Arizona Marijuana Program Updates
Just three months after voters approved recreational marijuana in November 2020, the Arizona adult-use program was up and running, making it one of the fastest implementations in the country.
Recreational sales in Arizona have been strong. MJBizDaily projects that the state’s recreational market could be worth $350-400 million in its first year and $700-760 million by 2024.
The adult-use law in Arizona allows for the sale, possession, and consumption of one ounce of marijuana (of which 5 grams can be concentrate) for adults 21 years old or older. Adults can cultivate up to six plants at home, or 12 if two adults reside in the home.
The strong revenues for the state that are predicted are easy to understand, as there is a 16 percent excise tax on recreational sales in addition to the 10 percent tax that was already on medicinal marijuana sales.
Arizona first legalized medical marijuana in 2010 and the state issued 130 Dispensary Registration Certificates between 2011 and 2016. A Dispensary Registration Certificate allows a business to operate a cultivation, processing/manufacturing and/or dispensary facility. In 2019, the state passed another law, which allows for the additional licensing of Dispensary Registration Certificates, based on geographic areas where a previous dispensary moved from and is 25 miles from another dispensary. Additionally, the department can’t issue more than one marijuana license for every ten pharmacies in the state.
New Adult-Use Dispensary Licenses Issued
The 130 current medical marijuana license holders were able to apply for an adult-use license as early as January 2021. Recreational license holders are allowed 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.
In April 2021, Arizona held a lottery for 13 new recreational licenses for businesses to open cannabis businesses in rural counties. Despite the $25,000 entry fee, 300 businesses entered raising a quick $9.5 million for state coffers. Before the lottery, Arizona only had 130 dispensary licenses, that total is now 143, with around 125 operating today. The newly issued lottery licenses are only for adult-use dispensary retail shops.
New Social Equity Licenses Coming
A major component of Arizona’s program is its social equity program which will roll out in 2021. The state plans to issue 26 new adult-use licenses under this program. The state adopted rules to create and implement the Social Equity Ownership Program on June 1, 2021. The idea is to promote the ownership and operation of marijuana establishments by individuals disproportionately impacted by the enforcement of previous marijuana laws. The Department will begin accepting applications for these licenses in Dec 2021. In addition to opening up lucrative licenses to diverse populations, the social equity program also allows people previously convicted of possessing less than an ounce of marijuana or six or fewer plants or paraphernalia to petition the court to have their record expunged.