Rules for Arizona's social equity marijuana program finalized

Rules for what could be the last marijuana dispensary licenses issued by Arizona have been finalized by the state’s health department.

The the final draft report by the Arizona Department of Health Services’ “social equity ownership program” was issued Thursday. In general, the program is intended to “promote the ownership and operation of marijuana establishments … by individuals from communities disproportionately impacted by the enforcement of previous marijuana laws,” according to the department’s website.

The major changes include clearing up language around the transferability of a social equity license. It effectively bars applicants from entering into prior agreements with larger retailers to sell or take over an applicant’s license. The initial application fee of $5,000, which is nonrefundable, was also lowered to $4,000.

However, critics and potential applicants to the program contend that, while the final draft closes a big loophole, it still falls short of establishing a truly equitable program.

“Not very good,” Zsa Zsa Simone Brown, a cannabis entrepreneur and potential social equity program applicant, said of the final rules. “Some of the things in there are good, and I can see where they can benefit. But there’s still some things that are missing,” like a point-based application system and better transferability controls, Brown said.

The National Organization for the Reform of Marijuana Laws, or NORML, issued a statement Thursday praising AZDHS for changing language in the documents that allowed for potential licensees to “flip” their license to an outside buyer. Before the change, there was concern from applicants and advocates that potential licensees could enter into agreements to sell their licenses to individuals with deep pockets or to established marijuana consortiums.

Back to homepage

Subscriber Login

Keep reading with a digital access subscription.

Subscribe now

Brown said the department could have gone further. She said she would have liked to see more restrictive language about what potential licensees could do. Under the final rules, there is no restriction on when licensees can sell their rights. Licensees can theoretically sell those rights immediately.

“If they are going to be transferable, then one, it should be a longer time period that you have to hold on to them,” Simone Brown said. “And then secondly, if you are going to transfer a sale, that it should only be to another social equity applicant.”

Brown and NORML also were critical of AZDHS not extending the period for potential applicants with eligible marijuana-related convictions or arrests to have them be expunged from their records, an argument tied into the departments release of eligible ZIP codes for applicants last week.

Even if an applicant were to apply for expungement now, with the average turnaround time of two months to be processed by the courts, they would likely miss the AZDHS-set application period of Dec. 1 to Dec. 14, according to NORML.

Additionally, applicants for the social equity program might be out of luck when it comes to opening a dispensary after the licenses are handed out in early 2022, when AZDHS is set to hold a random distribution, according to the agency.

Due to a formula that ties the number of dispensaries to the number of retail pharmacies — 100 pharmacies to every 1 dispensary — it’s possible there will be no more legal dispensary licenses issued in the state for the foreseeable future, officials said.