Strong sales of recreational cannabis in Arizona means possible future supply issues

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Bethan Rose Jenkins, Cannabis News Writer/Editorial

The swift launch of Arizona’s recreational cannabis market seems to have paid off. The state, which legalized recreational cannabis on November 3, 2020 with the passing of Proposition 207, is serving the adult-use consumer demographic via dozens of its medical cannabis dispensaries. 

Reports confirm that vertically-integrated cannabis companies are already welcoming an influx of customers just three months after adult-use legalization was approved by voters. Impressively, amid the new launch, the adult-use market saw two to three times more sales than the medical segment.

This is according to various medical cannabis dispensary operators, of whom were granted the first opportunity to obtain a recreational license. In particular, flower sales are proving most popular among recreational buyers in Arizona — the average basket value is approximately $85, with flower products constituting around 65 percent of sales and vape-related products constituting 22 percent.

Arizona’s second-largest dispensary operator Curaleaf which boasts nine licenses and currently operates eight dispensaries has experienced major luck during the early days of the state’s recreational market. In fact, the company’s president Steve Cottrell says that early adult-use sales were up to two and a half times more than daily medical sales before the new market blossomed.

Moreover, in excess of 7,200 customers poured through the doors of The Mint Dispensary’s two Arizona-based stores within the first three days of opening. The Mint’s customers, on average, spent $78. 

Owners of The Flower Shop, which operates three dispensaries, claim that adult-use sales were up to three and a half times greater than medical sales during the market’s launch weekend.

Supply issues are likely, say cannabis dispensary operators in Arizona

Despite the initial success of Arizona’s recreational cannabis market, numerous operators are concerned that supply shortages could be on the horizon. COVID-19 is believed to have stunted cultivation, with the construction of new sites being heavily delayed amid the pandemic.

On the plus side, The Arizona Department of Health Services (AZDHS) intends on maintaining balance between supply and demand. The Department recently announced that off-site cultivation permits will be made available to recreational licensees by April. 

Officials from Arizona’s Marijuana Industry Trade Association say that this increase in cultivation facilities presents a major opportunity for the market to thrive, as well as to recover from supply-chain backlogs that occurred when cannabis testing requirements were imposed in November.

High hopes for Arizona’s recreational cannabis market, but sales insights are bleak

Based on MJBizDaily projections, Arizona’s recreational cannabis market could be worth $375 million-$400 million within its first year. If the market continues to move in the direction that it has done thus far, sales may top $700 million-$760 million by 2024. However, it should be noted that state-level recreational sales figures are not available at the current time.

On January 22, 73 of 130 available licenses were approved for recreational cannabis sales in Arizona. One week later, on January 27, a total of 95 licenses had been distributed among recreational retailers. An additional 26 licenses are anticipated to be awarded under the state’s social equity program, in addition to a spattering of licenses in “empty counties” — the term used for counties that have none or just one dispensary in operation.

At the current time, Harvest Health & Recreation is paving the way for Arizona’s recreational cannabis industry. The company holds 19 licenses and is serving recreational cannabis consumers via 15 dispensaries.