HB2657 - 542R

Be it enacted by the Legislature of the State of Arizona:

Section 1. Section 4-111, Arizona Revised Statutes, is amended to read:

START_STATUTE4-111. State liquor board; state marijuana board; department of liquor licenses and control; members; director; appointment and removal

A. The department of liquor licenses and control is established consisting of the state liquor board, the state marijuana board established by section 4‑402 and the office of director of the department.

B. From and after January 31, 2003, the board consists of seven members to be appointed by the governor pursuant to section 38‑211. Five of the members of the board shall not be financially interested directly or indirectly in business licensed to deal with spirituous liquors. Two members shall currently be engaged in business in the spirituous liquor industry or have been engaged in the past in business in the spirituous liquor industry, at least one of whom shall currently be a retail licensee or employee of a retail licensee. One member shall be a member of a neighborhood association recognized by a county, city or town. The term of members is three years. Members' terms expire on the third Monday in January of the appropriate year. The governor may remove any member of the board for cause. No member may represent another licensee before the board for a period of one year after the conclusion of the member's service on the board.

C. The board shall annually elect from its membership a chairman and vice‑chairman. A majority of the board constitutes a quorum, and a concurrence of a majority of a quorum is sufficient for taking any action. If there are unfilled positions on the board, a majority of those persons appointed and serving on the board constitutes a quorum.

D. The chairman may designate panels of not less than at least three members. A panel may take any action that the board is authorized to take pursuant to this title. Such action includes the ability to hold hearings and hear appeals of administrative disciplinary proceedings of licenses issued pursuant to this chapter. A panel shall not, however, adopt rules as provided in section 4‑112, subsection A, paragraph 2. The chairman may from time to time add additional members or remove members from a panel. A majority of a panel, may on the concurrence of a majority of the members of the panel, may take final action on hearings and appeals of administrative disciplinary proceedings concerning licenses issued pursuant to this chapter.

E. Members of the board are entitled to receive compensation at the rate of fifty dollars $50 per day while engaged in the business of the board.

F. A person shall not be appointed to serve on the board unless the person has been a resident of this state for not less than at least five years before the person's appointment. Not more than four members may be of the same political party. Persons eligible for appointment shall have a continuous recorded registration pursuant to title 16, chapter 1 with the same political party or as an independent for at least two years immediately preceding appointment. Not more than three members may be appointed from the same county.

G. The governor shall appoint the director, pursuant to section 38‑211, who shall be a qualified elector of the state and experienced in administrative matters and enforcement procedures. The director shall serve at the pleasure of the governor.

H. The director is entitled to receive a salary as determined pursuant to section 38‑611. END_STATUTE

Sec. 2. Section 4-112, Arizona Revised Statutes, is amended to read:

START_STATUTE4-112. Powers and duties of board and director of department of liquor licenses and control; investigations; county and municipal regulation; definition

A. The board shall:

1. Except as provided in chapter 4 of this title, grant and deny applications in accordance with the provisions of this title.

2. Adopt rules in order to carry out the provisions of this section.

3. Hear appeals and hold hearings as provided in this section.

B. Except as provided in subsection A of this section and section 4‑403, the director shall administer the provisions of this title, including:

1. Adopting rules:

(a) For carrying out the provisions of this title.

(b) For the proper conduct of the business to be carried on under each specific type of spirituous liquor license and marijuana license.

(c) To enable and assist state officials and political subdivisions to collect taxes levied or imposed in connection with spirituous liquors and marijuana.

(d) For the issuance and revocation of certificates of registration of retail agents, including provisions governing the shipping, storage and delivery of spirituous liquors by registered retail agents, the keeping of records and the filing of reports by registered retail agents.

(e) To establish requirements for licensees under section 4‑209, subsection B, paragraph 12.

2. Subject to title 41, chapter 4, article 4, employing necessary personnel and fixing their compensation pursuant to section 38‑611.

3. Keeping an index record that is a public record open to public inspection and that contains the name and address of each licensee and the name and address of any person having an interest, either legal or equitable, in each license as shown by any written document that is placed on file in the office of the state liquor board or the state marijuana board, as applicable.

4. Providing the state liquor board and the state marijuana board with supplies and personnel as directed by the each board.

5. Responding in writing to any law enforcement agency that submits an investigative report to the department relating to a violation of this title, setting forth what action, if any, the department has taken or intends to take on the report and, if the report lacks sufficient information or is otherwise defective for use by the department, what the agency must do to remedy the report.

6. Taking steps that are necessary to maintain effective liaison with the department of public safety and all local law enforcement agencies in the enforcement of enforcing this title, including the laws of this state against the consumption of spirituous liquor and marijuana by persons under the legal drinking age and the legal age to use marijuana.

7. Providing training to law enforcement agencies in the proper investigation and reporting of violations of this title.

C. The director shall establish within the department a separate investigations unit that has as its sole responsibility the investigation of compliance with this title, including the investigation of investigating licensees alleged to have sold or distributed spirituous liquor or marijuana in any form to persons under the legal drinking age or the legal age to use marijuana. Investigations conducted by this unit may include covert undercover investigations.

D. All employees of the department of liquor licenses and control, except members of the state liquor board, members of the state marijuana board and the director of the department, shall be employed by the department in the manner prescribed by the department of administration.

E. The director may enter into a contract or agreement with any public agency for any joint or cooperative action as provided for by title 11, chapter 7, article 3.

F. The state liquor board, the state marijuana board or the director may take evidence, administer oaths or affirmations, issue subpoenas requiring attendance and testimony of witnesses, cause depositions to be taken and require by subpoena duces tecum the production of books, papers and other documents that are necessary for the enforcement of this title. Proceedings held during the course of a confidential investigation are exempt from title 38, chapter 3, article 3.1. If a person refuses to obey a subpoena or fails to answer questions as provided by this subsection, the state liquor board, the state marijuana board or the director may apply to the superior court in the manner provided in section 12‑2212. The state liquor board, the state marijuana board or the director may serve subpoenas by personal service or certified mail, return receipt requested.

G. The director may:

1. Examine books, records and papers of a licensee.

2. Require applicants, licensees, employees who serve, sell or furnish spirituous liquors to retail customers, managers and managing agents to take training courses approved by the director in spirituous liquor handling, and spirituous liquor laws and rules, marijuana handling and marijuana laws and rules. The director shall adopt rules that set standards for approving training courses. The director may suspend or revoke the previous approval of trainers who do not adhere to course administration requirements prescribed by the department or who do not meet course standards. If the director suspends or revokes the previous approval of a trainer pursuant to this paragraph, the trainer may appeal to the board pursuant to section 4‑210.02 as if the suspension or revocation was a sanction against a licensee. After January 1, 2019, The rules for on‑sale retailer basic training and on‑sale retailer management training shall include security procedures for security personnel assigned to monitor admission of patrons, interaction with patrons, calls to law enforcement and strategies for use of force and for the use of de‑escalation techniques. If the retailer uses a registered security guard, the retailer shall attempt to verify the validity and status of the security guard's registration certificate. The department's licensed investigators may participate and receive compensation as lecturers at approved training courses within this state's jurisdiction that are conducted by other entities but shall not participate in in‑house training programs for licensees.

3. Delegate to employees of the department authority to exercise powers of the director in order to administer the department.

4. Regulate signs that advertise a spirituous liquor product or marijuana at licensed retail premises.

5. Cause to be removed from the marketplace spirituous liquor or marijuana that may be contaminated.

6. Regulate the age and conduct of erotic entertainers at licensed premises. The age limitation governing these erotic entertainers may be different from other employees of the licensee.

7. Issue and enforce cease and desist orders against any person or entity that sells beer, wine, or spirituous liquor or marijuana without an appropriate license or permit.

8. Confiscate wines carrying a label including a reference to Arizona or any Arizona city, town or place unless at least seventy‑five percent by volume of the grapes used in making the wine were grown in this state.

9. Accept and expend private grants of monies, gifts and devises for conducting educational programs for parents and students on the repercussions of underage alcohol consumption. State general fund monies shall not be expended for the purposes of this paragraph. If the director does not receive sufficient monies from private sources to carry out the purposes of this paragraph, the director shall not provide the educational programs prescribed in this paragraph. Grant monies received pursuant to this paragraph are nonlapsing and do not revert to the state general fund at the close of the fiscal year.

10. Procure fingerprint scanning equipment and provide fingerprint services to license applicants and licensees. The department may charge a fee for providing these services.

11. Accept electronic signatures on all department and licensee forms and documents and applications. The director may adopt requirements that would require facsimile signatures to be followed by original signatures within a specified time period.

12. For use after January 1, 2019, Adopt a form that is required to be used by all on-sale retailers that hire or designate employees to serve as security personnel. All security personnel job applicants and employees for on-sale retailers shall complete the form, which shall be notarized, before assignment to a security role. The form shall require the applicant or other person to disclose whether in the previous five years the person has been a registered sex offender or pled guilty, pled no contest or been convicted of any offense that constitutes assault, homicide, domestic violence, sexual misconduct, misconduct involving a deadly weapon or a drug violation that constitutes the illegal sale, manufacturing, cultivation or transportation for sale of marijuana, a dangerous drug or a narcotic drug. A licensee may not hire or assign to a role as security personnel any person who fails to complete the form or if the form discloses one of the listed offenses within the previous five years. The licensee shall maintain on file affidavits of all security personnel hired or designated by the licensee. The form may not be required for a peace officer who is certified by the Arizona peace officer standards and training board or other security personnel who hold a current security guard registration certificate or armed security guard registration certificate issued pursuant to title 32, chapter 26.

H. A county or municipality may enact and enforce ordinances regulating the age and conduct of erotic entertainers at licensed premises in a manner at least as restrictive as rules adopted by the director.

I. For the purposes of this section, "security personnel" includes individuals whose primary assigned responsibilities include the security and safety of employees and patrons of an on-sale retailer premises. Security personnel does not include a person whose primary responsibilities include checking the identification cards of patrons to determine compliance with age requirements. END_STATUTE

Sec. 3. Title 4, Arizona Revised Statutes, is amended by adding chapter 4, to read:

CHAPTER 4

REGULATION OF MARIJUANA

ARTICLE 1. GENERAL PROVISIONS

START_STATUTE4-401. Definitions

In this chapter, unless the context otherwise requires:

1. "Board" means the state marijuana board.

2. "Independent third-party laboratory" has the same meaning prescribed in section 36‑2801.

3. "Marijuana":

(a) Means all parts of the plant of the genus cannabis, whether growing or not, as well as the seeds from the plant, the resin extracted from any part of the plant, and every compound, manufacture, salt, derivative, mixture or preparation of the plant or its seeds or resin.

(b) Includes cannabis as defined in section 13‑3401.

(c) Does not include industrial hemp, the fiber produced from the stalks of the plant of the genus cannabis, oil or cake made from the seeds of the plant, sterilized seeds of the plant that are incapable of germination, or the weight of any other ingredient combined with marijuana to prepare topical or oral administrations, food, drink or other products.

4. "Marijuana concentrate":

(a) means resin extracted from any part of a plant of the genus cannabis and every compound, manufacture, salt, derivative, mixture or preparation of that resin or tetrahydrocannabinol.

(b) Does not include industrial hemp or the weight of any other ingredient combined with cannabis to prepare topical or oral administrations, food, drink or other products.

5. "Marijuana product":

(a) Means marijuana concentrate and products that are composed of marijuana and other ingredients and that are intended for use or consumption, including edible products, ointments and tinctures.

(b) Does not include any marijuana concentrate or product that is composed of marijuana that is mixed with alcohol.

6. "Marijuana wholesaler" means a wholesaler that is licensed pursuant to title 42, chapter 3, article 13 to sell marijuana and marijuana products to retail marijuana stores that are registered pursuant to this chapter.

7. "Nonprofit medical marijuana dispensary" has the same meaning prescribed in section 36‑2801.

8. "Public place" has the same meaning prescribed in section 36‑601.01. END_STATUTE

START_STATUTE4-402. State marijuana board; membership; appointment

A. The state marijuana board consists of seven members who are appointed by the governor pursuant to section 38‑211. Five of the members of the board may not be financially interested, directly or indirectly, in business licensed to deal with marijuana. Two members must currently be engaged in business in the marijuana industry or have been engaged in the past in business in the marijuana industry, at least one of whom is currently a retail licensee or employee of a retail licensee. One member must be a member of a neighborhood association recognized by a county, city or town. The term of members is three years. Members' terms expire on the third Monday in January of the appropriate year. The governor may remove any member of the board for cause. A member may not represent another licensee before the board for a period of one year after the conclusion of the member's service on the board.

B. The board shall annually elect from its membership a chairman and vice chairman. A majority of the board constitutes a quorum, and a concurrence of a majority of a quorum is sufficient for taking any action. If there are unfilled positions on the board, a majority of those persons appointed and serving on the board constitutes a quorum.

C. The chairman may designate panels of at least three members. A panel may take any action that the board is authorized to take pursuant to this chapter, including holding hearings and hearing appeals of administrative disciplinary proceedings of licenses issued pursuant to this chapter. The chairman may from time to time add additional members or remove members from a panel. A majority of a panel, on the concurrence of a majority of the members of the panel, may take final action on hearings and appeals of administrative disciplinary proceedings concerning licenses issued pursuant to this chapter.

D. Members of the board are entitled to receive compensation at the rate of $50 per day while engaged in the business of the board.

E. A person may not be appointed to serve on the board unless the person has been a resident of this state for at least five years before the person's appointment. Three members of the board must be members of the political party with the largest total of voter registration as of the date of the board member's appointment, and three members of the board must be members of the political party with the second largest total of voter registration as of the date of the board member's appointment. One member may be registered with any other political party or not be a member of a political party that is recognized by this state. Persons eligible for appointment shall have a continuous recorded registration pursuant to title 16, chapter 1 with the same political party status for at least two years immediately preceding appointment. Not more than three members may be appointed from the same county.

F. Except for a member designated by the governor to be appointed from the industry, a member of the board or the director or any employee of the department may not be financially interested, directly or indirectly, in any business licensed to deal in marijuana. A violation of this subsection by the director or any member of the board shall be deemed a resignation by that person, and a violation by an employee of the department shall result in the person's immediate dismissal.END_STATUTE

START_STATUTE4-403. Duties of the board; appeals from director; hearings

A. The board shall:

1. Grant and deny applications in accordance with this chapter.

2. Adopt rules in order to carry out this chapter.

3. Hear appeals and hold hearings as provided in this section.

B. A decision issued by the director is not final for purposes of appeal to superior court until it has first been appealed to and ruled on by the board. Any aggrieved party may appeal any final decision of the director regarding applicants or licensees to the board based on a contention that the decision was any of the following:

1. Founded on or contained errors of law that shall specifically include errors of construction or application of any relevant rules.

2. Unsupported by any competent evidence as disclosed by the entire record.

3. Materially affected by unlawful procedures.

4. Based on a violation of any constitutional provision.

5. Arbitrary or capricious.

C. The aggrieved party shall file the appeal in writing with the department within fifteen days after service of the notice of the director's decision. The director's decision is suspended until the determination of any appeal by the board.

D. The board or an administrative law judge shall conduct a hearing on the appeal pursuant to title 41, chapter 6, article 10 and may accept any relevant and material evidence and testimony and exercise the rights prescribed by section 4‑112, subsection F or section 12‑2212. At the hearing, an attorney or corporate officer or employee of a corporation may represent the corporation. The department shall prepare an official record of the hearing, including all testimony recorded mechanically or stenographically and all exhibits introduced. The department is not required to transcribe the record except pursuant to an appeal to the superior court, except that, on written request and receipt of a reasonable fee for transcribing the record, the department may transcribe the record or allow for its transcription by the person requesting.

E. The board may affirm, reverse or modify any decision issued by the director. END_STATUTE

START_STATUTE4-404. Personal use of marijuana; prohibitions; violation; classification

A. Notwithstanding any other law, except as otherwise provided in this chapter, beginning January 1, 2022, the following acts by persons who are at least twenty‑one years of age are lawful and are not a criminal or civil offense under the laws of this state or any political subdivision of this state or a basis for seizure or forfeiture of assets under the laws of this state or any political subdivision of this state:

1. Possessing, using, purchasing or transporting marijuana accessories or one ounce or less of marijuana, except that not more than five grams of marijuana may be in the form of marijuana concentrate.

2. Transferring one ounce or less of marijuana in the originally sealed packaging to a person who is at least twenty‑one years of age without remuneration.

3. Consuming marijuana in a private residence, unless the private residence is used as a child care, adult day care or health care facility.

b. This chapter does not allow a person:

1. To possess, grow, process or transport marijuana plants in this state unless authorized pursuant to title 36, chapter 28.1 or 28.2.

2. To transport any amount of marijuana that is not in its originally sealed packaging, unless otherwise authorized by law to do so.

3. To drive, fly or boat while impaired to even the slightest degree by marijuana and have more than five nanograms per milliliter of tetrahydrocannabinol in the person's blood.

4. Who is under twenty‑one years of age to purchase, possess, transport or consume marijuana or marijuana products.

5. To consume marijuana or marijuana products in a public place.

C. Beginning January 1, 2022, a person who consumes marijuana in a public place or transports marijuana that is in the original packaging that has had its seal broken or the contents of which have been partially removed is guilty of a class 2 misdemeanor. END_STATUTE

START_STATUTE4-405. Employers; applicability of chapter

This chapter does not restrict the rights of employers to maintain a drug and an alcohol‑free workplace or affect the ability of employers to have workplace policies restricting the use of marijuana by employees or prospective employees. END_STATUTE

START_STATUTE4-406. Sale of marijuana; registration; requirements; inspection; prohibitions

A. In addition to the requirements prescribed for liquor store licensees in this title, a liquor store licensee may apply to the department for a retail marijuana store registration to be located within the liquor store.

B. A registered nonprofit medical marijuana dispensary pursuant to title 36, chapter 28.1 or an applicant that is not a licensee under this title may apply to the department for a retail marijuana store registration. A retail marijuana store that is registered under this subsection may not be colocated with a nonprofit medical marijuana dispensary.

C. The department may issue up to five hundred retail marijuana store registrations over a period of five years. The Applicants under subsection A of this section shall receive seventy-five percent of the retail marijuana store registrations issued and applicants under subsection B of this section shall receive twenty-five percent of the retail marijuana store registrations issued. The department shall allocate the licenses throughout this state by population.

D. The director shall prescribe the application form and fees for an original and renewal registration. A retail marijuana store registration is valid for three years.

E. Before a liquor store licensee or an applicant under subsection B of this section applies to the department for a retail marijuana store registration pursuant to this section, the licensee shall apply with the local jurisdiction where the liquor store is located or where the applicant intends on locating the retail marijuana store and receive approval of the retail marijuana store's location.

F. The department shall inspect each retail marijuana store at least once per year. END_STATUTE

START_STATUTE4-407. Local jurisdictions; zoning; regulation; retail marijuana stores

A. A local jurisdiction may:

1. Enact reasonable zoning regulations that limit the use of land for retail marijuana stores to specified areas within the local jurisdiction.

2. Limit the number of retail marijuana stores.

3. Establish reasonable restrictions on public signage regarding marijuana and retail marijuana stores.

4. Regulate the time, place and manner of a retail marijuana store within the local jurisdiction.

B. A county may exercise its authority pursuant to subsection A of this section only in unincorporated areas of the county.

C. A local jurisdiction may not:

1. Enact any ordinance, regulation or rule that is more restrictive than a comparable ordinance, regulation or rule that applies to nonprofit medical marijuana dispensaries.

2. Prohibit the transportation of marijuana or marijuana products by a retail marijuana store, a marijuana cultivator or manufacturer, a third‑party independent laboratory or a marijuana wholesaler on public roads. END_STATUTE

START_STATUTE4-408. Authority of cities and towns to tax transactions involving the retail sale of marijuana; prohibitions; exception

In addition to the taxes imposed by title 42, chapter 3, article 13, cities and towns may levy a tax on the privilege of engaging in the business of selling marijuana at retail within the city's or town's corporate limits and impose a permit tax or fee. This section Does not apply to marijuana wholesalers that are licensed pursuant to title 42, chapter 3, article 13.END_STATUTE

START_STATUTE4-409. Retail marijuana stores; requirements; testing; prohibitions; advertising

A. A retail marijuana store located within a liquor store shall be in a secured area that is restricted to persons who are at least twenty‑one years of age. The shelving, display and purchase of the marijuana or marijuana products must occur within the secured area of the retail marijuana store.

B. A retail marijuana store may not:

1. Allow any Onsite consumption of marijuana or marijuana products.

2. Sell any product in the retail marijuana store that contains both marijuana and alcohol.

3. Facilitate the delivery of marijuana or marijuana products.

4. Solicit or accept orders for marijuana or marijuana products or operate a platform that solicits or accepts orders for marijuana or marijuana products.

5. Sell or advertise marijuana or marijuana products with names that resemble or imitate food or drink brands marketed to children or otherwise advertise marijuana or marijuana products to children.

6. Sell marijuana products that resemble the form of a human, animal, insect, fruit, toy or cartoon.

C. A retail marijuana store may engage in Advertising if the advertising accurately and legibly identifies the retail marijuana store responsible for the content of the advertising by name and registration number.

D. A retail marijuana store shall allow an independent third‑party laboratory to test marijuana and marijuana products that are in the possession of the retail marijuana store. The retail marijuana store shall comply with all requests for testing from the department of health services and independent third‑party laboratories authorized by the department of health services to test the marijuana and marijuana products pursuant to title 36, chapter 28.2.

E. Notwithstanding any other law, the following acts, when performed by a retail marijuana store with a valid registration or by a person who is at least twenty‑one years of age and who is acting in the person's capacity as an owner, employee or agent of a retail marijuana store, are lawful and are not an offense under the laws of this state or a basis for seizure or forfeiture of assets under the laws of this state:

1. Possessing, displaying or storing marijuana or marijuana products in a secured area within the retail liquor store, except that marijuana and marijuana products may not be displayed in a manner that is visible to the general public outside of the secured area.

2. Possessing, displaying or storing marijuana or marijuana products within the retail marijuana store that is not a liquor store.

3. Delivering or transferring marijuana or marijuana products to an independent third-party laboratory or the department of health services.

4. Receiving marijuana or marijuana products from an independent third-party laboratory or the department of health services.

5. Purchasing and transporting marijuana or marijuana products from a marijuana wholesaler.

6. Beginning January 1, 2022, selling marijuana or marijuana products to consumers.

F. Notwithstanding any other law, it is lawful and is not an offense under the laws of this state or a basis for seizure or forfeiture of assets under the laws of this state to lease or otherwise allow the use of property owned, occupied or controlled by any person, corporation or other entity for any activity conducted lawfully in accordance with this chapter and the rules adopted pursuant to this chapter.

G. This section does not prevent the imposition of penalties on retail marijuana stores for violating this chapter or rules adopted by the department pursuant to this chapter or by local governments.END_STATUTE

START_STATUTE4-410. Retail sale of marijuana fund; use

The retail sale of marijuana fund is established consisting of fees collected pursuant to this chapter. the director shall administer this fund. Monies in the fund are continuously appropriated and shall be used to regulate retail marijuana stores and enforce the adult use of marijuana.END_STATUTE

Sec. 4. Title 13, chapter 9, Arizona Revised Statutes, is amended by adding section 13-911, to read:

START_STATUTE13-911. Marijuana possession; automatic expungement and sealing of records; petition to expunge; expungement order; requirements; definition

A. The court shall expunge the record of a person's arrest, conviction and sentence for possessing marijuana in violation of section 13‑3405, subsection A, paragraph 1. A person whose record is expunged shall be treated in all respects as if the person was never arrested, convicted or sentenced.

B. Within one year after the effective date of this section, all law enforcement agencies in this state and the clerk of the court in each county shall identify and seal all records in the entity's possession or control that are related to a person's arrest, conviction and sentence for possessing marijuana in violation of section 13‑3405, subsection A, paragraph 1.

C. If a person is arrested for, charged with or indicted for a violation of section 13‑3405, subsection A, paragraph 1 and the court or a prosecutor dismisses or vacates the complaint, information or indictment, the person is found not guilty or a criminal charge is not filed against the person in the Superior Court or a municipal court or justice court within fourteen days after the arrest or court disposition, all law enforcement, grand jury, prosecuting agency and court records that pertain to the arrest or charge shall be sealed. The clerk of the court or the person who is charged with the retention and control of the records may not disclose to anyone the existence of the records or any information that pertains to any charge that was sealed. This subsection does not prohibit an arrested, charged or indicted person or the person's heirs from filing a petition with the court or the clerk of the court to seal the records, and, if granted, the records shall be sealed.

D. The clerk of the court, any person who is charged with retaining and controlling the records or any law enforcement agency that has information contained in the sealed records may not disclose to anyone, except the subject of the record on submission of satisfactory proof of the subject's identity, information that pertains to any charge that is sealed under this section. The clerk of the court or a person who is charged with retaining and controlling the records shall forward a notice of the sealing to any law enforcement agency that the clerk or person knows received disseminated information concerning the arrest, and the law enforcement agency shall seal the disseminated information. the clerk of the court or a person who is charged with retaining and controlling the records shall provide adequate security measures to safeguard against unauthorized access to or dissemination of the records or, on the request of the accused, cause the actual physical destruction of the records, except that the clerk of the court or person may not cause the actual physical destruction of the records until three years after the date of the final disposition of the criminal case to which the records pertain. A person who has a record sealed may state that the person has never been arrested within the meaning of the law with respect to the proceedings that are sealed and may swear so under oath.

E. Beginning one year AFTER THE effective date of this section, if a person's arrest, conviction or sentence is not expunged and sealed pursuant to subsections A, B, C and D of this section for possessing marijuana pursuant to section 13‑3405, subsection A, paragraph 1, the person may petition the court that pronounced sentence to expunge the person's record of arrest, conviction and sentence or, If the person was Indicted but the charges were dismissed, the person was found not guilty or the conviction was vacated, may petition the court of proper jurisdiction in the city, town or county that filed the charges against the person or where the arrest occurred to expunge the person's arrest record or court record, or both.

F. The court shall grant a petition for expungement without a hearing. The court may dismiss a petition that does not meet the requirements prescribed in this section only after a hearing. The court shall provide a copy of the petition for expungement to the prosecutor and allow the prosecutor to respond to the petition and request a hearing.

G. After the court grants a petition for expungement or after an automatic expungement under subsection A of this section:

1. The court shall issue an order or minute entry to the petitioner that states that the expungement order expunges any record of the petitioner's arrest, conviction and sentence and that the clerk of the court will notify the department of public safety, the prosecutor and the arresting law enforcement agency, if applicable, of the expungement order.

2. On order of a court, the clerk of the court shall seal all records relating to the expunged arrest, conviction and sentence and allow the records to be accessed only by the person whose record was expunged, the person's attorney or a peace officer for a lawful purpose.

3. The department of public safety shall seal and separate the expunged record from the department's records and inform all appropriate state and federal law enforcement agencies of the expungement. The department may not charge the successful petitioner a fee to research and correct the petitioner's criminal history record.

4. The arresting and prosecuting agencies shall clearly identify in each agency's files and electronic records that the petitioner's arrest or conviction and sentence is expunged.

5. a person whose conviction is expunged pursuant to this section may state, in all instances, that the person has never been arrested for, charged with or convicted of the crime that is the subject of the conviction, including in response to questions on employment, housing, financial aid or loan applications.

H. A conviction for an offense that is committed in another jurisdiction and that if committed in this state would not constitute an offense in this state may not be used against the petitioner or prohibit the petitioner from obtaining an expungement.

I. this section does not affect The right Of the person whose record is expunged to appeal from the conviction or sentence or to rely on it in any subsequent proceeding for the same offense.

J. This section does not apply to any law enforcement, prosecuting agency or court record that pertains to an information or indictment that contains more than one count while the case is pending or, if the case is disposed of, only when all counts are entitled to expungement pursuant to this section.

K. For the purposes of this section, "record" includes every photograph of the person and all palm prints and fingerprints taken or made of the person. Record does not include a court record or transcript of the proceedings that is made or prepared by an official court reporter, assistant court reporter or monitor. END_STATUTE

Sec. 5. Title 15, chapter 16, article 1, Arizona Revised Statutes, is amended by adding section 15-2007, to read:

START_STATUTE15-2007. Distribution of marijuana taxes

The school facilities board may transfer monies deposited in the building renewal grant fund pursuant to section 42‑3555 that are otherwise unencumbered at the end of any fiscal year to either the new school facilities fund established by section 15-2041 or the emergency deficiencies correction fund established by section 15-2022 as the board deems necessary.END_STATUTE

Sec. 6. Subject to the requirements of article IV, part 1, section 1, Constitution of Arizona, section 36-2803, Arizona Revised Statutes, is amended to read:

START_STATUTE36-2803. Rulemaking; notice; testing of marijuana and marijuana products; fees

A. The department shall adopt rules:

1. Governing the manner in which the department considers petitions from the public to add debilitating medical conditions or treatments to the list of debilitating medical conditions set forth in section 36‑2801, paragraph 3, including public notice of, and an opportunity to comment in a public hearing on, petitions.

2. Establishing the form and content of registration and renewal applications submitted under this chapter.

3. Governing the manner in which the department considers applications for and renewals of registry identification cards.

4. Governing nonprofit medical marijuana dispensaries to protect against diversion and theft without imposing an undue burden on nonprofit medical marijuana dispensaries or compromising the confidentiality of cardholders, including:

(a) The manner in which the department considers applications for and renewals of registration certificates.

(b) Minimum oversight requirements for nonprofit medical marijuana dispensaries.

(d) Minimum security requirements for nonprofit medical marijuana dispensaries, including requirements to protect each registered nonprofit medical marijuana dispensary location by a fully operational security alarm system.

(e) Procedures for suspending or revoking the registration certificate of nonprofit medical marijuana dispensaries that violate this chapter or the rules adopted pursuant to this section.

5. Establishing application and renewal fees for registry identification cards, nonprofit medical marijuana dispensary registration certificates and independent third‑party laboratory certificates, according to the following:

(a) The total amount of all fees shall generate revenues that are sufficient to implement and administer this chapter, except that fee revenue may be offset or supplemented by private donations.

(b) Nonprofit medical marijuana dispensary application fees may not exceed $5,000.

(d) The total amount of revenue generated from nonprofit medical marijuana dispensary application and renewal fees, registry identification card fees for nonprofit medical marijuana dispensary agents and independent third‑party laboratory agents and application and renewal fees for independent third‑party laboratories shall be sufficient to implement and administer this chapter, including the verification system, except that the fee revenue may be offset or supplemented by private donations.

(e) The department may establish a sliding scale of patient application and renewal fees based on a qualifying patient's household income.

(f) The department may consider private donations under section 36‑2817 to reduce application and renewal fees.

B. The department of health services shall adopt rules that require each nonprofit medical marijuana dispensary to display in a conspicuous location a sign that warns pregnant women about the potential dangers to fetuses caused by smoking or ingesting marijuana while pregnant or to infants while breastfeeding and the risk of being reported to the department of child safety during pregnancy or at the birth of the child by persons who are required to report. The rules shall include the specific warning language that must be included on the sign. The cost and display of the sign required by rule shall be borne by the nonprofit medical marijuana dispensary. The rules shall also require each certifying physician to attest that the physician has provided information to each qualifying female patient that warns about the potential dangers to fetuses caused by smoking or ingesting marijuana while pregnant or to infants while breastfeeding and the risk of being reported to the department of child safety during pregnancy or at the birth of the child by persons who are required to report.

C. The department is authorized to adopt the rules set forth in subsections A and B of this section and shall adopt those rules pursuant to title 41, chapter 6.

D. The department of health services shall post prominently on its public website a warning about the potential dangers to fetuses caused by smoking or ingesting marijuana while pregnant or to infants while breastfeeding and the risk of being reported to the department of child safety during pregnancy or at the birth of the child by persons who are required to report.

E. Beginning November 1, 2020, before selling or dispensing marijuana or marijuana products to registered qualified patients or registered designated caregivers, nonprofit medical marijuana dispensaries shall test marijuana and marijuana products for medical use to determine unsafe levels of microbial contamination, heavy metals, pesticides, herbicides, fungicides, growth regulators and residual solvents and confirm the potency of the marijuana to be dispensed.

F. Beginning November 1, 2020, nonprofit medical marijuana dispensaries shall:

1. Provide test results to a registered qualifying patient or designated caregiver immediately on request.

2. Display in a conspicuous location a sign that notifies patients of their right to receive the certified independent third‑party laboratory test results for marijuana and marijuana products for medical use.

G. The department shall adopt rules to certify and regulate independent third‑party laboratories that analyze marijuana cultivated for medical use. The department shall establish certification fees for laboratories pursuant to subsection A of this section. In order to be certified as an independent third‑party laboratory that is allowed to test marijuana and marijuana products for medical use pursuant to this chapter, an independent third‑party laboratory:

1. Must meet requirements established by the department, including reporting and health and safety requirements.

2. May not have any direct or indirect familial or financial relationship with or interest in a nonprofit medical marijuana dispensary or related medical marijuana business entity or management company, or any direct or indirect familial or financial relationship with a designated caregiver for whom the laboratory is testing marijuana and marijuana products for medical use in this state.

3. Must have a quality assurance program and standards.

4. Must have an adequate chain of custody and sample requirement policies.

5. Must have an adequate records retention process to preserve records.

6. Must establish procedures to ensure that results are accurate, precise and scientifically valid before reporting the results.

7. Must be accredited by a national or international accreditation association or other similar accrediting entity, as determined by the department.

8. Must establish policies and procedures for disposal and reverse distribution of samples that are collected by the laboratory.

H. The department may shall conduct proficiency testing and remediate problems with independent third‑party laboratories that are certified and regulated pursuant to this chapter. Remediation may include assessing civil penalties and suspending or revoking a laboratory's certification. END_STATUTE

Sec. 7. Subject to the requirements of article IV, part 1, section 1, Constitution of Arizona, section 36-2817, Arizona Revised Statutes, is amended to read:

START_STATUTE36-2817. Medical marijuana fund; private donations; state laboratory renovation

A. The medical marijuana fund is established consisting of fees collected, civil penalties imposed and private donations received under this chapter. The department shall administer the fund. Monies in the fund are continuously appropriated.

B. The director of the department may accept and spend private grants, gifts, donations, contributions and devises to assist in carrying out the provisions of this chapter.

C. The director may use monies in the medical marijuana fund to renovate the state laboratory to comply with the proficiency testing requirements of independent third‑party laboratories in this chapter and chapter 28.2.

C. D. Monies in the medical marijuana fund do not revert to the state general fund at the end of a fiscal year. END_STATUTE

Sec. 8. Title 36, Arizona Revised Statutes, is amended by adding chapter 28.2, to read:

CHAPTER 28.2

ADULT USE OF MARIJUANA

ARTICLE 1. GENERAL PROVISIONS

START_STATUTE36-2851. Definitions

In this article, unless the context otherwise requires:

1. "Department" means the department of health services.

2. "Director" means the director of the department.

3. "Independent third‑party laboratory" has the same meaning prescribed in section 36‑2801.

4. "Marijuana":

(b) Includes cannabis as defined in section 13‑3401.

5. "Marijuana concentrate":

(a) means resin extracted from any part of a plant of the genus cannabis and every compound, manufacture, salt, derivative, mixture or preparation of that resin or tetrahydrocannabinol.

(b) Does not include industrial hemp or the weight of any other ingredient combined with cannabis to prepare topical or oral administrations, food, drink or other products.

6. "Marijuana product":

(a) Means marijuana concentrate and products that are composed of marijuana and other ingredients and that are intended for use or consumption, including edible products, ointments and tinctures.

(b) Does not include any marijuana concentrate or product composed of marijuana that is mixed with alcohol.

7. "Marijuana wholesaler" means a wholesaler that is licensed pursuant to title 42, chapter 3, article 13 to sell marijuana and marijuana products to retail marijuana stores.

8. "Nonprofit medical marijuana dispensary" has the same meaning prescribed in section 36‑2801.

9. "Retail marijuana store" means a store that is registered to sell marijuana and marijuana products to consumers pursuant to title 4, chapter 4.END_STATUTE

START_STATUTE36-2852. Marijuana cultivator and manufacturer registration; cards; applications; requirements; rules

A. The director shall issue registration cards for cultivating and manufacturing marijuana and marijuana products to be sold to marijuana wholesalers. the director may issue up to two hundred eighty‑five marijuana cultivator and manufacturer registration cards. A marijuana cultivator and manufacturer registration card is valid for two years. The director shall issue marijuana cultivator and manufacturer registration cards:

1. First to nonprofit medical marijuana dispensary applicants that are currently in good standing and that have not had any enforcement action taken against the applicant's dispensary agent card in the preceding twelve months.

2. To any remaining applicants that meet the requirements prescribed in rule by the director under subsection E of this section.

B. A marijuana cultivator and manufacturer may:

1. Cultivate, produce and process marijuana and marijuana products by any means, including chemical extraction or chemical synthesis.

2. Transfer marijuana and marijuana products to third-party independent laboratories for testing.

3. Sell, transfer or transport marijuana and marijuana products to marijuana wholesalers.

C. A marijuana cultivator and manufacturer may not:

1. Sell marijuana or marijuana products directly to retail marijuana stores or consumers.

2. manufacture marijuana products that resemble the form of a human, animal, insect, fruit, toy or cartoon.

3. Package or label marijuana or marijuana products in a false or misleading manner.

D. A marijuana cultivator and manufacturer shall:

1. Place all marijuana and marijuana products in child‑resistant packaging before it is sold to the marijuana wholesaler.

2. Clearly and conspicuously label containers that contain accurate warnings regarding the use of marijuana and marijuana products.

3. Limit the strength of edible marijuana products to not more than ten milligrams of tetrahydrocannabinol per serving or one hundred milligrams of tetrahydrocannabinol per package.

4. Ensure that marijuana products that contain more than one serving are delineated or scored into standard serving sizes and homogenized to ensure uniform disbursement throughout the marijuana product.

5. Transfer marijuana and marijuana products to independent third‑party laboratories as required by rule.

E. The director shall adopt rules relating to all of the following:

1. Requirements for applying for marijuana cultivator and manufacturer registration cards issued pursuant to this section. these requirements shall be equivalent to the requirements for nonprofit medical marijuana dispensaries pursuant to chapter 28.1 of this title, including any fingerprinting requirements.

2. Fees for initial and renewal marijuana cultivator and MANUFACTURER registration cards issued pursuant to this section.

3. cultivating, manufacturing and testing marijuana and marijuana products that will be sold to marijuana wholesalers. these rules shall be consistent with the rules adopted pursuant to chapter 28.1 of this title. END_STATUTE

START_STATUTE36-2853. Independent third-party laboratories; proficiency testing; rules

A. The director shall provide testing or contract with independent third‑party laboratories for testing of marijuana and marijuana products that are cultivated and manufactured pursuant to this chapter, that are purchased by marijuana wholesalers and that are sold to consumers by retail marijuana stores. All applicable Rules adopted by the director pursuant to chapter 28.1 of this title relating to independent third‑party laboratories apply to this chapter.

B. The director shall conduct proficiency testing and remediate problems with independent third-party laboratories that are certified pursuant to chapter 28.1 of this title and that conduct testing under this chapter. END_STATUTE

START_STATUTE36-2854. Inspections

The department shall inspect, at least annually, a marijuana cultivator and manufacturer registered pursuant to this chapter to determine compliance with this chapter and the rules adopted pursuant to this chapter. END_STATUTE

START_STATUTE36-2855. Adult use of marijuana fund; use

The Adult use of marijuana fund is established consisting of fees collected pursuant to this chapter. the director shall administer this fund. Monies in the fund are continuously appropriated and shall be used to regulate the cultivating and manufacturing of marijuana and marijuana products for adult use, the testing of marijuana and marijuana products pursuant to this chapter and the inspection of marijuana cultivators and manufacturers that are registered pursuant to this chapter. END_STATUTE

Sec. 9. Title 42, chapter 3, Arizona Revised Statutes, is amended by adding article 13, to read:

ARTICLE 13. MARIJUANA AND MARIJUANA PRODUCTS

START_STATUTE42-3551. Definitions

In this article, unless the context otherwise requires:

1. "Independent third‑party laboratory" has the same meaning prescribed in section 36‑2801.

2. "Marijuana":

(b) Includes cannabis as defined in section 13‑3401.

3. "Marijuana concentrate":

(a) means resin extracted from any part of a plant of the genus cannabis and every compound, manufacture, salt, derivative, mixture or preparation of that resin or tetrahydrocannabinol.

(b) Does not include industrial hemp or the weight of any other ingredient combined with cannabis to prepare topical or oral administrations, food, drink or other products.

4. "Marijuana product":

(a) Means marijuana concentrate and products that are composed of marijuana and other ingredients and that are intended for use or consumption, including edible products, ointments and tinctures.

(b) Does not include any marijuana concentrate or product composed of marijuana that is mixed with alcohol.

5. "Marijuana wholesaler" means a wholesaler who is licensed pursuant to this article to sell marijuana and marijuana products to retail marijuana stores that are registered pursuant to title 4, chapter 4.END_STATUTE

START_STATUTE42-3552. Marijuana wholesalers; licensure; return and payment by marijuana wholesalers; inspection; reporting

A. The department of revenue shall license wholesalers of marijuana and marijuana products for the purpose of transporting, delivering and selling the marijuana and marijuana products to retail marijuana stores. A marijuana wholesaler may not hold a retail marijuana store registration or a marijuana cultivator and manufacturing registration card. The department of revenue, in conjunction with the department of liquor licenses and control, shall adopt rules prescribing the qualifications, bond requirements and any other requirements of a marijuana wholesaler. The department of revenue may prescribe and collect fees for a marijuana wholesaler application, initial license and renewal license. A marijuana wholesaler license is valid for two years. the number of marijuana wholesaler licenses issued by the department of revenue may not exceed ten percent of the number of retail marijuana store registrations issued by the department of liquor licenses and control pursuant to title 4, chapter 4.

B. Each marijuana wholesaler purchasing marijuana and marijuana products for resale in this state shall pay the tax under this article on all marijuana and marijuana products purchased by retail marijuana stores and shall add the amount of the tax to the sales price.

C. Each marijuana wholesaler shall pay the tax to the department monthly on or before the twentieth day of the month next succeeding the month in which the tax accrues.

D. On or before the date prescribed by subsection C of this section, each marijuana wholesaler shall prepare a sworn return for the month in which the tax accrues in the form prescribed by the department, showing:

1. The amount of Marijuana and marijuana products purchased during the month in which the tax accrues.

2. The amount of tax for the period covered by the return.

3. Any other information that the department deems necessary to properly administer this chapter.

E. The taxpayer shall deliver the return, together with a remittance of the amount of the tax due, to the department.

F. Any taxpayer that fails to pay the tax within ten days after the date on which the payment becomes due is subject to and shall pay a penalty determined under section 42‑1125, plus interest at the rate determined pursuant to section 42‑1123 from the time the tax was due and payable until paid.

G. For reporting periods beginning when the department has established an electronic filing program, a taxpayer shall file electronically any report or return required under this article. The report or return is considered to be filed and received by the department on the date of the electronic postmark pursuant to section 42‑1105.02.

H. The department shall inspect each marijuana wholesaler at least once per year. END_STATUTE

START_STATUTE42-3553. Marijuana tax stamps; requirements; rules

A. The department shall prepare and have on hand official adhesive stamps for marijuana and marijuana products on which a tax is imposed by this article and for which the department either collects payment or prepayment of the tax through the purchase of such stamps by marijuana wholesalers. Only licensed marijuana wholesalers may purchase, obtain or affix marijuana stamps.

B. The tax stamps shall be both of the following:

1. Unable to be removed from an article once attached to the article without destroying the stamps.

2. Printed in the form and manner prescribed by the director.

C. Any tax stamp required under this article must be securely affixed to some visible part of the package or container and must remain firmly adhered to the package or container during possession by the consumer, except as otherwise provided.

D. The department shall adopt rules prescribing the tax stamps characteristics, the use of serial numbers to keep records of each marijuana wholesaler that purchases the tax stamps and the marijuana and marijuana products sold by the marijuana wholesaler and compliance inspections of marijuana wholesalers and retail marijuana stores.END_STATUTE

START_STATUTE42-3554. Marijuana wholesalers; marijuana and marijuana products; testing; transfer; transport and delivery

A marijuana wholesaler shall allow an independent third‑party laboratory or the department of health services to test marijuana and marijuana products that are in the possession of the marijuana wholesaler. The marijuana wholesaler shall comply with all requests for testing from the department of health services and independent third‑party laboratories authorized by the department of health services to test the marijuana and marijuana products pursuant to title 36, chapter 28.2. A marijuana wholesaler may transfer, transport and deliver marijuana and marijuana products to an independent third‑party laboratory to test the marijuana and marijuana products. END_STATUTE

START_STATUTE42-3555. Levy of tax; administration; disposition of monies

A. In addition to all other taxes, a tax is levied at the rate of sixteen percent of the wholesale price of each sealed marijuana and marijuana product container.

B. Unless the context otherwise requires, the administration of this article is vested in and shall be exercised by the department according to chapters 1 and 2 of this title and article 1 of this chapter.

C. The department shall deposit, pursuant to sections 35‑146 and 35‑147, monies levied and collected annually pursuant to this section as follows:

1. The first $300,000,000 in the building renewal grant fund established by section 15‑2032.

2. All remaining monies in the state general fund. END_STATUTE

Sec. 10. Applicability

Section 13‑911, Arizona Revised Statutes, as added by this act, applies to persons who are arrested, convicted or sentenced before, on or after the effective date of this act.

Sec. 11. Requirements for enactment; three-fourths vote

Pursuant to article IV, part 1, section 1, Constitution of Arizona, sections 36‑2803 and 36‑2817, Arizona Revised Statutes, as amended by this act, are effective only on the affirmative vote of at least three-fourths of the members of each house of the legislature.

Sec. 12. Requirements for enactment; two-thirds vote

Pursuant to article IX, section 22, Constitution of Arizona, this act is effective only on the affirmative vote of at least two-thirds of the members of each house of the legislature and is effective immediately on the signature of the governor or, if the governor vetoes this act, on the subsequent affirmative vote of at least three-fourths of the members of each house of the legislature.