phoenixnewtimes.com PHOENIX NEW TIMES JULY 7TH–JULY 13TH, 2022 State Licensed Dispensaries & Doctor Certifications | CANNABIS | PromesaArtStudio / iStock / Getty Images Grows Like a Weed Has Arizona’s uncapped cannabis cultivation created a glut? BY NINA MARKOWITZ C annabis prices are falling across Washington, Oregon, and Colorado as supply steeply overshadows demand. In Arizona, cannabis prices are beginning to fall, too — prompting concern the Grand Canyon State might have a glut of its own. “In the past several months the price of flower has gone down,” said Ryan Hermansky, Arizona Dispensaries Association (ADA) board president, in a statement released to Phoenix New Times. “Flower is being sold at competitive prices and that enables well-run grows to func- tion and be profitable.” Hermansky reports current Arizona wholesale prices ranging from $500 per pound for outdoor flower and $2,200 per pound for top-tier indoor flower. For comparison, Colorado’s all-time-high price per pound was $2,007 in 2015; in July 2022, the average price was reported as $709. Declining prices across Arizona are reflected in government data. Despite several incremental increases in transac- tion privilege tax (TPT) across some cities and towns in 2022, total tax revenue from Arizona marijuana sales remained rela- tively consistent. For example, tax collected on marijuana sales in April 2022 totaled $21.7 million, down slightly from $21.9 million in December 2021. There is concern that without regula- tion capping production in Arizona, grows continue to increase output even with prices already on the decline. Without a marked increase in demand in step with the industry’s continued expansion, it is possible that a surplus of product will result. Andrew Livingston, the director of economics and research at cannabis law firm Vicente Sederberg, does not neces- sarily see lower prices as bad for the state market. “Arizona entrepreneurs need to be able to produce at price points that are competi- tive,” Livingston said. “Eventually, Arizona cannabis will need to be competitive with cannabis grown in Washington, Oregon, and Colorado.” But it is not only lower (or promotional) pricing that is reining in revenue. Overall consumption also appears to be stagnating, if not weakening. “Although there are nearly 200,000 medical marijuana patients and numerous adult-use consumers in Arizona, marijuana sales have not increased and have declined in many areas,” Hermansky said. The Arizona Department of Revenue reports taxable adult-use marijuana sales slipped from $70.2 million in December 2021 to $68.4 million in April 2022. However, it’s still up considerably from April 2021, when sales were reported at $53.2 million. There’s a lot that can cause sales to fluc- tuate, including changing habits during and due to COVID-19, the relatively recent influx of new Arizonans, outrageous infla- tion, and recession fears. But there remains real concern that as in Washington, Oregon, and, Colorado, Arizona may also be approaching market saturation. Hermansky disagrees. “Each voter-passed initiative had a limit to the number of licenses available in the state, which has prevented >> p 39 37
