Adult Use Marijuana

Proposition 207, the Safe and Smart Act, passed into law in November 2020 and legalized marijuana for adult personal use.  The statutory provision Prop 207 is found in Arizona Revised Statutes (A.R.S.) Title 36, Chapter 28.2.  This voter initiative allows adults over the age of 21 to possess, purchase, transport, or process 1 ounce or less of marijuana or 5 grams or less of marijuana concentrate. The Arizona Department of Health Services (ADHS) is responsible for licensing and regulating marijuana, marijuana retail sales, marijuana growth, and testing facilities in Arizona. The Arizona Department of Revenue (ADOR) is tasked in A.R.S. Title 42, Chapter 5, Article 10 with collecting the excise tax (imposed only by the state) and transaction privilege tax (state, counties, and cities) imposed on adult use marijuana sales.

Licensing and Registration

If your business sells marijuana or marijuana products (see definitions), you will need a transaction privilege tax (TPT) license and a Marijuana Excise Tax (MET) registration number.  Proof of licensing with ADHS will be required in order to obtain a MET registration number.  Registration for MET cannot be done online.  In addition, if you are already licensed for medical marijuana, you must apply to convert your TPT license to reflect the new business activity or if applicable, you must also register as an adult use marijuana retail establishment to report the retail TPT and excise tax.

Arizona imposes transaction privilege tax (TPT) on the sale of medical and adult use marijuana. Additionally, a 16% excise tax is also imposed on the sale of adult use marijuana.

You will need to complete the paper registration form, Medical, Adult Use or Dual License Transaction Privilege/Use/Excise Tax Application (JTM-1) to get your MET registration number to obtain your TPT license. Form JTM-1 is used to apply for the transaction privilege tax and use tax as well as the MET registration number.  It can also be used to register for Employer Withholding and Unemployment Insurance. Registration can not be done online; it must be done by paper. TPT licenses are valid for a calendar year and must be renewed annually.

If you already have a TPT medical marijuana license, you will need to complete Form JTM-1 to get your business codes updated to report medical marijuana sales under business code 203, and the adult use marijuana sales under business code 420 (no additional fees will be charged). A new excise tax registration number (MET Registration Number) will subsequently be issued to report the 16% excise tax.  There is no MET registration fee. The registration cannot be done online, rather it must be emailed to [email protected].

Do I need a Transaction Privilege Tax (TPT) license or Marijuana Excise Tax (MET) license?