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Marijuana in Arizona is really cheap right now. Why hemp may be to blame

Beverages can be infused wth Delta-9 THC.
IURII BUKHTA
/
Getty Images
Beverages can be infused wth Delta-9 THC.

Arizona’s once-booming marijuana market is in a big slump. While it’s good news for consumers who are paying a lot less these days, it’s not good news for dispensaries — or the tax revenue they bring in.

It’s happening for a few reasons, one of which could be on the docket at the Arizona Legislature this year: unregulated intoxicating hemp products that are being sold outside of dispensaries and do pretty much the same thing as what you can find inside.

Ray Stern, state politics and issues reporter at the Arizona Republic, has been covering it all and joined The Show to discuss.

Conversation highlights

RAY STERN: It's basically the biggest slump that they've had since the medical marijuana industry started back in 2010. The industry has just been growing like gangbusters ever since then.

Over time, of course, since the 2020 law, the medical numbers have gone down and the recreational has gone up. Because it costs money to get a medical card, and you don't need that anymore if you buy at the recreational. So what has happened is during the summer, starting in July, there was just an unprecedented decline in the combined revenue. And it went below $100 million per month of combined revenue for the first time in basically recent years.

There's been a lot of different factors, as we'll talk about that have just saturated the market with product. And supply and demand mean that if there's more supply, then then the price is going to go down, right?

So that's probably the first reason to talk about here — there seems to be a glut. There's too much product.

STERN: Yes, and that's the No. 1 reason that people are talking about for the for the decline. Which, by the way, I'll just add has been important for customers as well because it's meant to decline in prices. ... It's been a bonus for them, for sure, and that's probably going to stay that way. Because this oversaturation that's occurred with the product, it's happened in other states, too. Because as the industry of this new — I mean, it's not really new anymore — but it's legal marijuana, which of course was not the case, just 15 years ago. So now these businesses have matured and cultivation is part of what they do. And they've done quite a bit of it.

Here in Arizona, when we went to recreational, they allowed these existing medical dispensaries to have two licenses. And so you have lots of situations where the dispensary company themselves has a cultivation operation. Then they also lease out cultivation rights to others, who have big cultivation operations. And then they sell the marijuana to maybe the dispensary that gave them the license, as well as other dispensaries around the state. ... So yes, this, this large supply has brought the price down.

Let's talk about the other reason that some people say there's a slump in the marijuana market though, which is the hemp market, which is different. This is the same plant, a different strain of THC as marijuana. What is this? Explain.

STERN: Well, you have to get a little bit scientific there because there's this plant called cannabis sativa — everyone else knows that it is marijuana. But, cannabis sativa is the plant and there's lots of different strains. Hemp is a type of marijuana or a type of type of this plant, basically, that contains very low THC. But with this 2018 farm bill that came around, and it had this loophole that basically allowed people to take the small, tiny amounts of the THC molecules that are in the hemp and just squeeze them out, concentrate them. You take a lot of hemp, and you've got a lot of concentrate. And then and then what you get is this pure THC product.

The typical psychoactive ingredient in marijuana is called Delta-9 THC. Then there's other Delta THCs, like Delta-8 and Delta-10, and these are sometimes called weed light because they will get you high, supposedly, but not very much. When people really started exploiting this loophole, the hemp had mostly been used to make CBD, which is considered to be like a healthful thing that people will make to put on their their skin or maybe comsume it to relieve. Things like that. ... This is basically just another one of these molecules that was taken out of this cannabis sativa plant and concentrated, but it doesn't get people high. It's not intoxicating.

So when this farm bill passed, people realized, well, this contains a loophole that seems to suggest that we can produce these intoxicating products. So you've gotten to the situation where these Delta-9 products are very similar to regular marijuana products. But they don't have to adhere to the same state laws that the marijuana dispensaries have to. So people can order them online. You can find them at smoke shops. The age is 18 to buy them. And that's just actually the age that the smoke shop might put on them, because there's absolutely no regulation for these products right now. And the marijuana dispensaries say that it's putting a major dent in their sales — although exactly what that dent is, nobody can say. Because people can not go to a dispensary and still get basically the same product.

I just wrote a story about how Total Wine and Beer, which is one of the country's largest alcohol retailers, just started introducing these products into their stores across the country.

Ray Stern in KJZZ's studio in January 2025.
Amber Victoria Singer/KJZZ
Ray Stern in KJZZ's studio in January 2025.

They're selling THC-infused drinks.

STERN: It's — there's no alcohol in it, because there's a federal law that says you can't mix alcohol and and some other substance. But what they can do is offer people — and they have actually like a, like a whole shelf or actually a whole like part of an aisle — that's dedicated to many different brands. They're all from out of state. There are some states where these hemp products have been regulated. They're tested very well, and then they're shipped here. The products have usually about 10 mg of THC Delta-9 per serving, but the lack of regulation means that they could put a lot more in there if they wanted to. ... So the dispensaries, they do sell low THC drinks like Total Wine is selling with 10 mg. They also sell 100 mg drinks that will definitely get people really high. So we may see Total Wine and others start to do that just because there's a demand for it and there's no reason they, you know, shouldn't do it.

So you said regulated — sometimes tested in other states. But here they're unregulated. The attorney general actually said here that they are illegal here at some point, right?

STERN: This is where it gets really legally complicated for people. And it kind of reminds me of the wild west back in the back in the old days and like the late 2000s where where people were saying, "Well, no, we can sell marijuana under these laws." And the feds and other people are saying, "No, you can't." And that's what we have here with this hemp product right now. And locally our Attorney General Kris Mayes put out this advisory basically, and it was asked for by the current House Speaker Steve Montenegro and Sen. T.J. Shope. And they don't like the situation with this unregulated hemp product coming in. And of course voters did approve these laws that that, you know, they're supposed to keep it to the dispensaries. So the AG put out this message basically saying that intoxicating hemp products are illegal in Arizona and mostly focused on Delta-8, though, and not Delta-9. But clearly Delta-9 is an intoxicating product. In fact, it's the most intoxicating. So when I called the AG's Office and asked, you know, like, "What are you doing about Total Wine?" They're saying, "Well, we're still thinking about it."

Will we see some regulation of this — maybe legalization of it — in some way in Arizona?

STERN: We could this year see quite a bit of regulation — a new regulation on the hemp and marijuana front. In the state Legislature. There's interest by people like Sen. T.J. Shope, who was against the the hemp market recently. But told me that since he talked to Total Wine, he's kind of understanding that that this is a product that can be tested and safe for the public. So he's considering possible legislation for that. And so we, we may see this hemp products market regulated.

And then there's also the fact that the federal government is considering changing the schedule process of marijuana. So it's a Schedule 1 controlled drug right now. They want to go to Schedule 3, and the DEA has to approve this basically. But there's going to be hearings this year. If that happens, then people will be able to use credit cards and things like that at the dispensaries where they've been using cash. And the dispensaries themselves can start taking advantage. These tax like tax deductions that they haven't been able to do, so they'll make more money.

There'll still be this oversupply. So I've been told that the prices shouldn't go down for consumers even if the dispensaries start making more money just because of these different regulation changes.

KJZZ's The Show transcripts are created on deadline. This text is edited for length and clarity, and may not be in its final form. The authoritative record of KJZZ's programming is the audio record.

Lauren Gilger, host of KJZZ's The Show, is an award-winning journalist whose work has impacted communities large and small, exposing injustices and giving a voice to the voiceless and marginalized.
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