Arizonans spent more than $500M on medical marijuana in 2019 as legalization proposal attracts more donations
Ryan Randazzo
Arizonans spent more than half a billion dollars on medical marijuana in 2019, a dollar amount that grew over the previous year and a sign of the substance's prevalence in a state where voters likely will decide whether to legalize recreational use of it this fall.
Nearly 220,000 medical marijuana patients were in the state's program as of December, and they purchased almost 83 tons of the drug last year, according to a year-end report from the Arizona Department of Health Services.
The increase in total weight was 36% higher than the 61 tons bought in 2018, while the number of patients increased 18% year over year.
Most of the marijuana purchased was in dry flower form, accounting for 75 tons, but patients also bought nearly 6,000 pounds of marijuana edibles and 9,226 pounds of other forms of concentrated marijuana.
The statewide sales volume figure is worth about $580 million, using a conservative estimate of marijuana selling for an average of $3,500 a pound. The actual figure could be much greater. Some dispensaries sell high-end marijuana for more than $300 per ounce, or about $5,000 per pound.
A report commissioned Arizona dispensaries in 2018 estimated the average retail price at about $4,800 a pound, though that price was expected to decline as producers increased efficiency.
Legalization effort collects $1.6M so far
Meanwhile, the latest quarterly campaign finance report from the effort to legalize marijuana for adult, recreational use in Arizona, showed about $446,000 in business contributions from October through December. It also received about $1,700 from 13 individual contributions.
That brings the total so far to $1.6 million for the "Smart and Safe Arizona Act." Backers of the measure have gathered signatures to place the proposal on the ballot since September.
The measure would allow people 21 and older to have as much as an ounce of marijuana, while letting the state decide some important decisions such as potency.
If passed by voters, the act would allow for sales at 130 existing, licensed medical-marijuana dispensaries in Arizona as well as at 26 licensed stores aimed at "social equity." Those additional licenses are intended to benefit "individuals from communities disproportionately impacted" by marijuana laws.
It also would allow some people previously convicted of marijuana possession to have their records expunged.
One big marijuana player leaving state
The legalization effort is primarily funded by existing medical-marijuana dispensaries in Arizona.
Harvest Health and Recreation Inc., the Tempe-based dispensary operator that is on track to become the largest legal marijuana retailer in the United States, contributed $250,000 in the past quarter. Harvest has given $785,000 to the Arizona effort so far.
Another major donor in prior quarters was Los Angeles-based MedMen Enterprises Inc., which contributed $200,000 to the initiative as of October. However, MedMen recently opted to attempt to sell its three Arizona medical-marijuana dispensaries.
MedMen told investors the company expects to generate $54 million from the sale of the Arizona licenses and an Illinois manufacturing license. Each license in Arizona includes the right to run a farm.
Opposition is yet to ramp up
It's unclear whether the ballot measure will have opposition and if so, from where.
Regarding potential opposition groups, "The two things we look for are funding and viability," said Stacy Pearson, a spokeswoman for the Smart and Safe Arizona Act. "We don't see anybody out there with both."
Among the most vocal critics in Arizona is Yavapai County Attorney Sheila Polk, who serves as chairwoman of the group Arizonans for Responsible Drug Policy.
While Polk's position opposing legalization has not changed since she helped defeat a statewide ballot measure in 2016, her group doesn't plan to present an organized defense to this year's initiative.
"At this point, ARDP has no plans to form a PAC in opposition to the initiative," spokesman Robert Leger said. "The group will continue its work at the grassroots level to raise awareness about the harms of today’s marijuana."
Her group raised $6.3 million to combat the 2016 measure.
One of the bigger donors to the last opposition campaign was Discount Tire. But company founder Bruce Halle is no longer alive. His company gave $1 million to prevent marijuana legalization in 2016.
Another major contributor to that opposition effort, former Insys Therapeutics Chairman John Kapoor, 76, was just sentenced to 5 1/2 years in prison for a bribery scheme prosecutors said helped sell a highly addictive oral fentanyl spray known as Subsys.
Insys gave $500,000 to the 2016 opposition campaign.
Reach reporter Ryan Randazzo at ryan.randazzo@arizonarepublic.com or 602-444-4331. Follow him on Twitter @UtilityReporter.