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ARIZONA STATE SENATE
Fifty-Seventh Legislature, First Regular Session
marijuana; dual licensees; rural communities
Purpose
Requires the Department of Health Services (DHS) to adopt rules establishing a rural opportunity initiative and to issue marijuana establishment licenses and nonprofit medical dispensary registration certificates to entities that are qualified pursuant to the rural opportunity initiative. Contains requirements for enactment for initiatives and referendums (Proposition 105).
Background
In 2010, Arizona voters approved the Arizona Medical Marijuana Act to establish a regulatory system, overseen by DHS, that allows a dispensary to dispense a permissible amount of medical marijuana to a qualifying patient or the qualifying patient's designated caregiver (A.R.S. Title 36, Chapter 28.1). In 2020, Arizona voters approved the Smart and Safe Arizona Act which legalized the sale and use of recreational marijuana to Arizonans who are at least 21 years of age (A.R.S. Title 36, Chapter 28.2).
Current statute requires DHS to adopt rules to implement, enforce and regulate marijuana, marijuana products, marijuana establishments and marijuana testing facilities that include requirements for licensing marijuana establishments. DHS may only issue one marijuana establishment license for every 10 registered pharmacies that have obtained a pharmacy permit from the Arizona Board of Pharmacy and that operate within Arizona. DHS may also only issue a marijuana establishment license to two marijuana establishments per county that have no registered nonprofit medical marijuana dispensaries, or one marijuana establishment license per county that has one registered nonprofit medical marijuana dispensary. Licenses issued by DHS to marijuana establishments and marijuana testing facilities are valid for two years (A.R.S. ยง 36-2854).
There is no anticipated fiscal impact to the state General Fund associated with this legislation.
Provisions
1. Requires DHS to adopt rules to implement, enforce and regulate marijuana, marijuana products and marijuana establishments that include establishing and implementing a rural opportunity initiative to create tax revenue and economic opportunities for rural communities.
2. Requires DHS to issue marijuana establishment licenses and nonprofit medical marijuana dispensary registration certificates to entities that are qualified pursuant to the rural opportunity initiative.
3. Requires the marijuana establishment licenses and the nonprofit medical marijuana dispensary registration certificates to be for a fixed community that has not opted out of the rural opportunity initiative.
4. Allows a dual licensee's retail site to be relocated only to an unserved rural community in accordance with the rural opportunity initiative.
5. Requires DHS, by July 1, 2026, to adopt rules establishing a rural opportunity initiative.
6. Requires DHS, by August 1, 2026, to post on its website a form that allows unserved rural communities to communicate to DHS the community's intention to opt out of participation in the rural opportunity initiative.
7. Allows a county to opt out of participation on behalf of census-designated areas in the county, not including cities or towns.
8. Allows an unserved rural community to withdraw its opt-out form at any time.
9. Requires DHS, by October 1, 2026, to post and maintain on its public website, a current list of unserved rural communities that have opted out of the rural opportunity initiative.
10. Requires DHS, beginning October 1, 2026, to accept applications for marijuana establishment licenses and nonprofit medical marijuana dispensary registration certificates from qualified applicants.
11. Requires DHS, within 60 days after receiving the first application from a qualified applicant that seeks to serve a specific unserved rural community, to award and allocate a marijuana establishment license and a nonprofit medical dispensary registration certificate to the qualified applicant that first applies to serve the unserved rural community.
12. Requires an applicant, to qualify for a license pursuant to the rural opportunity initiative, to complete and submit a DHS-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 DHS-approved form or forms showing the property is in compliance with local zoning restrictions applicable to where a dual licensee may be located.
13. Prohibits a landowner from executing or agreeing to execute multiple landowner consent forms concerning the same property address for the rural opportunity initiative.
14. Stipulates that the landowner consent form executed first in time is the only valid landowner consent form.
15. Stipulates that entities that become a dual licensee:
a) must be licensed by DHS to operate only one retail location and one off-site location at which the dual licensee may cultivate marihuana and manufacture marijuana products;
b) may operate an offsite location only at a property where cultivation operations were conducted pursuant to DHS's approval for at least one day during the 18 months immediately preceding a dual licensee's date of application to operate at the off-site cultivation location; and
c) are not required to operate the dual licensee's retail site for more than 24 hours each week.
16. Allows any entity that becomes a dual licensee to move its retail site only to another unserved rural community that has not opted out of the rural opportunity initiative.
17. Defines unserved rural community as a city, town or census-designated area that has a population of fewer than 50,000 persons and contains one or more parcels of property that are at least 25 miles from a marijuana retail site, as measured from the closest points of both properties.
18. Makes conforming changes.
19. Requires for the enactment the affirmative vote of at least three-fourths of the members of each house of the Legislature (Proposition 105).
20. Becomes effective on the general effective date.
Prepared by Senate Research
February 17, 2025
SB/slp