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 36-2803.01, Arizona Revised Statutes, is amended to read:
36-2803.01. New dispensary registration
certificates; issuance; priority; requirements; definition
A. Except as provided in subsection E of
this section, beginning on April
1, 2020, the department shall issue all new nonprofit medical marijuana
dispensary registration certificates in the following order of priority based
on the dispensary's geographic area as described in the registration
certificate application:
1. The geographic
area had a registered nonprofit medical marijuana dispensary move from the
geographic area and the geographic area is at least twenty-five miles
from another dispensary that has been issued a dispensary registration
certificate.
2. The geographic
area is at least twenty-five miles from another dispensary that has been
issued a dispensary registration certificate.
3. According to rule,
if
there are no dispensary registration certificate applications as described in
paragraph 1 or 2 of this subsection.
B. If the department
receives multiple applications as described in subsection A, paragraph 1 of
this section from previously approved nonprofit medical marijuana dispensary
locations, the department shall approve the certificate for the application
that serves the most qualifying patients within five miles of the proposed
dispensary location. If the department receives multiple applications as
described in subsection A, paragraph 2 of this section or if there are no
applications from previously approved dispensary locations, the department may
issue the registration certificate by random drawing.
C. A nonprofit
medical marijuana dispensary that receives a registration certificate pursuant
to subsection A, paragraph 1 or 2 or subsection E of this
section on or after April 1, 2020 must open the dispensary at the approved
location within eighteen months after the application is approved or the
registration certificate becomes invalid.
D. A nonprofit
medical marijuana dispensary that is issued a registration certificate pursuant
to subsection A, paragraph 1 or 2 of this section may relocate only as follows:
1. If the dispensary
is located within a city or town, only within that city or town.
2. If the dispensary
is located within an unincorporated area, only within the unincorporated area
of the county where the dispensary is located but not within twenty-five
miles from another dispensary that has been issued a dispensary registration
certificate.
E. Notwithstanding
any other provision of this chapter, the department shall issue a nonprofit
medical marijuana dispensary registration certificate to each entity that is
issued a marijuana establishment license pursuant to section 36-2854,
subsection A, paragraph 1, subdivision (g)
and allow these registration certificate holders to relocate their retail site
only to another unserved rural community in accordance with section 36-2857.01.
E. F. For
the purposes of this section, "geographic area" means a city, town or
unincorporated area of a county.
Sec. 2. Subject
to the requirements of article IV, part 1, section 1, Constitution of
Arizona, section 36-2854, Arizona Revised Statutes, is amended to read:
36-2854. Rules; licensing; early applicants;
fees; civil penalty; legal counsel
A. The department
shall adopt rules to implement and enforce this chapter and regulate marijuana,
marijuana products, marijuana establishments and marijuana testing
facilities. Those rules shall include requirements for:
1. Licensing
marijuana establishments and marijuana testing facilities, including conducting
investigations and background checks to determine eligibility for licensing for
marijuana establishment and marijuana testing facility applicants, except that:
(a) An application
for a marijuana establishment license or marijuana testing facility license may
not require the disclosure of the identity of any person who is entitled to a
share of less than ten percent of the profits of an applicant that is a
publicly traded corporation.
(b) The department
may not issue more than one marijuana establishment license for every ten
pharmacies that have registered under section 32-1929, that have obtained
a pharmacy permit from the Arizona board of pharmacy and that operate within
this state.
(c) Notwithstanding
subdivision (b) of this paragraph, the department may issue a marijuana
establishment license to not more than two marijuana establishments per county
that contains no registered nonprofit medical marijuana dispensaries, or one
marijuana establishment license per county that contains one registered
nonprofit medical marijuana dispensary. Any license issued pursuant
to this subdivision shall be for a fixed county and 
may
not be relocated outside of that county.
(d) The department
shall accept applications for marijuana establishment licenses from early
applicants beginning January 19, 2021 through March 9, 2021. Not
later than sixty days after receiving an application pursuant to this subdivision,
the department shall issue a marijuana establishment license to each qualified
early applicant. If the department has not adopted final rules
pursuant to this section at the time marijuana establishment licenses are
issued pursuant to this subdivision, licensees shall comply with the rules
adopted by the department to implement chapter 28.1 of this title except
those that are inconsistent with this chapter.
(e) After issuing
marijuana establishment licenses to qualified early applicants, the department
shall issue marijuana establishment licenses available under subdivisions (b)
and (c) of this paragraph by random selection and according to rules adopted
pursuant to this section. At least sixty days before any random selection, the
department shall prominently 
publicize the random selection on its website and through
other means of general distribution intended to reach as many interested
parties as possible and shall provide notice through an email notification
system to which interested parties can subscribe.
(f) Notwithstanding
subdivisions (b) and (c) of this paragraph, and not later than six months after
the department adopts final rules to implement a social equity ownership
program pursuant to paragraph 9 of this subsection, the department shall issue
twenty-six additional marijuana establishment licenses to entities that
are qualified pursuant to the social equity ownership program.
(g) Notwithstanding
subdivisions (b) and (c) of this paragraph, the department shall
issue a marijuana establishment license to each entity that is qualified pursuant to the rural opportunity
initiative. The licenses issued pursuant to this subdivision shall
be for a fixed community that has not opted out of the rural opportunity
initiative, and the entity's
retail site may be relocated only to an unserved rural community in accordance
with section 36-2857.01. The department may not issue more than eighteen marijuana
establishment licenses pursuant to this subdivision.
(g) (h) Licenses issued
by the department to marijuana establishments and marijuana testing facilities
shall be valid for a period of two years. A dual licensee's initial
renewal date, which will be the ongoing renewal date for both the dual licensee's
marijuana establishment license and nonprofit medical marijuana dispensary
registration, is the earlier of:
(i) The date of the
marijuana establishment license renewal.
(ii) The date of the
nonprofit medical marijuana dispensary registration renewal.
(h) (i) The department
may not issue a marijuana establishment or marijuana testing facility license
to an applicant who has an ownership interest in an out-of-state
marijuana establishment or marijuana testing facility, or the other state's
equivalent, that has had its license revoked by the other state.
2. Licensing fees and
renewal fees for marijuana establishments and marijuana testing facilities in
amounts that are reasonable and related to the actual cost of processing
applications for licenses and renewals and that do not exceed five times the
fees prescribed by the department to register or renew a nonprofit medical
marijuana dispensary.
3. The security of
marijuana establishments and marijuana testing facilities.
4. Marijuana
establishments to safely cultivate, process and manufacture marijuana and
marijuana products. The department shall require licensees to
procure, develop, acquire and maintain a system to track marijuana and
marijuana products at all points of cultivation, manufacturing and sale. The
system developed and maintained pursuant to this paragraph shall:
(a) Ensure an
accurate accounting and reporting of the production, processing and sale of
marijuana and marijuana products.
(b) Ensure compliance
with rules adopted by the department.
(c) Be capable of
tracking, at a minimum:
(i) The propagation
of immature marijuana plants and the production of marijuana by a marijuana
establishment.
(ii) The processing
of marijuana and marijuana products by a marijuana establishment.
(iii) The sale and
purchase of marijuana and marijuana products between licensees.
(iv) The transfer of
marijuana and marijuana products between premises for which licenses have been
issued.
(v) The disposal of
marijuana waste.
(vi) The identity of
the person making the entry in the system and the time, date and location of
each entry into the system, including any corrections or changes to that
information.
(vii) Any other
information that the department determines is reasonably necessary to
accomplish the duties, functions and powers of the department.
(d) Contain a
transactional stamp to ensure accuracy, provide for chain of custody of the
information and foreclose tampering of the data, human error or intentional
misreporting.
5. Tracking, testing,
labeling consistent with section 36-2854.01 and packaging marijuana and
marijuana products, including requirements that marijuana and marijuana
products be:
(a) Sold to consumers
in clearly and conspicuously labeled containers that contain accurate warnings
regarding the use of marijuana or marijuana products.
(b) Placed in child-resistant
packaging on exit from a marijuana establishment.
6. Forms of
government-issued identification that are acceptable by a marijuana
establishment verifying a consumer's age and procedures related to verifying a
consumer's age consistent with section 4-241. Until the department
adopts final rules related to verifying a consumer's age, marijuana
establishments shall comply with the proof of legal age requirements prescribed
in section 4-241.
7. The potency of
edible marijuana products that may be sold to consumers by marijuana
establishments at reasonable levels on consideration of industry standards,
except that the rules:
(a) Shall 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.
(b) Shall require
that if a marijuana product contains more than one serving, it must be
delineated or scored into standard serving sizes and homogenized to ensure
uniform disbursement throughout the marijuana product.
8. Ensuring the
health, safety and training of employees of marijuana establishments and
marijuana testing facilities.
9. The creation and
implementation of 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.
10. Prohibiting a
marijuana testing facility from having any direct or indirect familial
relationship with or financial ownership interest in a marijuana establishment
or related marijuana business entity or management company. The rules
shall include prohibiting a marijuana establishment from having any direct or
indirect familial relationship with or financial ownership interest in a
marijuana testing facility or related marijuana business entity or management
company.
11. Requiring
marijuana establishments 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 marijuana establishment.
12. Establishing
and implementing a rural opportunity initiative in accordance with section 36-2857.01
to create tax revenue and economic opportunities for rural communities.
B. The department
may:
1. Subject to title
41, chapter 6, article 10, deny any application submitted or deny, 
suspend
or revoke, in whole or in part, any registration or license issued under this
chapter if the registered or licensed party or an officer, agent or employee of
the registered or licensed party does any of the following:
(a) Violates this
chapter or any rule adopted pursuant to this chapter.
(b) Has been, is or
may continue to be in substantial violation of the requirements for licensing
or registration and, as a result, the health or safety of the general public is
in immediate danger.
2. Subject to title
41, chapter 6, article 10, and unless another penalty is provided elsewhere in
this chapter, assess a civil penalty against a person that violates this
chapter or any rule adopted pursuant to this chapter in an amount not to exceed
$2,000 for each violation. Each day a violation occurs constitutes a separate
violation. In determining the amount of a civil penalty assessed
against a person, the department shall consider all of the factors set forth in
section 36-2816, subsection H. All civil penalties
collected by the department pursuant to this paragraph shall be deposited in
the smart and safe Arizona fund established by section 36-2856.
3. At any time during
regular hours of operation, visit and inspect a marijuana establishment,
marijuana testing facility or dual licensee to determine if it complies with
this chapter and rules adopted pursuant to this chapter. The
department shall make at least one 
unannounced
visit annually to each facility licensed pursuant to this chapter.
4. Adopt any other
rules that are not expressly stated in this section and that are necessary to
ensure the safe and responsible cultivation, sale, processing, manufacture,
testing and transport of marijuana and marijuana products.
C. Until the
department adopts rules allowing and regulating delivery by marijuana
establishments pursuant to subsection D of this section, delivery is unlawful
under this chapter.
D. On or after
January 1, 2023, the department may, and not later than January 1, 2025 the
department shall, adopt rules to allow and regulate delivery by marijuana
establishments. The rules shall:
1. Require that
delivery and the marijuana and marijuana products to be delivered originate
from a designated retail location of a marijuana establishment and only after
an order is made with the marijuana establishment by a consumer. The
rules may not limit the distance between the delivery location and the
originating designated retail location of the marijuana establishment.
2. Prohibit delivery
to any property owned or leased by the United States, this state, a political
subdivision of this state or the Arizona board of regents.
3. Limit the amount
of marijuana and marijuana products based on retail price that may be in a
delivery vehicle during a single trip from the designated retail location of a
marijuana establishment.
4. Prohibit extra or
unallocated marijuana or marijuana products in delivery vehicles.
5. Require that
deliveries be made only by marijuana facility agents in unmarked vehicles that
are equipped with a global positioning system or similar location tracking
system and video surveillance and recording equipment, and that contain a
locked compartment in which marijuana and marijuana products must be stored. The rules may
not limit the number of vehicles that a marijuana establishment may use for
delivery.
6. Require delivery
logs necessary to ensure compliance with this subsection and rules adopted
pursuant to this subsection.
7. Require
inspections to ensure compliance with this subsection and rules adopted
pursuant to this subsection.
8. Include any other
provisions necessary to ensure safe and restricted delivery.
9. Require dual
licensees to comply with the rules adopted pursuant to this subsection.
E. Except as provided
in subsection D of this section, the department may not allow delivery of
marijuana or marijuana products under this chapter by any individual or
entity. In addition to any other penalty imposed by law, an individual
or entity that delivers marijuana or marijuana products in a manner that is not
authorized by this chapter shall pay a civil penalty of $20,000 per violation
to the smart and safe Arizona fund established by section 36-2856. This
subsection may be enforced by the attorney general.
F. All rules adopted
by the department pursuant to this section shall be consistent with the purpose
of this chapter.
G. The department may
not adopt any rule that:
1. Prohibits the
operation of marijuana establishments, either expressly or through requirements
that make the operation of a marijuana establishment unduly burdensome.
2. Prohibits or
interferes with the ability of a dual licensee to operate a marijuana
establishment and a nonprofit medical marijuana dispensary at shared locations.
H. Notwithstanding
section 41-192, the department may employ legal counsel and make an
expenditure or incur an indebtedness for legal services for the purposes of:
1. Defending this
chapter or rules adopted pursuant to this chapter.
2. Defending chapter
28.1 of this title or rules adopted pursuant to chapter 28.1 of this title.
I. The department
shall deposit all license fees, application fees and renewal fees paid to the
department pursuant to this chapter in the smart and safe Arizona fund
established by section 36-2856.
J. On request, the
department of health services shall share with the department of revenue
information regarding a marijuana establishment, marijuana testing facility or
dual licensee, including its name, physical address, cultivation site and
transaction privilege tax license number.
K. Notwithstanding
any other law, the department may:
1. License an
independent third-party laboratory to also operate as a marijuana testing
facility.
2. Operate a
marijuana testing facility.
L. The department
shall maintain and publish a current list of all marijuana establishments and
marijuana testing facilities by name and license number.
M. Notwithstanding
any other law, the issuance of an occupational, professional or other
regulatory license or certification to a person by a jurisdiction or regulatory
authority outside this state does not entitle that person to be issued a marijuana
establishment license, a marijuana testing facility license, or any other
license, registration or certification under this chapter.
N. Until the
department adopts rules as required by subsection A, paragraph 10 of this
section:
1. A marijuana
testing facility is prohibited from having any direct or indirect familial
relationship with or financial ownership interest in a marijuana establishment
or related marijuana business entity or management company.
2. A marijuana
establishment is prohibited from having any direct or indirect familial
relationship with or financial ownership interest in a marijuana testing
facility or related marijuana business entity or management company.
Sec. 3. Subject
to the requirements of article IV, part 1, section 1, Constitution of
Arizona, title 36, chapter 28.2, Arizona Revised Statutes, is amended by adding
section 36-2857.01, to read:
36-2857.01. Rural opportunity initiative;
applicant requirements; opt out; definition
A. On
or before July 1, 2026, the department shall adopt rules establishing a rural
opportunity initiative in accordance with this section.
B. On
or before August 1, 2026, the department shall post on the department's public
website a form that allows unserved rural communities to communicate to the
department the unserved
rural community's intention to opt out of
participation in the rural opportunity initiative. For the purposes of this
section, a county may opt out of participation on behalf of census-designated
areas in the county, not including cities or towns. An unserved rural community
may withdraw its opt-out form at any time.
C. On
or before October 1, 2026, the department shall post and maintain on the
department's public website a current list of unserved rural communities that
have opted out of the rural opportunity initiative.
D. Beginning
October 1, 2026, the department shall accept applications from qualified
applicants. Within sixty days after receiving the first application from a
qualified applicant that seeks to serve a specific unserved rural community,
the department shall issue a marijuana establishment license pursuant to section 36-2854,
subsection A, paragraph 1, subdivision (g) and a nonprofit medical marijuana
dispensary registration certificate pursuant to section 36-2803.01, subsection E to the qualified applicant that first
applies to serve the unserved rural community.
E. To
qualify for a license pursuant to the rural opportunity initiative, an
applicant shall complete and submit a department-approved form or forms
showing that the applicant has a landowner's consent to use property in the
eligible unserved rural community for a marijuana retail site and a department-approved
form or forms showing the property is in COMPLIANCE with local zoning
restrictions applicable to where a retail site operating pursuant to both a marijuana
establishment license and a nonprofit medical marijuana dispensary registration
certificate and this section may be located.
F. A
landowner may not execute or agree to execute multiple landowner consent forms
concerning the same property address for the rural opportunity initiative. The
landowner consent form executed first in time is the only valid landowner
consent form.
G. Notwithstanding
any other provision of this chapter or chapter 28.1 of this title, each entity that is issued a marijuana establishment license pursuant to section 36-2854, subsection A, paragraph
1, subdivision (g) and a nonprofit medical marijuana
dispensary registration certificate pursuant to section 36-2803.01,
subsection E:
1. Shall
be licensed by the department to operate only one retail location and one off-site
location at which the entity may cultivate marijuana and manufacture marijuana
products.
2. May
operate an off-site location only at a property where cultivation
operations were conducted pursuant to the department's approval for at least
one day during the eighteen months immediately preceding the entity's date of application to operate at the
off-site cultivation location.
3. is not required to operate the entity's retail site for more than twenty-four
hours each week.
4. Shall
open the entity's retail site within eighteen months after being issued a
marijuana establishment license pursuant to section 36-2854, subsection
A, paragraph 1, subdivision (g) or the marijuana establishment
license becomes invalid.
H. Notwithstanding any other provision of
this chapter or chapter 28.1 of this title, Any entity that is issued a marijuana establishment license pursuant to section 36-2854, subsection A, paragraph
1, subdivision (g) and a nonprofit medical marijuana
dispensary registration certificate pursuant to section 36-2803.01,
subsection E
may move its retail site only to another unserved rural community that has not
opted out of the rural opportunity initiative pursuant to this section.
I. For the purposes of this section,
"unserved rural community":
1. means a city, town or census-designated
area that has a population of less than fifty thousand persons and contains one
or more parcels of property that are at least twenty-five miles from a
marijuana retail site, as measured from the closest points of both properties.
2. Does not include an unincorporated
territory that is surrounded on all sides by an Indian reservation.
Sec. 4. Requirements for enactment;
three-fourths vote
Pursuant
to article IV, part 1, section 1, Constitution of Arizona, sections 36-2803.01 and 36-2854, Arizona
Revised Statutes, as amended by this act, and section 36-2857.01, Arizona
Revised Statutes, as added by this act, are effective only on the affirmative
vote of at least three-fourths of the members of each house of the legislature.