Arizona Releases Draft Regulations for Cannabis Social Equity Program

How to apply for a marijuana business license as a Social Equity Applicant in Arizona

In Arizona, both medical and adult use marijuana is legal. On November 3rd, 2020, Arizona voters had the opportunity to vote on Proposition 207, also known as the “Smart and Safe Arizona Act” to legalize adult-use/recreational marijuana in the state. Included in the proposition, was  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.

The Arizona Department of Health Services (AZDHS) shall issue 26 Marijuana Establishment licenses to applicants who qualify under the Social Equity Ownership Program. However, AZDHS must first adopt rules to create and implement a Social Equity Ownership Program that includes information regarding how and when eligible applicants can apply for these licenses.

On May 6, 2021, AZDHS released the long awaited draft regulations for its Social Equity ownership program. Biggest takeaways include the following:

• To qualify as a social equity applicant, at least 51% ownership of the applying entity must include individuals that meet the following criteria:
  • Has petitioned the court for expungement pursuant to A.R.S. § 36-2862:
    • Beginning July 12, 2021, an individual who was arrested for, charged with, adjudicated or convicted by trial or plea of, or sentenced for, any of the following offenses based on or arising out of conduct occurring before the effective date of this section may petition the court to have the record of that arrest, charge, adjudication, conviction or sentence expunged:
      • Possessing, consuming or transporting two and one-half ounces or less of marijuana, of which not more than twelve and one-half grams was in the form of marijuana concentrate.
      • Possessing, transporting, cultivating or processing not more than six marijuana plants at the individual’s primary residence for personal use.
      • Possessing, using or transporting paraphernalia relating to the cultivation, manufacture, processing or consumption of marijuana.
    • Had a family income in 2019 that would make the individual eligible under A.R.S. § 41-1080.01* for the Department to waive the application fee for the individual’s marijuana facility agent initial license, according to R9-18-102(B):
      • *Family income does not exceed two hundred percent of the federal poverty guidelines
    • Each qualifying principal officer or board member has a certificate of completion of a Department-provided educational training course
  • Applicants are required to submit the following, but not limited to: business organization information, attestations, and a nonrefundable fee of $5,000.
  • Differing from the early applicant licensing in Jan – March 2021, Applicants will NOT be required to secure property or provide proof of funds of $500,000 per application.
  • Social Equity Licenses will be issued based on lottery system.

AZDHS will be accepting public comments for the draft regulations until May 16th, 2021, you can submit comments online here: https://www.surveymonkey.com/r/ZYSK59B. AZDHS will begin accepting applications for these 26 licenses within 6 months of adopting the final rules for the Social Equity Ownership Program. We anticipate that to be sometime around late Q2 of 2021.

 For more information on how to apply for a Social Equity License in Arizona, Schedule a Consultation with our Director of Licensing.