Marijuana dispensary licensing under Smart and Safe Arizona Act, by RLG Partner and Cannabis Department Director Adam Trenk & law clerk Madelaine Bauer

By Adam Trenk and Madelaine Bauer | Rose Law Group

After Arizona’s effort to legalize marijuana failed in 2016, the four-year wait to try again is almost at its end, and a highly anticipated legalization initiative is back on the 2020 ballot. If the Act is passed, the Arizona Department of Health Services (“ADHS”) has the power to grant approximately 150 marijuana establishment licenses for business applicants determined to make their mark in the recreational marijuana industry. Of these licenses, 26 will be specifically allocated for applicants from communities that were disproportionately impacted by past marijuana prohibition laws.

The Smart and Safe Arizona Act (the “Act”) will legalize adult marijuana use if passed this upcoming November. Although the Act is anticipated by the general public for the legalization of recreational marijuana use, the Act is also eagerly awaited by the business community as it will open up an entirely new industry here in Arizona.

The Act gives medical marijuana dispensaries licensees the right of first application for the limited recreational marijuana establishment licenses available. However, if passed the Act carves out an additional 26 licenses to be granted to ensure that rural communities are well served under the Social Equity Ownership Program.

Specifically, the Social Equity Ownership Program is found in Section 36-2854 of the Act. The draft law does not fully detail how this Social Equity Ownership Program will be administered. However, we do know that the Social Equity Ownership Program is intended to promote the ownership and operation of marijuana establishments and marijuana testing facilities by individuals from communities disproportionately impacted by the enforcement of previous marijuana laws.

Ultimately, the ADHS will be responsible for implementing this program and will draft the rules necessary to carry it out. The rules are anticipated to define who can qualify as an applicant under this program, and of course how they apply. After finalizing these rules, ADHS will have six months to roll out the Social Equity Ownership Program and issue the marijuana distribution licenses allocated thereto by the Act.

Even though the specifics of the Social Equity Program in Arizona are not fully known, it is likely that the program will find similarities with other Social Equity Programs throughout the United States. Social Equity Programs are enacted to address the impacts of the inequities of past marijuana policies and promote equitable ownership and employment opportunities in the new emerging marijuana industries. Qualifications are likely to include coming from a community and/or demographic with a statistically lower income and a higher ratio of prior marijuana convictions and arrests than other communities during marijuana prohibition.

If you are representative of a community that has been adversely affected by the criminalization of marijuana in Arizona and are interested in the opportunity to operate and own a recreational marijuana business, the time to start preparing is now. If you are serious for applying for a recreational marijuana establishment license under the Social Equity Ownership Program, a relationship with a qualified attorney who is familiar with the Cannabis industry is an essential first step towards participating in this emerging market. If the Act passes there will be a short window of time to work with ADHS while they draft the rules, and to offer comments that may shape the administration of the Social Equity Program before the rules are finalize. Being prepared before the Smart & Safe Arizona Act passes this coming November will put you at the front of the pack.

Adam M. Trenk, Esq. is a Partner at Rose Law Group pc. He is the Chair of the Equine, Cannabis, and Hemp Law Departments. He advises clients on matters of Strategic Development, Contracts, Conflict Resolution, and Government Relations. He is an avid Horseman and active in the Equine Community. Adam Trenk sits on the Advisory Board for the Scottsdale Community College Equine Science Program.  He served his community in Cave Creek as an Elected member of the Town Council from 2009 to 2011, and again as Vice Mayor 2013-2015. Adam Trenk can be contacted by email at ATrenk@RoseLawGroup.com or by phone at 602-402-3335. Like him on Facebook at www.facebook.com/EquineAttorneys. Follow him on Instagram @thelawhorse.   

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