*This story has been corrected to reflect that the total tax revenue collected by the City of Tucson reflects revenue generated from sales from the adult-use recreational program and medical program. The Daily Star regrets the error.
The city of Tucson brought in almost $2.4 million in tax revenue between both adult-use recreational and medical programs since July 2021 and is projected to take in nearly $4 million before the fiscal year is through, according to the city manager.
“It’s a little less than expected,” said City Manager Michael Ortega. “We had expected by the end of June to have about $8 million. So that should be closer to $4 million at this point.”
That $8 million was a sort of a guess going into the first year of recreational marijuana sales, according to Ortega. “The estimate was based on just running numbers as best we could, but having no previous revenue to compare it to,” he said.
Still, Ortega noted the city’s fiscal year ends June 30, so the city still has some time to make up the difference. Plus, the Arizona state treasurer, who is responsible for dispersing tax revenues, doesn’t send them out in a linear manner.
In other words, additional allocations could be higher than previous ones. And now the city has a more accurate gauge on what it can project, revenue wise, from recreational pot in the future, Ortega said.
There is some data to suggest future allocations this fiscal year could be higher, too.
According to cannabis data tracking firm Headset’s latest report on overall sales (both medical and recreational programs), Arizonans spent nearly 78% more on marijuana in December 2021 than in January 2021 when recreational sales began, $175 million up from $110 million.
One caveat is that some of the tax dollars tied to marijuana sales go directly to the state for reapportionment. Those are from the state excise tax, which sits at 16% and is exclusive to adult-use recreational purchases.
Other tax dollars, collected as part of state and local sales taxes, which in Tucson total 8.1%, come directly back to the community. Those taxes are levied on both recreational and medical marijuana purchases.
Tucson has a dozen active recreational and medical marijuana dispensaries. There are about 125 operating dispensaries throughout the state.
Dollars collected from the excise tax are required by statute, established when voters passed Prop. 207 making adult-use recreational marijuana legal in 2020, to go into the pension fund for public safety.
“These aren’t dollars going toward gear or toward M-16s,” said Samuel Richard, executive director of the Arizona Dispensary Association. “That’s going to fund the local jurisdictions’ pension liabilities.”
Those revenue dollars also keep money in the city’s general fund.
“If those dollars were not allocated from the Prop. 207 revenues, then they would have to come directly out of the general fund,” Ortega confirmed.
Although the city finds itself behind on estimated tax revenues, the state overall is seeing a green rush in its first year of adult-use legalization.
The same Headset report estimates the state saw nearly $2 billion in sales between both medical and recreational marijuana programs last year.
