Arizona Marijuana Laws & the Brave New World of Adult Use

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With the recent changes in Arizona marijuana laws, cannabis licensing is in the limelight. As with anything new, there’s some uncertainty surrounding recreational licenses in the Grand Canyon State. When will licenses be awarded? Who’ll be eligible for a license? How can I get started in Arizona cannabis?

Arizona Marijuana Laws & the Brave New World of Adult Use

Fortunately, legislation answers many of these burning questions. If all goes as hoped, Arizona’s transition from medical-use to recreational-use cannabis will go smoothly.

Here’s what you need to know about Arizona cannabis licensing and legalization.

Cannabis-Friendly Legislation in the Grand Canyon State

Arizona has a history with 420-friendly legislation that goes back a decade. In 2010, voters of the Grand Canyon State passed Proposition 203, which permitted the medical use of cannabis for certain health conditions. Ultimately, Proposition 203 led to the creation of a strict framework under which medicinal cannabis businesses could operate.

Then, in 2016, Arizonans decided to push for legalized adult-use cannabis in their state. However, this citizen-led ballot initiative failed to get a majority vote. Despite this failure, however, Arizona still wanted to legalize adult-use — especially since they’d been losing adult-use consumers to neighboring states California and Nevada for years.

In 2020, Arizona voters decided that it was now time to legalize cannabis for adult use. The Smart and Safe Arizona Act, also known as Proposition 207, set the stage for recreational cannabis operations in the state.

Arizona Cannabis Licensing & Non-Profit Organizations

The situation surrounding Arizona marijuana laws is unique. As a former medical-use state, a framework for Arizona cannabis businesses was already in place and stated that all medical dispensaries would operate as non-profit organizations (NPOs). In order to keep business ownership with Arizonans, the state is offering recreational-use licenses almost exclusively to existing NPO dispensaries.

Current medical dispensaries that are in good standing can submit early applications for adult-use, for-profit licenses starting on January 19th, 2021, and should do so before the window closes on March 9th. Additionally, any business seeking to set up shop in a county with fewer than two NPO dispensaries is also eligible to submit an early application during this period.

Furthermore, Proposition 207 sets a hard deadline for issuing these licenses. If the state hasn’t issued recreational licenses by April 5, 2021, then presently licensed medical dispensaries may begin cultivating, manufacturing, and selling adult-use cannabis within their current capacity.

Social Equity

A commitment to social equity has become a huge factor in Arizona marijuana laws and cannabis licensing. In fact, the Smart and Safe Arizona Act creates a Social Equity Ownership Program (SEOP) designed to benefit business with owners from “communities disproportionately impacted by the enforcement of previous marijuana laws.”

Proposition 207 also explicitly stipulates that 26 recreational licenses will be awarded to social equity candidates. Some experts say we could see these licenses awarded by late 2021 or early 2022.

Recommendations for Adult-Use Businesses in Arizona

The best chances for breaking into the recreational cannabis market belong to existing NPO operators and social equity candidates. If you’re a social equity candidate, start pulling together your resources and get involved in the rulemaking process. The specifics of how the SEOP will work are still being decided — so get out there, get involved, and make your voice heard!

Arizona Marijuana Laws & the Brave New World of Adult Use

For larger companies, consider a partnership with an NPO dispensary. Arizona seems to be keeping ownership largely within the state, so a partnership with an existing operator may be able to get you in quickly and easily.

Ancillary cannabis businesses will be increasingly popular in Arizona as well. For example, real estate within green zones will become a hot commodity as more cannabis businesses begin to pop up. If you’re looking to get into an ancillary sector of the cannabis industry, our Pivot Program can help!

Both adult-use cannabis and the Arizona cannabis licensing process are new for the Grand Canyon State. Fortunately, there’s a solid framework for setting up adult-use operations as well as language in the law for making sure it happens on time.

If you’re an existing NPO operator or a social equity candidate in Arizona, you’ve got a good chance at winning a recreational license. If not, start exploring partnerships with existing NPO dispensaries or consider ancillary cannabis sectors. The time to get in on the exciting new adult-use venture is now.

Are you looking to build a successful cannabis operation in Arizona? Contact us today for a consultation!

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