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Recreational cannabis sales debut in Arizona months ahead of schedule

January 22, 2021

With an unexpected soft opening, Arizona launched retail cannabis sales Friday afternoon, less than three months after passing adult-use legalization on last November’s ballot.

More than 70 existing dispensaries got the nod to immediately start adult-use sales Friday, accounting for over half the marijuana stores across the state.

“Historically, this is massive,” said Pankaj Talwar, CEO of four Sol Flower dispensaries in the Metro Phoenix area. “We’re already one of the strongest medical markets in the country, and this is just going to make things bigger.”

Fastest vote-to-opening ever

Friday’s openings mean the Grand Canyon State now owns the record for fastest turnaround from passing an adult-use initiative to actually launching sales, blowing out Nevada’s previous mark of eight months, set in 2016.

A spokesperson for Arizona’s Department of Health Services said 79 medical marijuana dispensaries had applied to sell recreational marijuana since Tuesday. All but six got the nod to move forward on Friday. The others are expected to be approved within a few days.

Talwar and other industry leaders expect the vast majority of the remaining 62 medical dispensaries to be on board soon.

“I have to imagine just about everyone’s going to want to do this,” he said.

Redemption at the ballot box

While Nevada, California, Maine, and Massachusetts legalized adult-use back in 2016, Arizona was the only state with rec on the ballot to fall short.

The slim loss was heartbreaking, as the adult-use initiative fell short by just a fraction of one percent. For some of the state’s biggest cannabis advocates, it was like watching their season end on a buzzer-beater. 

“We had all of the momentum and really thought we could do it,” recalled Samuel Richard, executive director of the Arizona Dispensaries Association. “The opponents funded so much negative propaganda, though, filled with falsehoods about problems in other cannabis-legal states.”

The 2020 election proved to be the ultimate redemption. Proposition 207, the Safe and Smart Act, passed by a whopping 20% margin to finally make Arizona’s adult-use dreams come true.

territory-store-arizona
Eager customers line up outside Territory in Chandler, Arizona, waiting for the store’s official adult-use sales to begin at 4:20 on Friday, Jan. 22, 2021. (Photo courtesy of Territory)

Tax revenue starts rolling in

Prop. 207 legalized possession of up for an ounce of marijuana flower or five grams of concentrated THC for adults 21 and older. The state added a 16% excise tax on retail sales of the plant, to go toward public safety, public health programs, community colleges, and infrastructure projects.

The act also lets adults grow up to six marijuana plants at their homes.

“Voters had four years to watch other rec states thrive, and it was an easy victory this time around,” Richard said. “Time helped people see for themselves that most of their fears about legal cannabis were largely untrue.”

Shockingly fast

Last fall’s results were a long time coming. But Prop. 207 meant nothing until the dispensaries could actually start selling.

Public health authorities had 60 days to approve applications for adult-use sales, according to the initiative, and most dispensary owners were preparing to start in March or April. They figured a 4/20 launch date would make for a massive celebration.

Instead, their wish was granted months early. Health department officials announced on Tuesday, to everyone’s surprise, that they were accepting applications for medical dispensaries to go rec. The process was as simple as sending in a few fingerprints and writing a check for $25,000.

“That’s what made this so fast,” an ADHS spokesman explained. “We already knew these operators and had information on their companies. So it was pretty seamless.”

Barely time to prepare

While the earlier-than-expected start didn’t offer the drama of a 4/20 launch, interviewed dispensary heads were overwhelmingly pleased with the quick turnaround.

Lilach Power was one of the Grand Canyon State’s original cannabis dispensary owners back when medical sales kicked off in 2012. Giving Tree dispensary in north Phoenix served a small handful of daily customers during its first couple years in business. But it began turning profits later in the decade as Arizona’s medical program flourished.

When adult-use legalization passed, Power built a new store—double the size of Giving Tree’s original shop—down the road to fit the expected push of new customers. Reports from other adult-use states suggested dispensaries would see from three-to-five times more buyers than medical-only stores, so she wanted to be ready.

But because Friday’s rec launch arrived so quickly, Powers and her team still hadn’t moved stores. The coming days will be a “fire drill” of taking everything over to Giving Tree’s new home, she said.

The soft, slow launch gives her time to prepare, she said.

“I think we’ll definitely see some huge lines for the first few days, but it shouldn’t be as drastic as what you’ve seen in other states. It’s not a set date that people could really prepare for, so a lot of people are still figuring out that rec is legal.”

Consumers were surprised, too

When local media outlets reported the possible approvals earlier this week, Power said people began flocking by the dozens to Giving Tree. The influx of customers created lines outside the Phoenix-based dispensary’s door.

By Thursday, a couple dozen customers each day were asking staffers whether Giving Tree was selling retail marijuana.

Ditto for Talwar and Sol Flower. He said a percent of his shoppers kept up with the news. Most, though, still had no idea adult-use marijuana was coming this fast.

It didn’t take long for word to spread.

Within hours of ADHS’s announcement, social media showed people lined up at dispensaries and customers celebrating their first legal purchases.

But Talwar warned it’s going to be a while before things calm down. While Sol Flower doesn’t expect to be approved for rec for about a week, he believes the first few months will be “controlled chaos” for everyone.

“It’s the nature of the industry we’re in,” he said. “But it’s a team effort. Everyone just wants their customers to be satisfied and wants them to know what to expect.”

Chris Kudialis's Bio Image
Chris Kudialis

Chris Kudialis is a Las Vegas–based cannabis reporter. He has written articles for the Los Angeles Times, Las Vegas Sun, Charlotte Observer, Houston Chronicle, Detroit Free Press, and Brazil's Rio Times, among other metropolitan dailies.

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