Be it enacted by the Legislature of the State of Arizona:
Section 1. Subject to the requirements of article IV, part 1, section 1, Constitution of Arizona, section 36-2803, Arizona Revised Statutes, is amended to read:
36-2803. 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.
(c) Minimum recordkeeping 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.
(c) Nonprofit medical marijuana dispensary renewal fees may not exceed $1,000.
(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 that are based on a qualifying patient's household income and that are reasonable and related to the actual costs of processing applications and renewals.
(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. 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 contamination, including unsafe levels of microbial contamination, heavy metals, pesticides, fungicides, growth regulators and residual solvents and confirm the potency of the marijuana to be dispensed. The dried flowers of the marijuana plant are not required to be tested for residual solvents. If a nonprofit medical marijuana dispensary's test results for heavy metals comply with the prescribed requirements for a period of six consecutive months, heavy metal testing for that dispensary's marijuana and marijuana products is required only on a quarterly basis.
F. The department shall adopt rules that define batch and ensure that nonprofit medical marijuana dispensaries are properly submitting marijuana and marijuana products for testing consistent with these rules to ensure patient safety.
G. The department shall adopt rules regarding sampling procedures and ensure enforcement of sampling procedures to ensure patient safety.
H. The department shall adopt rules, based on national or international standards where available, to standardize how independent third-party laboratories test samples of marijuana and marijuana products to ensure consistent, reliable and scientifically valid results.
I. The department shall develop a standard form and require independent third-party laboratories to submit the standard form as a cover page for all test results. The standard form cover page, at a minimum, must contain a pass or fail designation of mandatory testing requirements.
J. The department shall develop a standard form and require independent third-party laboratories to submit the standard form as the final certificate of analysis of test results. The standard form must contain the mandatory testing requirements.
F. K. 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. L. 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. M. Through December 31, 2022, the department may conduct proficiency testing and remediate problems with independent third-party laboratories that are certified and regulated pursuant to this chapter and marijuana testing facilities that are licensed and regulated pursuant to chapter 28.2 of this title.
I. N. Beginning January 1, 2023, The department shall conduct proficiency testing and remediate problems with require independent third-party laboratories that are certified and regulated pursuant to this chapter and marijuana testing facilities that are licensed and regulated pursuant to chapter 28.2 of this title to conduct proficiency testing that is commercially available by contracting with a proficiency testing provider that has national or international accreditation. The department may contract for proficiency testing with laboratories that have a national or international accreditation shall supervise remediation and take corrective action as needed.
J. O. For the purposes of subsections H M and I N of this section, remediation may include assessing civil penalties and suspending or revoking a laboratory's certification or a marijuana testing facility's license.
K. P. The department shall adopt rules that prescribe reasonable time frames for testing marijuana and marijuana products.
Sec. 2. Subject to the requirements of article IV, part 1, section 1, Constitution of Arizona, section 36-2804.07, Arizona Revised Statutes, is amended to read:
36-2804.07. Independent third-party laboratories; certification; inspection; testing requirements
A. Independent third-party laboratories shall be certified by the department.
B. After receiving an application for certification from an independent third-party laboratory, the department shall certify the independent third-party laboratory and issue a certificate and a random twenty-digit alphanumeric identification number if:
1. The prospective independent third-party laboratory has submitted all of the following:
(a) The application fee.
(b) An application, that includes:
(i) The legal name of the independent third-party laboratory.
(ii) The physical address of the independent third-party laboratory, which may not be within five hundred feet of a public or private school existing before the date of the independent third-party laboratory's application.
(iii) The name, address and date of birth of the owner of the independent third-party laboratory.
(iv) The name, address and date of birth of each independent third-party laboratory agent.
(c) Policies and procedures consistent with department rules and the requirements of section 36-2803.
(d) If the city, town or county in which the independent third-party laboratory would be located has enacted zoning restrictions, a sworn statement certifying that the independent third-party laboratory is in compliance with the restrictions.
2. The prospective independent third-party laboratory's owner and agents have not been convicted of an excluded felony offense.
3. The prospective independent third-party laboratory's owner and agents are at least twenty-one years of age.
C. Certified independent third-party laboratories are subject to reasonable inspection by the department.
D. The department may conduct a criminal records check in order to carry out this section.
E. Beginning December 31, 2023, in order to be certified by the department, an independent third-party laboratory must be approved by the department to conduct testing for all of the contaminants prescribed in section 36-2803, subsection E. An independent third-party laboratory may contract with another independent third-party laboratory for specific contaminant testing if final and full test results are provided inclusively.
F. Beginning January 1, 2024, an independent third-party laboratory that conducts testing in accordance with subsection e of this section shall report to the department monthly aggregated data regarding testing conducted during the previous month. The department shall review the reports to evaluate testing and recommend any changes to ensure consumer safety. The department shall take corrective action as needed. The department shall adopt rules regarding the data to be included in the monthly report.
G. Beginning December 31, 2025, the department shall establish a laboratory to provide testing for medical marijuana, marijuana and marijuana products to ensure compliance and scientific validity with the certified independent third-party laboratories and marijuana testing facilities, to provide proficiency testing and to provide any other services deemed necessary for consumer safety pursuant to this chapter and chapter 28.2 of this title. The Department is exempt from the licensing requirements of title 36, chapters 28.1 and 28.2 regarding independent third-party laboratories and marijuana testing facilities for the laboratory established pursuant to this subsection.
Sec. 3. Subject to the requirements of article IV, part 1, section 1, Constitution of Arizona, section 36-2817, Arizona Revised Statutes, is amended to read:
36-2817. Medical marijuana fund; private donations; fund transfers; use of monies
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 this chapter.
C. Monies in the medical marijuana fund may be used to provide grants for marijuana clinical trials conducted pursuant to section 36-2822.
D. Monies in the medical marijuana fund do not revert to the state general fund at the end of a fiscal year.
E. On November 30, 2020, the director of the department shall transfer the following sums from the medical marijuana fund for the following purposes:
1. $15,000,000 to the Arizona teachers academy fund established by section 15-1655.
2. $10,000,000 to the department to fund the formation and operation of councils, commissions and programs dedicated to improving public health, including teen suicide prevention, the maternal mortality review program, improving youth health, substance abuse prevention, addressing adverse childhood experiences, the Arizona poison control system established pursuant to section 36-1161, the Arizona health improvement plan, the child fatality review team established pursuant to section 36-3501 and the chronic pain self management program.
3. $10,000,000 to the governor's office of highway safety to distribute grants for the following purposes:
(a) Reducing impaired driving, including conducting training programs and purchasing equipment for detecting, testing and enforcing laws against driving, flying or boating while impaired.
(b) Equipment, training and personnel costs for dedicated traffic enforcement.
4. $2,000,000 to the department to implement, carry out and enforce chapter 28.2 of this title.
5. $4,000,000 to the department to distribute grants to qualified nonprofit entities that will provide outreach to individuals who may be eligible to file petitions for expungement pursuant to section 36-2862 and will assist with the expungement petition process. The department shall distribute grants pursuant to this paragraph on or before June 30, 2021.
6. $2,000,000 to the department of health services
to develop and implement, in conjunction with the
department of economic security and other state agencies, a social equity
ownership program to promote the ownership and operation of marijuana
establishments and marijuana testing facilities by individuals from communities
disproportionately impacted by the enforcement of 
previous
marijuana laws. For the purposes of this paragraph, "marijuana
establishment" and "marijuana testing facility" have the same
meanings prescribed in section 36-2850.
7. $1,000,000 to the department to fund programs and grants to qualified nonprofit organizations for education and community outreach related to chapter 28.2 of this title.
8. $1,000,000 to the smart and safe Arizona fund established by section 36-2856.
F. After all costs incurred to implement, carry out and enforce this chapter and the rules adopted pursuant to this chapter are paid for fiscal year 2021-2022, the department shall transfer from the medical marijuana fund the following sums for the following purposes:
1. $1,250,000 to the department for suicide prevention.
2. $1,250,000 to the Arizona health care cost containment system for suicide prevention.
3. $2,000,000 to the institute for mental health research for research to improve mental health services, research and education in this state.
4. $2,000,000 to the department for the primary care provider loan repayment program and the rural private primary care provider loan repayment program established by chapter 21 of this title. The department shall prioritize rural providers in the areas of mental health care and behavioral health care if feasible and appropriate.
5. $2,000,000 to the board of medical student loans for the purposes of title 15, chapter 13, article 7. The board shall prioritize students who intend to practice in the area of psychiatry or other areas of practice that treat mental illness if feasible and appropriate.
6. $5,000,000 to county public health departments, in proportion to the population of each county, for the purposes of addressing important public health issues and communities affected by drug addiction and incarceration.
7. $1,000,000 to the department for the health care directives registry established pursuant to section 36-3291.
G. Monies transferred pursuant to subsection F of this section do not revert to the state general fund.
H. The director shall make a onetime transfer of $250,000 from the medical marijuana fund to the department to provide grants for marijuana research studies pursuant to section 36-2812.
I. The director may use monies in the medical marijuana fund to contract with laboratories pursuant to section 36-2803, subsection I N to comply with the proficiency testing requirements of this chapter for independent third-party laboratories and marijuana testing facilities. On or before July 1 of each year, the department shall report to the joint legislative budget committee expenditures made pursuant to this subsection for the preceding fiscal year.
Sec. 4. Repeal
Section 36-2821, Arizona Revised Statutes, is repealed.
Sec. 5. Legislative intent
It is this legislature's intent that the department of health services meet quarterly to review and take input regarding the testing of medical marijuana, marijuana and marijuana products in this state. The meetings shall be open to the public and the public may provide testimony and give input to the department regarding the policy, operations and administrative issues relating to testing medical marijuana, marijuana and marijuana products in this state.
Sec. 6. Requirements for enactment; three-fourths vote
Pursuant to article IV, part 1, section 1, Constitution of Arizona, sections 36-2803, 36-2804.07 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.