How the Legalization of MMJ Helps the Arizona Economy by Bringing in Tax Revenue

How the Legalization of MMJ Helps the Arizona Economy by Bringing in Tax Revenue


The legalization of medical marijuana products in Arizona has brought in a small but noticeable tax revenue stream for the state, and the close of 2016 brought the final total of that revenue to around $30 million. Also telling is that the amount of products consumed over the year doubled from the previous year to more than 29 tons.

A Good Year

Last year, Proposition 205 was put before the voters and was narrowly defeated. Prop 205 would have legalized recreational marijuana in the same vein as Colorado. 

If Colorado is any indicator, the effect on tax revenues would have been profound. The fact Prop 205 was defeated is not nearly as interesting as the margin by which it was defeated. Only 52 percent of the voters cast their ballots against the measure, which is not the sign of a strong prohibitionist movement or sentiment.

Sign Me Up

In the wake of Prop 205’s defeat, there was a reported increase in the number of calls to medical marijuana dispensaries looking for more information about signing up for the card.

By the end of the year, more than 114,000 people had received their cards, and there’s no indication that those numbers will be declining anytime soon. Even assuming that half the people applying for the card are doing so under a SNAP discount, that adds up to almost $13 million for DHS in application and renewal fees alone.

Stacking Paper

Reportedly, medical marijuana in Phoenix and elsewhere in the state brought in gross revenues of $280 million. The actual breakdown of those revenues between MMJ and related products, such as vaporizers, is unknown. 

If, as some have predicted, tax revenues triple in size from the legalization of recreational marijuana, and assuming the roughly 11 percent tax rate holds constant, that’s edging towards $1 billion in gross revenues. And that doesn’t take into account payroll taxes from people working in a dispensary, as well as sales taxes from purchases indirectly related to either MMJ or recreational marijuana.

Arizona Organix

Organizers behind Prop 205 have indicated that they will try to put the measure up on the ballot again either in 2018 or 2020. It may seem like a long time, but at Arizona Organix, we know that it’s time that can be spent calculating how much of a boon to our state it can be.