Arizona’s Missed Potential Cannabis Market
Arizona’s Missed Potential Cannabis MarketThis month, the voters of Arizona rejected Proposition 205, which would have allowed for the development of an adult use cannabis market starting in 2018. This decision limits the state’s total cannabis market size, though it is expected to encourage steady growth in the state’s already established medical cannabis market. Projected sales for the state’s medical market are expected to reach $681 million by 2020, with a compound annual growth rate of 17%. If Prop. 205 had passed, the total market size projected would have been $1.24 billion by 2020, with a compound annual growth rate of 35%. Comparing the current market scenario with a hypothetical market scenario in which Prop. 205 had passed, a slight decline in medical cannabis sales in the 2017 market would have been expected as consumers would have been incentivized to limit market participation in anticipation of the implementation of the adult use market. The projected loss in the medical cannabis market for 2017 would have been a decrease of $33 million. This loss in total market sales would have been offset by the difference in 2018 sales which are projected at $317 million. By 2020, the difference in total sales between these scenarios is projected to be $556 million. These figures represent the lost potential market activity with the rejection of Proposition 205.