TUCSON, Ariz. — Arizona's cannabis industry experienced a notable downturn in 2024, with combined medical and recreational marijuana sales declining to just over $1.1 billion, a significant drop from the nearly $1.4 billion recorded in both 2022 and 2023, according to the Arizona Department of Health Services.
Several factors have contributed to this decline. Michael Shew, Operations Director at Earth's Healingdispensary in Tucson, observed consumer behavior shifts and increased market competition.
"Customer behavior is changing," Shew noted, adding, "Within Tucson, we have seen a few dispensaries pop up over the past year."
Additionally, the proliferation of unregulated sales has impacted the legal market.
"People will go to a smoke shop and a non-dispensary to get these items," Shew explained.
Despite the downturn in sales, consumers are benefiting from decreased prices.
Data from Headset.io, an industry data tracking firm, indicates that the average price of cannabis products in Arizona dropped from $19.92 in January 2024 to $18.37 in January 2025.
Shew highlighted the trend.
"They do have a great variety of products they can get at a great discount," he said.
Customers have also taken note.
"The price actually, definitely been coming down," said Alex Barbar, a regular at Earth's Healing.
The decline in sales has broader implications, particularly for institutions benefiting from marijuana tax revenues.
Arizona imposes a 16% excise tax on recreational marijuana sales, with portions allocated to various sectors, including community colleges.
In 2024, the state collected $245.3 million in marijuana taxes, with $151.2 million from excise taxes and $75.7 million from recreational sales taxes.
At Pima Community College, marijuana tax revenues constitute approximately 3% of the operating budget.
David Bea, Vice Chancellor of Finance at PCC, expressed concerns about potential fluctuations in this funding.
"In terms of the college's operations, that's three percent roughly of what our total operating budget is," Bea said.
Last year's allotment totaled nearly $6 million according to Bea.
Those dollars go towards workforce training and development, like the college's automotive, advanced manufacturing, aviation, and health development programs.
Bea further cautioned, "If three percent goes away, it results in cuts, yes."
Looking ahead, industry representatives anticipate continued challenges in 2025.
A spokesperson for Earth's Healing indicated expectations of a stable market with a potential uptick in sales during April, coinciding with the 4/20 holiday, a date traditionally associated with increased cannabis consumption.
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Eddie Celaya is a multimedia journalist at KGUN 9. Born in Tucson and raised in the Phoenix area, Eddie is a life-long Arizonan and graduate of the University of Arizona who loves the desert and mountains and hates the cold. Previously, Eddie worked in print media at the Arizona Daily Star. Share your story ideas with Eddie at edward.celaya@kgun9.com, or by connecting on Facebook or Instagram.
