Cannabis Business Licenses in Arizona

Program Details

Type of Program

• Medical
• Adult-use

Regulatory Agency

• Department of Health and Human Service
  

Market Population

• 7.3 million

Existing Cannabis Market Statistics

• Estimated Adult-Use Sales 2021: $375-400 million (MJBizDaily)
• Estimated Adult-Use Sales 2024: $700-760 million (MJBizDaily)
• Number of Licensed Cannabis Businesses: 130
• Number of Registered Medical Patients: 292,821 (4% of the population) as of November 2020.
• Tax Rate: 
• No excise tax for medical cannabis.
• 16% excise tax on the retail price of adult-use cannabis.

History of the Market

• 2010 - Medical Cannabis Legalization
• Proposition 203 passed with 50.1% of the vote. 
• Allows patients with a doctor's recommendation to possess up to 2.5 ounces of cannabis.
• The law initially limited the number of dispensaries to 124 and allowed patients that reside over 25 miles from a dispensary to cultivate their medical cannabis.
• As of July 2020, 94.02% of the state’s patients reported Chronic Pain as their qualifying condition.
• 2016 - First Attempt to Legalize Adult-Use Cannabis
• Proposition 205 was on the November ballot.
• The proposition did not pass, with 51.32% of the population voting against it. 
• 2020 - Adult-Use Cannabis Legalization
• Proposition 207 passed with 60.03% of the vote legalizing adult-use cannabis in the state.
• Election results were made official on November 30, 2020, allowing adults over the age of 21 to possess up to an ounce of cannabis with no more than five grams of which being concentrate.
• Each adult is also allowed to grow up to six cannabis plants at home with no more than 12 plants per household.
• The state has until June 1, 2021, to adopt rules and launch its adult-use marijuana program.
• 2021
• In the fastest rollout of an adult-use cannabis program the Arizona Department of Health Services approved the first licensed dispensaries on January 22, 2021. 
• Adult-use sales began on February 25, 2021.
• The latest version of the draft rules for the adult-use marijuana program was released on January 15, 2021.
• Before the March 9, 2021 deadline, 377 applicants each paid a $25,000 non-refundable application fee to the state for a chance at 13 new Marijuana Establishment licenses. These licenses are for sparsely populated counties with fewer than two licensed Marijuana Establishments.

Available License Types

Marijuana Establishment Licenses

Arizona Revised Statutes (A.R.S.) § 36-2850(18) defines “marijuana establishment” as:

[An] entity licensed by the department to operate all of the following:

• A single retail location at which the licensee may sell marijuana and marijuana products to consumers, cultivate marijuana, and manufacture marijuana products.
• A single off-site cultivation location at which the licensee may cultivate marijuana, process marijuana, and manufacture marijuana products, but from which marijuana and marijuana products may not be transferred or sold to consumers.
• A single off-site location at which the licensee may manufacture marijuana products and package and store marijuana and marijuana products, but from which marijuana and marijuana products may not be transferred or sold to consumers.

Dual Licensee

A dual licensee is an entity that holds both a Nonprofit Medical Marijuana Dispensary Registration Certificate and a Marijuana Establishment License.

A dual licensee may operate a single retail location where the licensee may dispense medical marijuana to registered qualifying patients and their designated caregivers, and sell marijuana to adults who are at least 21 years of age.

Early Applicants

Entities seeking to operate in a marijuana establishment in a county with fewer than two registered Nonprofit Medical Marijuana Dispensaries or Nonprofit Medical Marijuana Dispensary that is registered and in good standing with the Department were eligible for the early application window. This early applicant window closed on March 9, 2021.

Social Equity Ownership Program Applicants

The Arizona Department of Health Services (ADHS) will issue 26 Marijuana Establishment licenses to applicants who qualify under the Social Equity Ownership Program. Considering there are only 130 licensed Marijuana Establishments to date and there were nearly 400 applicants for 13 licenses in rural counties the social equity licenses will be extremely valuable. The upcoming social equity licensing round will be the last chance to get into Arizona’s cannabis market for quite some time.

ADHS must first adopt rules to create and implement a Social Equity Ownership Program to promote the ownership and operation of marijuana establishments by individuals disproportionately impacted by the enforcement of previous marijuana laws. During the rulemaking, ADHS will post drafts and accept public comments. Municipalities are tasked with setting local regulations prior to April 5, 2021, and the first draft of the social equity rules will most likely be released in April. 

ADHS will begin accepting applications for these 26 licenses within six months of adopting the Social Equity Ownership Program's final rules. The Department does not currently have a timeline for this rulemaking; however, the website will be updated as more information becomes available.

Additional Requirements

Marijuana Facility Agent Licenses

A marijuana facility agent is a principal officer, board member, employee, or volunteer of a marijuana establishment or marijuana testing facility who is at least twenty-one years of age and has not been convicted of an excluded felony offense.

To work at a marijuana establishment or a marijuana testing facility, you must possess a valid marijuana facility agent license. Though you may work at more than one marijuana establishment or marijuana testing facility, you will only need one valid facility agent card for yourself. Once you are employed with a marijuana establishment or a marijuana testing facility, your card must be linked within the electronic portal to the facility for the employer/employee protections to be activated.

Required application forms for Facility Agents:

• Facility Agent Attestation
• Facility Agent Checklist
• Fingerprinting Instructions
• Fingerprinting Verification Form
• FBI Privacy Act Statement

Resources

• Arizona Department of Health Services - Marijuana 
• Adult Use of Marijuana FAQs

To date, 3C has developed cannabis license applications for clients in over 50 markets globally. Our team is standing by and ready to help you plan for, complete, review, and submit your application. Now is the time to get a head start.