12 www.azbankers.org The Cannabis Special Interest Section was formed to bring education and information to Arizona CPAs to better serve clients while protecting the public in this burgeoning cannabis and hemp industry. Research shows that in 2021, Americans purchased $24.6 billion worth of cannabis products, a 34% increase over 2020.1 This year the U.S. legal cannabis market is expected to grow by a rate of 18% to $29.2 billion. Analysts forecast that the following states will experience high growth in cannabis sales in the coming year: Arizona (20%), Florida (38%), Pennsylvania (57%), Illinois (58%), and New Jersey (74%). For Arizona, the addition of adult-use sales gave the state’s overall cannabis market a 31% boost over 2020. Arizona’s licensed adult-use stores andmedical dispensaries sold a total of $1.35 billion in cannabis products in 2021, $320million more than the state’s medical-only dispensaries sold in 2020.2 Medical Marijuana Program According to reports filed by the Arizona Department of Health Services (ADHS), Arizona medical marijuana stores sold 147,942 pounds of product in 2021 compared to 211,557 pounds of product in 2020 and 165,722 pounds sold in 2019. According to the Arizona Department of Revenue’s (ADOR) Office of Economic Research, medical marijuana retail sales for 2021 were $758.5 million with total sales tax collected of $63.5 million. As of February 2022, there were 268,309 medical marijuana active cardholders of which 244,523 are qualifying patients. The number of qualifying patients decreased by 19% from February 2021. Adult Use In April 2021, the ADHS awarded 13 new adult-use cannabis retail licenses across eight rural counties. In December 2021, in a transaction facilitated by Highway 33 Capital Advisory, the license was sold, establishing a benchmark for these rural cannabis retail licenses.3 According to ADOR’s Office of Economic Research and Analysis, total adult-use marijuana sales reported, and transaction privilege tax (TPT) and excise taxes collected in 2021 In the Weeds and Standing Tall ASCPA’s Cannabis Special Interest Section —The Year in Review By Josephine Giordano, CPA, ABV, CFE, CFF, CBA, ASA, CDBV, CIRA, CICA, CTP, CCCE were $594,449,941, $50,069,473 and $104,137,763, respectively. Job Growth According to the Leafly Job Report 20224, the legal cannabis industry added 107,059 new jobs in the U.S. in 2021 compared to 77,300 and 32,700 jobs in 2020 and 2019, respectively. Arizona ranked eighth (23,333 jobs) out of the top ten states by cannabis-related jobs as of January 2022. Arizona added approximately 2,600 jobs in 2021. Social Equity Program In December 2021, regulators in Arizona began taking applications for social equity cannabis retail licenses despite ongoing lawsuits seeking to stop multistate marijuana operators from getting the permits. The deadline for would-be applicants to submit the required paperwork was December 14.5 Arizona marijuana regulators received more than 1,500 applications from cannabis entrepreneurs hoping to win one of the 26 highly coveted social equity permits that were up for grabs via lottery in spring 2022. The lottery took place on April 8, 2022. 280E Updates In 2021, over 200 pages of internal documents were released by the Internal Revenue Service (IRS). According to the Marijuana Business Daily, “IRS audits of marijuana businesses have generated far more in unpaid taxes, or revenue, per hour for the agency than audits of mainstream industries.” These documents, which are a must-read for all CPAs, include a participant guide, IRS reference guide, training presentations and audit project documents.
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