Arizona’s Adult-Use Cannabis Sales Generate Nearly $260 Million in Tax Revenue

In 2020, 60% of Arizona voters approved Proposition 207 (the Smart and Safe Act) to legalize and regulate cannabis for adults. Since then, the state has seen significant financial benefits. Arizona’s cannabis sales have exceeded $1 billion, generating nearly $258 million in excise and transaction privilege taxes on adult-use cannabis.

Under Proposition 207, adults can legally possess up to 1 ounce of cannabis and grow up to six mature plants at home. Cannabis sales are subject to a 5.6% sales tax plus a 16% excise tax. The revenue supports state regulations and enforcement, with the remaining funds distributed as follows:

• 33% to community colleges
• 31.4% to police and fire departments
• 25.4% to the state highway fund
• 10% to a justice reinvestment fund
• 0.2% to the attorney general’s office for enforcement

According to the Arizona Department of Revenue, adult-use cannabis sales reached $950 million in 2022.

Expungement Process for Minor Cannabis Convictions

Arizona allows individuals with minor cannabis-related convictions to apply for expungement. Eligible cases include:

• Possession, transportation, or consumption of 2.5 ounces or less of cannabis
• Possession, cultivation, or transportation of up to six cannabis plants at home
• Possession, use, or transportation of cannabis paraphernalia

Arizona’s expungement law is not automatic—those eligible must file a petition to clear their records. Since July 12, 2021, at least 17,350 expungement petitions have been filed under Prop. 207.

In 2018 alone, over 14,000 arrests for marijuana possession were reported in Arizona. To assist with the expungement process, the University of Arizona School of Law has launched a free expungement clinic for those seeking relief.

Medical Marijuana in Arizona

Arizona voters passed Proposition 203 on November 2, 2010, legalizing medical marijuana with 50.13% of the vote. The Arizona Department of Health Services (DHS) finalized the program’s regulations in March 2011.

To qualify, patients must have one of the following debilitating medical conditions:

• Cancer
• HIV/AIDS
• Hepatitis C
• Glaucoma
• Multiple sclerosis (MS)
• Amyotrophic lateral sclerosis (ALS)
• Crohn’s disease
• Agitation of Alzheimer’s disease
• PTSD
• Conditions causing severe pain, nausea, seizures, wasting syndrome, or persistent muscle spasms

Registered patients can possess up to 2.5 ounces of marijuana and designate a caregiver to obtain it on their behalf. Patients living 25+ miles from a dispensary may cultivate up to 12 plants. Arizona also recognizes out-of-state medical marijuana cards for up to 30 days, though they cannot be used to purchase cannabis.

Medical marijuana patients are protected against discrimination in employment, housing, education, organ transplants, and parental rights.

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