Arizona Social Equity Cannabis License Lottery Deadline is Fast Approaching!

The State of Arizona is conducting an open application lottery for 26 new social equity owned adult-use licenses. The submission period for the application opens December 1, 2021, and closes on December 14, 2021. To be considered, at least 51% of each applying entity’s ownership must meet at least three of the four following social equity qualifications:

• The applicant has an annual household income in at least three of the years 2016 through 2020 that, for the respective year, was less than 400% of the poverty level ($51,520 for a single tax filer and $106,000 for a family of 4).
• The applicant has been personally adversely affected by the enforcement of previous marijuana laws via conviction in Arizona of a violation of federal or state laws related to marijuana or marijuana paraphernalia or has been granted expungement as demonstrated
• by a copy of the expungement issued by the prosecuting state or jurisdiction
• The applicant has been adversely affected by the enforcement of previous marijuana laws because the individual is related to another individual who was convicted in Arizona of violating federal or state laws related to marijuana or marijuana paraphernalia. Related individuals include spouses, surviving spouses, parents, children, siblings, and legal guardians.
• Applicant lived for at least three of the years 2016 through 2020 at a physical address in an area that the Department has identified as being disproportionately affected by the enforcement of Arizona’s previous marijuana laws.
• Furthermore, all principal officers and board members of applying entities must complete each of the 15 video training modules, which are 10-40 minutes each, of the ADHS provided training by November 17, 2021, regardless of who will apply. The ADHS training is provided free of charge to all persons with a free ADHS account.

The 26 new licenses will bring the total number of adult-use retail stores in Arizona to 169, bolstering Arizona’s growing adult-use cannabis market, which is projected to be valued at $750 million by 2024. Given Arizona’s 7.1 million residents and 11.9% population growth between 2010-2020, this license expansion creates a lucrative and unique opportunity for historically-marginalized individuals who will be awarded one of these 26 new licenses. For savvy entrepreneurs who want to capitalize on this market, now is the time to get in on the ground floor of the nascent adult-use market in Arizona, which allows sales of cannabis flower, cannabis extracts, edibles, beverages, cannabis resin, and all related products.

A unique aspect of the Arizona social equity licensing process is that the licenses are fully vertically-integrated, so it is possible to sublease cultivation or other elements if you do not want to undertake these operations. Additionally, social equity lottery winners will be able to sell the license immediately to a non-social equity ownership group upon licensure, or they can choose to develop the business. Currently, many groups have set a value between $5-10 million dollars for one of these licenses post-award announcement.

While time is limited, there is still time to apply for the Arizona social equity lottery via the online ADOH facility licensing portal between December 1, 2021, and December 14, 2021.

Compared to most other adult-use license applications, Arizona’s process is straightforward. The State of Arizona does not require a full-bore application process; common elements required in other states’ applications such as real estate location, proof of capital, among many others, are not required by the State of Arizona to secure one of the 26 licenses at hand. A $5,000 lottery ticket to have a potential upside of $5-10 million dollars on day one is nearly unheard of, and not many teams are planning on applying; hence now is the time!