 4,140 percent since 2013. That level of growth isn’t quite as good as Bitcoin’s ludicrous percentage increase, but at least marijuana is real.
* Patients don’t pay an excise tax on medical marijuana, but they do pay state and local sales taxes. The combined total can vary depending on the city, but the average is more than 8 percent. Richard said the average price of an ounce is $275 to $325, figuring in the more expensive concentrated products. If the average ounce was $300, that means the industry took in more than $1 billion in revenue from sales, and state and city taxes from that would be roughly $80 million.
* The number of patients enrolled in the SNAP food assistance program in 2020 — (SNAP participants pay the state half of its usual fee for a medical card) — grew by more than 12,000 as the pandemic raged, to a total of 37,738. The percent of patients discounted because of SNAP in 2020 was 12.8 percent of the total, which is slightly more than a full percentage point higher than what it was in 2019.
* Sales of edibles decreased in 2020, flouting the normal trend of Arizona cannabis product sales. Dispensaries sold about 2.5 tons of edibles last year, which was 16 percent less than the 2.99 tons sold in 2019.
* Sales of “other” products, a catch-all the state uses that includes concentrates like shatter and vape-pen cartridges, more than made up for the decrease in edibles, with about 8.8 tons of product sold. That’s nearly double the 4.6 tons of “other” sold in 2019.
* The number of patients authorized to cultivate shot up by 87 percent in 2020, the biggest increase in years. More than 4,500 patients were allowed to grow last year, up from 2,424 in 2019. The increase from 2018 to 2019, for example, was only 5 percent.
Part of the effect comes from rural dispensaries moving to urban areas in preparation for the recreational law that many felt was sure to pass. The 2010 Medical Marijuana Act allows patients to grow up to 12 plants if they live more than 25 miles from an operating dispensary. With fewer rural dispensaries, more rural patients in 2020 were left without an option. Apparently, many of these folks applied for cultivating rights. Besides that, Richard said, other patients who were qualified to grow and were optimistic about the passage of the new legalization law, which allows adults 21 and older to grow up to six plants, decided to get a head start.
* The number of caregivers authorized to grow marijuana fell nearly to zero in 2020. Usually, about 35 percent or more of the state’s caregivers, who can grow or obtain marijuana for up to five other people, have grow rights. Last year, even though the total number of caregivers grew from 728 to 812, the number of caregivers with grow rights dropped from 273 to just seven.
Richard’s theory: The caregivers who were good at cultivating have been snapped up by the dispensary industry, which rewards their expertise more than any previous arrangement they had with patients. Dispensary operators are “upping their game,” and cultivating caregivers are the “talent,” he said.
Yet that could also mean a number of patients previously served by caregivers may be left without access to reasonably priced weed. If they don’t want to try growing it themselves, they can always hope that the glut of cannabis growing in Arizona later this year will lead to greater discounts.
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