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ARIZONA STATE SENATE
Fifty-Seventh Legislature, First Regular Session
AMENDED
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 to each entity that is qualified pursuant to the rural opportunity initiative and nonprofit medical marijuana dispensary registration certificates to each entity that is issued a marijuana establishment license. 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 to each entity that is qualified pursuant to the rural opportunity initiative.
3. Caps the amount of marijuana establishment licenses that DHS may issue pursuant to the rural opportunity initiative at 18.
4. Requires DHS to issue a nonprofit medical marijuana dispensary registration certificate to each entity that is issued a marijuana establishment license and allow registration certificate holders to relocate their retail site only to another unserved rural community.
5. 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.
6. Allows an entity's retail site to be relocated only to an unserved rural community in accordance with the rural opportunity initiative.
7. Requires DHS, by July 1, 2026, to adopt rules establishing a rural opportunity initiative.
8. Requires DHS, by August 1, 2026, to post on its website a form that allows unserved rural communities to communicate to DHS the unserved rural community's intention to opt out of participation in the rural opportunity initiative.
9. Allows a county to opt out of participation on behalf of census-designated areas in the county, not including cities or towns.
10. Allows an unserved rural community to withdraw its opt-out form at any time.
11. 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.
12. Requires DHS, beginning October 1, 2026, to accept applications for marijuana establishment licenses and nonprofit medical marijuana dispensary registration certificates from qualified applicants.
13. Requires DHS, within 60 days after receiving the first application from a qualified applicant that seeks to serve a specific unserved rural community, to issue a marijuana establishment license and a nonprofit medical dispensary registration certificate to the qualified applicant that first applies to serve the unserved rural community.
14. 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 retail site operating pursuant to both a marijuana establishment license and a nonprofit medical marijuana dispensary registration certificate may be located.
15. Prohibits a landowner from executing or agreeing to execute multiple landowner consent forms concerning the same property address for the rural opportunity initiative.
16. Stipulates that the landowner consent form executed first in time is the only valid landowner consent form.
17. Stipulates that each entity that is issued a marijuana establishment license and a nonprofit medical marijuana dispensary registration certificate:
a) must be licensed by DHS to operate only one retail location and one off-site location at which the entity 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 the entity's date of application to operate at the off-site cultivation location;
c) is not required to operate the entity's retail site for more than 24 hours each week; and
d) must open the entity's retail site within 18 months after being issued a marijuana establishment license or the marijuana establishment license becomes invalid.
18. Allows any entity that is issued a marijuana establishment license and a nonprofit medical marijuana dispensary registration certificate to move its retail site only to another unserved rural community that has not opted out of the rural opportunity initiative.
19. 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.
20. Stipulates that an unserved rural community does not include an unincorporated territory that is surrounded on all sides by an Indian reservation.
21. Makes technical and conforming changes.
22. Requires for the enactment the affirmative vote of at least three-fourths of the members of each house of the Legislature (Proposition 105).
23. Becomes effective on the general effective date.
Amendments Adopted by Committee of the Whole
1. Requires DHS to issue a nonprofit medical marijuana dispensary registration certificate to each entity that is issued a marijuana establishment license and allow registration certificate holders to relocate their retail site only to another unserved rural community.
2. Removes the requirement that DHS issue nonprofit medical marijuana dispensary registration certificates to each licensee that is qualified pursuant to the rural opportunity initiative.
3. Caps the amount of marijuana establishment licenses that DHS may issue pursuant to the rural opportunity initiative at 18.
4. Requires each entity that is issued a marijuana establishment license and a nonprofit medical marijuana dispensary registration certificate to open the entity's retail site within 18 months after being issued a marijuana establishment license or the marijuana establishment license becomes invalid.
5. Modifies the definition of unserved rural community to exclude an unincorporated territory that is surrounded on all sides by an Indian reservation.
6. Makes technical and conforming changes.
Senate Action
NR 2/18/25 DP 6-1-1
Prepared by Senate Research
March 11, 2025
SB/slp