The 16% Adult-Use Marijuana Excise Tax
Adult-use cannabis sales under Proposition 207 carry a 16% marijuana excise tax administered by ADOR, collected at retail and remitted through AZTaxes.gov. Medical patient sales under the Arizona Medical Marijuana Act are exempt from this excise tax entirely.
Collected excise tax belongs to the state from the moment it is collected. It should be recorded as a liability and funded separately — operators who let it circulate as working capital create liabilities they eventually cannot clear.
Transaction Privilege Tax
TPT applies to retail cannabis sales, both medical and adult-use, at a 5.6% state rate plus applicable county and municipal rates that vary by location — a dispensary in Scottsdale and one in Yuma will carry different combined rates.
TPT is filed through AZTaxes.gov on the schedule assigned to the license, and the correct combined rate has to be configured separately for every retail location an operator runs.
- 5.6% state TPT rate plus county and municipal rates by location
- 16% adult-use excise tax on non-medical retail sales only
- Medical patient sales exempt from excise tax but still subject to TPT
- All filings submitted through AZTaxes.gov on the assigned schedule
ADHS Licensing and Its Financial Touchpoints
ADHS licenses marijuana establishments, dual-licensed dispensaries serving both medical and adult-use customers, testing facilities, and social equity ownership licenses. While ADHS itself does not administer tax, its inventory and verification requirements directly shape the accounting records that support every tax filing.
Operators renewing or transferring a license should expect financial documentation to be part of that process, which is another reason clean, current books matter beyond tax season.
Income Tax and 280E Non-Conformity
Arizona generally computes state income tax starting from federal taxable income, which means Arizona does not offer the state-level 280E relief that some other states provide. The federal COGS methodology therefore carries through to the state return as well.
This makes the inventory and cost-capitalization work described elsewhere in this library the single highest-leverage planning activity available to an Arizona operator.
The Filing Calendar
A typical Arizona operator manages TPT returns, adult-use excise tax returns, payroll withholding and unemployment filings, federal and state estimated income tax payments, and annual income tax returns.
One consolidated calendar with owners, due dates and funding requirements is the practical control that keeps all of it current across Phoenix, Tucson, Flagstaff or wherever the license sits.
