The Arizona marijuana market hit its lowest point of 2024 in November, with a grand total of $89.6 million in sales, according to state data.

That includes $73.1 million in recreational sales and another $16.5 million in medical sales, both respective lows for the 2024 calendar year.

That’s also down 21% year-over-year from a total of $113.3 million in November 2023, according to statistics from the Arizona Department of Revenue. That month, Arizona dispensaries sold $88 million in adult-use cannabis and $25.2 million in medical marijuana.

The southwestern market continued to crater throughout the past year, with cannabis sales peaking in March last year at $117.6 million. That month, Arizona dispensaries sold $93 million in adult-use cannabis and $24.5 million in medical marijuana.

Since then, sales have remained depressed, seemingly inching lower and lower every month.

Although there was a slight rebound in October, up to just over $100 million, that may have been an outlier, with the macro trend angling downwards. The state is on pace to “finish well below” the annual sales totals of both 2023 and 2022, when Arizona shops sold more than $1.4 billion in back-to-back years, the Arizona Mirror reported.

Arizona is far from the only mature state marijuana market experiencing headwinds. Contraction has also been felt acutely for months now in plenty of other longstanding cannabis markets, including Colorado, Michigan and Nevada.

A Florida judge upheld state regulators’ decision to block Green Thumb Industries (OTCQX: GTBIF) from opening dispensaries next to Circle K gas stations, citing security concerns and risks to minors.

Administrative Law Judge Joshua Pratt ruled last week that Florida’s Office of Medical Marijuana Use acted appropriately when denying Green Thumb’s requests for dispensaries at Circle K locations in St. Petersburg, Ocala and Orlando, the News Service of Florida reported.

The ruling halts Green Thumb’s plans, announced in October 2022, to launch 10 “RISE Express” dispensaries through a partnership with Circle K’s parent company Alimentation Couche-Tard (OTC: ANCUF) across Florida.

Green Thumb CEO Ben Kovler called it a “futuristic deal” at the time.

The Florida proposal was Alimentation Couche-Tard’s way of carrying over a pilot program in Canada. Fire & Flower, a Canadian cannabis retailer, opened several stores adjacent to Circle K locations in Ontario in late 2022, Green Market Report covered at the time. The company previously launched similar co-located stores in Alberta.

In a letter denying the Ocala location request, Christopher Kimball, director of Florida’s Office of Medical Marijuana Use, cited what he described as “increased risks of crime” around convenience stores and concerns over youth presence at such locations, the News Service of Florida reported.

Will Hall and Daniel Russell, attorneys for Green Thumb Industries, argued in legal filings that state law contains no explicit restrictions on cannabis dispensaries operating near gas stations. Their petition included examples of existing dispensaries near convenience stores, including one Trulieve location that shares a Gainesville strip mall with a Wawa.

The company’s legal team specifically called out what they termed “unadopted rules” being applied by health officials.

“These unadopted rules restrict the growth of these businesses despite the fact that the entities are otherwise in compliance with statutory and properly promulgated regulatory requirements,” GTI’s attorneys argued in filings, according to the News Service of Florida.

The state health department initially responded cautiously to the proposal, telling Green Market Report in October 2022 that “Florida has never approved a Medical Marijuana Treatment Center to operate out of a gas station,” though officials noted such arrangements could potentially be approved if compliant with state rules.

But the case emerged amid leadership changes at Florida’s cannabis regulatory office. Former director Chris Ferguson, who had approved similar location requests, was reassigned weeks after Green Thumb’s Circle K announcement. Gov. Ron DeSantis then appointed Kimball, a former Navy JAG Corps attorney.

Green Thumb, which operates seven Florida dispensaries, filed an additional case contesting the denial of its proposed Ocala location, according to state administrative court records. In that pending petition, the company’s lawyers question whether there is any legal basis for assuming higher crime risks near convenience stores.

In his ruling, Pratt, a former lawyer for Gov. Ron DeSantis’ administration, emphasized that Kimball “considered all three of the variance requests on a case-by-case basis” rather than applying a “bright line policy,” the News Service of Florida reported.

Florida’s medical marijuana program currently serves more than 895,000 registered patients, according to state health department data.

Despite delays in cannabis legalization efforts in the U.S., Tilray (NASDAQ: TLRY) still has its eyes on that prize.

The company’s CEO, Irwin Simon, told investors on the company’s earnings call that if the U.S. legalized medical marijuana, it would “represent an additional $250-million opportunity for Tilray.” He based that figure on expectations that Tilray could capture 2-3% of the market if such an event occurred.

Tilray reported its earnings on Jan. 10 before the markets opened, and the stock plunged 10% based on the company’s missed expectations. The stock dropped another 3% on Monday after investors considered the company’s comments on the earnings call. 

Simon estimated that the current medical marijuana market in the U.S. is $8 billion-$10 billion, meaning a 2%-3% market share would deliver $160 million to $250 million business. Of course, cannabis can’t cross state lines in the U.S., much less country borders, but that didn’t stop Simon from speculating on the opportunity.

“We ship EU-GMP products all throughout Europe coming out of Canada, and some of the best cannabis grown today comes out of Canada … If anything is going to be legalized, it’s medical cannabis. I think medical cannabis ultimately would be sold through drug stores through the medical market and would be prescribed,” he said.

Simon also said that U.S. demand likely would require more supply of medical marijuana than is available.

Much of the call was focused on its alcoholic beverage segment, which has been growing rapidly thanks to acquisitions, but cannabis still makes up a larger percentage of the company’s revenues. However, the company’s beverage revenue is growing rapidly as it continues to make acquisitions.

Cannabis falls flat

Cannabis revenue for the company was essentially flat as sales dipped.

“Revenue from Canadian medical cannabis grew 6% despite the category being impacted by competition from the adult-use market, while revenue from Canadian adult-use decreased 18%, which was a result of our increased focus on preserving gross margin and maintaining a higher average selling price in categories with high excise tax,” Simon noted.

For example, Tilray said it was backing away from low-margin cannabis products, like vapes and infused pre-rolls, and prioritizing other categories at the expense of market share.

High hopes for hemp beverages

The company still sees potential in the cannabis beverage industry, despite THC drinks being expensive and restricted to being sold in cannabis stores in Canada.

“If we could sell that today in beer stores, if we could sell it on tap, how big a business that would be?” Simon mused. However, he did say he believed that sales would pick up as a result of “dry January.”

At the same time, hemp-derived beverages continue to be a growing market in the U.S. Ty Gilmore, president of Tilray Beverages North America, said the company anticipates that the broadest opportunity for such products would be brick-and-mortar stores, like convenience and liquor stores, rather than direct-to-consumer sales.

“There’s a big national chain that’s leaning into HDD9 in a really, really strong way. We absolutely are exploring and are taking part of DTC, but we see the much bigger opportunity in brick-and-mortar,” he said. “When you look at the consumer and what’s happening in this segment, and you can look at some big chains in Louisiana or what’s happened over the last couple of years in Minnesota, you can clearly see that there’s a consumer demand in brick-and-mortar stores to go to be able to look at brands.”

Simon made it clear he wished he could sell THC-infused beverages in the U.S., but in the meantime, the company will make hemp beverages instead. He also thinks Trump will be more friendly to the industry and may reduce regulations because he will look at the potential tax revenue.

“My thing is the Trump organization will look at this here just because of the dollars that will contribute to bringing in more to the tax dollars and also eliminating from the illicit market and eliminating all the confusion and helping with safe banking,” Simon said.