Following the launch of Adult-Use (AU) cannabis sales on January 22, 2021, Arizona’s legal cannabis market has grown rapidly, with sales growing ~30% to total ~$1.3 billion for the full year per BDSA Retail Sales Tracking. Already a mature medical cannabis market, the start of AU sales has brought the Arizona cannabis market to another level. With a highly developed retail landscape, and rising consumer participation, Arizona’s homegrown brands have been able to stay dominant in the market. Some of these brands have also built on their brand reputation to launch a house of subsidiary brands and even expand into other competitive markets.
Adult-Use sales in Arizona launched less than 90 days after the legalization in the November 2020 election, making it the fastest launch of Adult-Use (AU) sales yet. Leading up to the launch of AU sales, Arizona was home to a fairly open medical cannabis market with 130 retail storefronts, no product restrictions and broad qualifying conditions which led to high patient counts. Arizona has also expanded the retail footprint in the cannabis market, with the addition of 13 dispensary licenses intended to serve rural residents and 26 licenses to be issued to social equity applicants in 2022.
Cannabis sales grew rapidly with the expanded access from AU, from ~$1 billion for full-year 2020 to ~$1.3 billion for full-year 2021. Per BDSA trending Consumer Insights data, Consumer penetration in AZ has grown from ~30% in Spring 2020 to ~40% in Spring 2021 to a whopping ~50% in Fall 2021. Consumer participation in Arizona now is at a comparable level to that in Colorado, with the rate of consumer participation rising faster than has been seen in almost any market.
Seeing the potential that a highly developed cannabis market like Arizona holds with the addition of adult-use sales, some of the largest MSO’s in the country have made heavy investments into Arizona, leading some to believe that the fledgling adult-use market would be dominated by the largest players in the U.S. cannabis industry. Large MSO’s are seeing big returns on their investments in Arizona, as evidenced by Curaleaf’s subsidiary brand Select rising to become a top brand by dollar sales with ~$65 million in sales in 2021. That said, there is still plenty of room in the market for brands that cut their teeth in the Arizona medical era.
Some brands have even been able to use their brand recognition in Arizona to cross into new cannabis markets and launch their own house of subsidiary brands and create strong mutually beneficial partnerships with these top MSOs. A prime example is Timeless Vapes, a brand that has long led the Arizona vape market with BDSA Retail Sales Tracking showing the brand bringing in ~$75 million in sales for 2021 in Arizona and claiming every spot on BDSA’s ranking of the top twenty vape products by dollar sales in Arizona for 2021, making it the top brand across all categories in the state.
As the number one ranked brand in the cannabis market, Timeless has used their brand presence in Arizona to launch successful ventures in California, Missouri, Oklahoma, and coming soon to Ohio, and cultivated a suite of brands that are already taking off across these competitive markets. Timeless Vapes’ California presence has seen rapid growth since its launch in 2020, with monthly sales growing 10X from December 2020 to December 2021, an impressive feat in the highly competitive California cannabis market.
“Collaboration has been an important tool to help the brand tell its story including collaborating with our dispensary partners including the top MSO’s that have become a large presence in AZ and our other markets. Our collaborations with local brands, artists and restaurants are key to maintaining authenticity, making sure our brands stay locally and culturally relevant to each market we are in.”Joshua Hirschey, President, Timeless Refinery
Timeless has maintained their emphasis on quality, authenticity, and connecting with the needs of different segments of the consumer base with their launch of a house of brands, including NOIR Live Resin Terpenes, JOILO, Tumble and Canary CBD. JOILO, a pre-roll brand offering quarter and half-gram sized full flower joints targeted to consumers looking for convenience, has risen to become the number one pre-roll brand in Arizona by dollar sales for January 2022 per BDSA Retail Sales Tracking. One of the newest brands from Timeless Refinery, Tumble, focuses on infused pre-rolls formulated for the experienced consumer looking for a high quality and high potency product. Tumble has taken the Arizona infused pre-roll market by storm, becoming the number one ranked infused pre-roll brand in Arizona by dollar sales for January 2022.
Arizona may represent a unique case of a mature medical cannabis market making a quick and smooth transition to adult-use, but a few key lessons can be taken from the success that homegrown brands such as Timeless Vapes have had since full legalization. By crafting products that cater to the diverse needs of the consumer base, centering one’s brand with a lifestyle image that connects with consumers, and using a data-based approach to effectively recognize key opportunities, homegrown brands can compete and even thrive when faced with an increasingly competitive cannabis market.
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