Last year, Arizona started to allow for the sale of recreational cannabis and the medical cannabis market has been feeling the effects of the development.
According to tax and sales data compiled by the Arizona Department of Revenue, medical cannabis sales dropped to less than $45 million in May, which was the lowest amount since recreational sales commenced in January 2021.
Based on the data available from Arizona’s Department of Revenue, the state has sold more than $1 billion of medical and recreational cannabis so far this year. In May, more than $120 million of medical and recreational cannabis was sold which came in below the amount of sales reported in April.
Last year, Arizona generated approx. $1.4 billion of medical and recreational cannabis sales and we expect the state to surpass this amount by the end of the year. We consider Arizona to be one of the most underappreciated cannabis markets in the United States (US) and are surprised by the apparent lack of interest.
When Arizona’s recreational cannabis market opened, we noticed a spike in interest from US cannabis firms. Since then, momentum has been trending lower (as to the level of interest in the market) and we believe the market is discounting the potential value that is associated with the state over the long-term.
Although the US cannabis market has reported impressive growth on a year-over-year basis, the sector has been under considerable pressure. Over the next year, we expect the trend to change and believe we will see more consolidation as a result of the recent weakness. We are of the opinion that companies with leverage to Arizona will benefit from consolidation and will closely follow how the sector continues to advance.
If you are interested in learning about US cannabis companies that are capitalizing on Arizona’s cannabis industry, please send an email to email@example.com with the subject “Leading Arizona Cannabis Operators” to be added to our distribution list.