Arizona Cannabis Business Licenses
WHAT IS ARIZONA'S CURRENT CANNABIS MARKET STATUS?
Content Below Last Updated by Point7 04/06/2022
Since the passing of Proposition 207, Arizona cannabis sales have begun. Although legislators and Arizonians were expecting an increase in cannabis sales since the passing of the bill in 2020, Arizona saw a decrease in cannabis purchases in January of 2022. Cannabis sales dropped to $115 million, the lowest the state has seen since February of 2021. This decrease in spending is equivalent to nearly a 10% decline from December of 2021, when sales totaled to $127.3 million. Some cannabis experts think that the sales in December of 2021 were actually a spike due to the novelty of cannabis during the holidays. Within this next year, cannabis sales will start to regulate as the cannabis market in Arizona matures.
WHAT ARE ARIZONA'S CANNABIS LAWS?
Most recently in November 2020, Proposition 207, known as the Safe and Smart Arizona Act, legalized the cultivation, processing, and sale of adult-use cannabis in Arizona. Eligible applicants include existing non-profit medical cannabis establishments as well as 26 Social Equity Applicants from communities that have been disproportionately impacted by the War on Drugs.
Arizona legalized cannabis for medical purposes on November 2, 2010 when voters supported Proposition 203, known as the Arizona Medical Marijuana Question, a medical cannabis ballot initiative. According to this proposition, all medical cannabis dispensaries in Arizona must be nonprofit businesses under Arizona laws 36-2806, which states a registered nonprofit medical marijuana dispensary shall be operated on a not-for-profit basis and they are subjected to government oversight.
In 2019, Gov. Ducey signed Senate Bill 1494 which stated that all Arizona dispensaries must test their inventory for potency, as well as microbial contamination, heavy metals, pesticides, and other contaminants beginning on November 1, 2020. This is similar to other highly regulated markets. After August 2019, qualifying patients' identification cards now expire after two years instead of one.
WHAT IS ARIZONA'S CANNABIS LICENSING TIMELINE & CANNABIS APPLICATION PROCESS?
At this time, the medical cannabis dispensary licensing window is closed in Arizona. The early applicant window of January 19, 2021 through March 9, 2021 has passed and the next stage of licensing has not yet begun.Social equity cannabis establishment licenses will be held for a drawing on April 8th, 2022. Arizona Department of Health Services (ADHS) will determine recipients of 26 adult-use marijuana establishment licenses available under voter-approved law. ADHS will hold a drawing to determine recipients of the licenses available to applicants who qualify as part of the social equity ownership program under the voter-approved Proposition 207. The digital random drawing took place at 1 p.m., Friday, April 8, 2022. Due to the large number of applicants, license recipients will be selected using a computerized random drawing system offered by Smartplay International Inc. This system is widely used for state lottery and raffle drawings and meets the highest standards for verification and accountability. The drawing was held at ADHS with industry and news media representatives witnessing and streamed live at azdhs.gov/live. The accounting and auditing firm Henry and Horne oversaw the drawing.
WHAT IS THE HISTORY OF CANNABIS IN ARIZONA?
In 1996, Arizona passed the Drug Medicalization, Prevention, and Control Act, also known as Proposition 200. This act allowed physicians to prescribe cannabis for qualifying conditions, however later failed to be implemented due to conflicts with federal law. Proposition 203, a medical cannabis initiative that also sought to decriminalize recreational use, was introduced in 2002 and also failed by not securing enough votes.
In 2010, Proposition 203 finally passed with 50.7% of the votes cast. Doctors could recommend up to 2.5 ounces of medical cannabis to patients with qualifying conditions. However, many policymakers in Arizona did not approve of Proposition 203 and tried to sue state employees on a federal level. As a result, Arizona suspended medical cannabis licenses for an extended period of time until those lawsuits were dismissed. In 2012. Governor Brewer approved legislation that prohibited the possession of medical cannabis on college campuses, which was later found unconstitutional by the Supreme Court and repealed.
In 2016, there was an initiative called Proposition 205 proposing the legalization of recreational cannabis use, which like all those preceded, ultimately failed. Finally, in 2020, the Smart and Safe Act was passed by voters, legalizing recreational cannabis in Arizona for adult-use.
Arizona was one of four states to legalize cannabis in the November 2020 Election Day ballots. Proposition 207 - which has not been given a short name - received 60% of the voters’ support and was quickly put into action. The Arizona Department of Health Services (ADHS), which was tasked with overseeing the state’s medical marijuana program, was chosen to oversee the adult-use program rollout as well. ADHS was required to release regulations and licensing information by June 1, 2021 but released regulations within a month after the official election results were certified.
Proposition 207 also allows adults 21 and older to grow up to six plants in their homes and possess up to one ounce of cannabis. It’s expected, now that it has passed, that the initiative could lead to more Arizona cannabis legislation like expunging cannabis convictions and reinvesting tax money into the community.
DOES ARIZONA HAVE A HEMP PROGRAM?
The State of Arizona does have an industrial hemp program, regulated by the Arizona Department of Agriculture. Details regarding the program are available here.
PREPARING FOR THE ARIZONA CANNABIS MARKET
Although the application process has closed for this round in Arizona, you can still prepare your business for the next round of license drawings on April 8, 2022. Contact Point7 to discuss the fully customizable products and service packages available that have proved successful for operators around the country.