Key Takeaways

• Cannabis law and regulations:
  • Arizona Revised Statutes: Arizona Medical Marijuana Act and Responsible Adult Use of Marijuana (the Smart and Safe Arizona Act (SASAA)).
  • Arizona Administrative Code: Title 9, Chapter 17, Medical Marijuana Program and Title 9, Chapter 18, Adult-use of Marijuana Program.
• Licenses available:
  • In Arizona, there are three types of fully vertically integrated licenses available – adult-use cannabis business, medical cannabis business, dual cannabis business – as well as a cannabis testing facility license.
• Products legal:
  • Marijuana concentrate and products that are composed of marijuana and other ingredients and that are intended for use or consumption, including edible products, ointments and tinctures.
• Taxes:
  • A transaction privilege tax (TPT) is imposed on the sale of medical and adult-use cannabis.
  • Additionally, a 16% excise tax (MET) is imposed on the sale of adult-use cannabis.
• Market:
  • Recreational cannabis sales started in January 2021 and both programs, medical and recreational, brought $1.363 billion combined in cannabis sales in the first 12 months.
  • The recreational market soon began to outpace the medical market with recreational cannabis sales – $911 million – accounting for nearly 64% of total cannabis sales in 2022 of $1.410 billion.
  • Cannabis sales were worth around $1.281 billion in 2024 with $1.034 billion in recreational sales with the reason for the decrease being rising competition in the market.
  • As of July 2025, Arizona had 181 licensed cannabis establishments.

Arizona Medical Cannabis Market

In December 2010, Arizona voters passed the Arizona Medical Marijuana Act (AMMA). The AMMA went into effect on April 14, 2011, making Arizona the 14th state to adopt a medical cannabis law.

Cannabis extracts – including concentrates, vaporizer cartridges and infused food and beverages – are considered legal under an Arizona Supreme Court ruling (May 2019) and the state’s medical marijuana dispensaries can sell them.

In 2020, 211,557 pounds have been sold in total, a 28% increase over the 165,722 pounds that were purchased in 2019, according to a report from the state Department of Health Services. There were 130 registered nonprofit medical cannabis dispensaries, with 123 operating facilities and almost 300,000 medical cannabis active qualifying patients.

• Medical cannabis sales in Arizona grew to about $580 million in 2019 according to the report.
• The Arizona cannabis market reached revenues of $750 million in 2020.

Under SB 1494, beginning Nov. 1, 2020, all medical cannabis products in dispensaries must be tested for potency and cannabis contaminants including mold, mildew, fungus, heavy metals, pesticides, herbicides, fungicides, artificial hormones and residual solvents.

Arizona Recreational Cannabis Market

On November 3, 2020, voters approved a proposition that legalizes recreational cannabis. Proposition 207 legalized the possession and use of cannabis for adults (age 21 years or older) in the state and placed a 16% tax on cannabis sales, in addition to the existing transaction privilege tax and use tax. The ballot initiative made the Arizona Department of Health Services (DHS) responsible for adopting rules to regulate cannabis, including the licensing of retail stores, cultivation facilities, and production facilities. Under Arizona law, the DHS is prohibited from issuing more than one adult-use retail license for every 10 pharmacies which, as of October 2023, equated to 169 retail licenses, including 26 licenses designated specifically for social equity applicants. These 26 licenses were awarded through a lottery.

Recreational cannabis sales started in January 2021 and both programs, medical and recreational, brought $1.363 billion combined in cannabis sales in the first 12 months, including about $757 million in medical and $599 million in adult-use cannabis.

The recreational market soon began to outpace the medical market with recreational cannabis sales – $911 million – accounting for nearly 64% of total cannabis sales in 2022 of $1.410 billion. In 2023, cannabis sales totaled around $1.405 billion with $343 million from medical cannabis sales and $1.062 billion from recreational cannabis sales, representing 75% of total sales.

Cannabis sales were worth around $1.281 billion in 2024 with $1.034 billion in recreational sales. The first 5 months of 2025 brought in $517 million in recreational (83% of total cannabis sales) and medical cannabis sales.

The reason for the declining value of cannabis sales in Arizona is the rise in competition. From 2023 to 2024, the number of dispensaries increased by 13.5%. This raises the importance of building brand loyalty and boosting operational efficiency through inventory management and sales tracking in order to secure and keep market share in the intensely competitive landscape. As of July 2025, Arizona had 181 licensed cannabis establishments.

How to Start a Cannabis Business in Arizona?

Arizona Cannabis Market Infographics

How Can Cannabusinessplans Templates Help Start or Grow Your Cannabis Business?

The majority of cannabis licensing programs require the submission of a business plan as part of the application for a cannabis license. Even if it is not mandated by law, a business plan is essential for securing funding and assisting an applicant in understanding how much money it will take to start a cannabis business and how much profit it could make.

A well-structured business plan can make all the difference in helping you demonstrate your proposed cannabis business’ compliance with regulations and its operational viability.

Our complete cannabis business plan template package is everything you need to create a professional business plan for a cannabis business with expert financials and projections. A complete cannabis business plan template package includes:

• Excel Financial Model: change variables and immediately see the impact, break down operational and capital costs, know how much it will take to get into the business and the potential profits.
• Word Business Plan: value proposition, market analysis, marketing strategy, operating plan, organizational structure, financial plan and more.
• PowerPoint Pitch Deck: provide a quick overview of your cannabis business plan.

Cannabis Flowers Pre-rolls Concentrates Edibles Business Plan Sample, Arizona

Arizona Hemp/CBD Industry