Cannabis Business in Arizona

The Arizona cannabis industry encompasses both marijuana and hemp-derived CBD products. This industry is regulated by multiple state agencies, including the Arizona Department of Health Services (ADHS), the Arizona Department of Revenue (ADOR), and the Arizona Department of Agriculture (ADA).

Marijuana Regulations in AZ

The ADHS is responsible for licensing marijuana businesses. The ADOR oversees tax collection from marijuana sales.

Taxes and Licenses

Arizona imposes a transaction privilege tax (TPT) on both medical and adult-use (recreational) marijuana sales. Additionally, a 16% excise tax is levied on adult-use marijuana sales. Businesses that sell marijuana or marijuana products need a TPT license and a Marijuana Excise Tax (MET) registration number.

To get a MET registration number, businesses need to complete and submit the Medical, Adult Use or Dual License Transaction Privilege/Use/Excise Tax Application (Form JTM-1) and provide proof of ADHS licensure. Existing medical marijuana TPT licensees can use Form JTM-1 to update their business codes and obtain a MET registration number to report adult-use marijuana sales. The TPT licenses are valid for one calendar year and must be renewed annually.

Different Types of Marijuana Businesses require specific licenses:

• Businesses involved in growing or cultivating marijuana, wholesaling, or manufacturing marijuana products (oils, ointments, or edibles) require an Adult-Use Marijuana License from ADHS and a TPT license. These businesses do not need a MET license.
• Retailers selling adult-use marijuana, edibles, or other marijuana products need an Adult-Use Marijuana License from ADHS, a TPT license, and a MET license. They also need to update their current TPT licenses.
• Retailers selling medical marijuana, edibles, or other marijuana products also require an Adult-Use Marijuana License from ADHS, a TPT license, and a MET license and must update their existing TPT license.
• Businesses selling only grow items or pipes and accessories need a MET license but do not require an Adult-Use Marijuana License from ADHS or a TPT license.

Market Size and Sales

In 2023, the Arizona cannabis industry generated nearly $1.4 billion in revenue, showcasing its potential for entrepreneurs interested in acquiring a cannabis business for sale. As of June 2024, Arizona had close to 120 thousand medical marijuana cardholders, with over 97 thousand qualifying patients. In January 2024, the state reported 137 medical marijuana dispensaries and 15 operating labs.

CBD Regulations in Arizona

Arizona law considers both hemp-derived and cannabis-derived CBD legal. The ADA has oversight of industrial hemp cultivation used for CBD production. While Arizona does not have specific possession limits for CBD oil and other CBD products, there are possession limits on cannabis-derived CBD products for registered medical marijuana patients.

Licensing Requirements for Hemp-Derived CBD

Individuals interested in cultivating, processing, or harvesting hemp for CBD production in Arizona need to obtain a license from the ADA. The requirements include:

• Submitting a completed Industrial Hemp Program Application Form with accurate information.
• Paying the annual licensing fees, which vary based on the license type.
• Providing a valid signature clearance, demonstrating no criminal history.
• Submitting additional documentation such as location and storage supplement forms.

Labeling Requirements for CBD Products

Arizona does not have specific state requirements for CBD product labels. However, manufacturers in the state generally follow some FDA guidelines, including:

• Disclosing the amount of active CBD per serving.
• Including a supplement fact panel listing all ingredients.
• Displaying the net weight, manufacturer/distributor name, and suggested uses.
• Specifying whether the product is an isolate, full-spectrum, or broad-spectrum CBD.
• Providing batch and date codes.

CBD manufacturers, producers, and distributors do not need a separate license in Arizona if they are working with already processed cannabis or hemp extracts.