Cannabis Tax Revenue in Arizona Blooming

Arizonans approved an initiative regulating marijuana for adult-use in November 2020. Recreational marijuana sales at dispensaries began less than four months later in January 2021.

Arizona’s cannabis sales and tax revenues started out stronger than most states. Recreational cannabis sales surpassed $1 billion in both 2023 and 2024. Last year, Arizona brought in over $253 million in excise taxes and transaction privilege taxes on recreational cannabis, a slight decrease from the nearly $258 million generated in 2023.

After regulatory and enforcement overhead are paid, Arizona’s law distributes excise tax revenue accordingly:

– 33% of the cannabis tax revenue to community colleges
– 31.6% to law enforcement and fire departments
– 25.4% to transportation programs
– 10% to public health and criminal justice programs

24 states have legalized cannabis possession for adults 21 and older, MPP reported. All but one of them — Virginia — have also legalized, regulated, and taxed cannabis sales. In two legalization states — Delaware and Minnesota — sales have not begun yet.

States have generated a combined total of more than $24.7 billion in tax revenue from legal, adult-use cannabis sales. In 2024 alone, legalization states generated more than $4.4 billion in cannabis tax revenue from adult-use sales, which is the most revenue generated by cannabis sales in a single year. In 2024, seven states collected over $200 million in adult-use cannabis taxes. Four of those states generated over $500 million in revenue, one of which collected over $1 billion.