When analysts pinned a $750 million valuation on Arizona’s medical cannabis market, investors and “cannapreneurs” quickly started wondering how much a prospective recreational market could be worth in the conservative state. If all goes well this November, we will soon find out. 

On Monday, August 10, Arizona’s adult-use cannabis initiative was given the go-ahead to be featured on the 2020 ballot. If residents pull together and vote for legal weed, a recreational program could be established by as early as next spring. 

Introduced by Smart and Safe Arizona – a pro-cannabis group – Arizona’s adult-use cannabis initiative has already prompted many investors to snap up license deals. Thanks to the broader market opportunities that come with a license, business owners in possession of one can grow their worth by 30-80 percent.

“We will have adult use, the marketplace will double in size and an Arizona license is going to be one of the best investments” said cannabis consultant and founder of the Arizona Marijuana Industry Trade Association (MITA), Demitri Downing. 

Existing medical cannabis operators in Arizona would bag dual adult-use license by April 1, 2021 if the initiative passes. Under the terms of the proposed law, operators would charge a 16 percent retail sales tax on recreational products.

Arizona boasts one of the largest medical cannabis markets in the country

Existing medical cannabis operators in Arizona will be favored under the state’s recreational initiative; holders of medical cannabis licenses can operate a dispensary and on-site/off-site cultivation facilities. Should the initiative be approved during the November 2020 ballot, license holders will have first dibs on transitioning into a for-profit adult-use business.

Medical cannabis has been legal statewide since 2010; following the passing of Proposition 203. This year, sales are predicted to top $770 million-$910 million; based on projections featured in the new edition of the Marijuana Business Factbook. 

Despite the coronavirus pandemic slowing things down in other U.S. states, patients have steadily been stocking up on cannabis-derived medicines from the state’s 130 licensed dispensaries. Amid the COVID-19 outbreak, state officials deemed medical cannabis businesses in Arizona “essential business”. 

Between the months of January and May, sales soared 20 percent, with a monthly report from Arizona’s health department showing that 15,302 pounds was sold at the start of 2020, before increasing to 18,083 pounds this May. 

Supporters of Arizona’s adult-use cannabis initiative are confident it will qualify

A poll that was conducted in May by High Ground Public Affairs Consultants revealed that approximately 65 percent of probable voters are in favor of Arizona’s adult-use cannabis initiative. Moreover, 47 percent of the survey’s respondents said that they would “definitely” vote to pass the measure, while an additional 18 percent were leaning towards a “yes” vote.

There’s a good chance that those survey respondents will get their wish this November. Of the 420,000 raw signatures that were submitted, approximately 255,080 were validated. This surpassed the 237,645 signatures required for Arizona’s adult-use cannabis initiative to face a vote.

“We’re very confident (of passage),” said spokeswoman for Smart and Safe, Stacy Pearson, during an interview with Marijuana Business Daily reporters. “What our polling has consistently shown is that a significant portion of people who voted against marijuana legalization in 2016 have changed their minds.”

Financially supported by two of the state’s largest cannabis companies and multistate operators, Harvest Health & Recreation and Curaleaf, Arizona’s adult-use cannabis initiative includes a social equity aspect. A total of 26 licenses would be awarded among social equity applicants through a health department program.

Downing says that the MITA will be “deeply involved” in recreational-related activities to make sure Arizona’s adult-use cannabis program helps to resolve “social equity injustices that have occurred in Arizona,” which is heavily populated by Hispanics, Latinos and Native Americans.