Arizona Dispensary Laws

PUBLISHED JANUARY 5, 2021

On Nov 3, 2020, Arizona became the 13th state to legalize recreational marijuana for adult use after Proposition 207 to enact the Smart and Safe Arizona Act was passed by voters during the general elections with 60% voting in favor. Cannabis possession, cultivation and use officially became legal on Nov 30, 2020, when the election results were certified, but dispensaries will not be able to legally sell it for recreational use until they get licensed to do so, which is likely to happen by March 2021.

Arizona lawmakers have until April 5, 2021, to establish regulations for the recreational cannabis industry and to approve licenses for medical dispensaries and new recreational stores to sell marijuana to adults. The SSAA will not impact the Arizona Medical Marijuana Act that has been in force since 2010.

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Arizona Cannabis Laws

An overview of the medical and recreational marijuana laws in Arizona.

Who can purchase cannabis in Arizona and what are the limits?

Arizona residents who are at least 21 years of age or older and have a valid government-issued ID will be allowed to possess up to 1 ounce of marijuana for recreational use, with no more than 5 grams of it being marijuana concentrate.

Although there is no age limit for becoming an Arizona medical marijuana patient and medical cannabis patients can possess up to two and a half ounces of marijuana over a period of 2 weeks. Anyone possessing cannabis over the legal limits will be guilty of a petty offence.

Are there any qualifying conditions for medical marijuana patients in Arizona?

Patients with the following conditions can qualify for medical marijuana use:

  • Alzheimer’s Disease
  • Amyotrophic Lateral Sclerosis (Lou Gehrig’s disease)
  • Cachexia or wasting syndrome
  • Cancer
  • Chronic pain
  • Crohn’s Disease
  • Glaucoma
  • Hepatitis C
  • HIV or AIDS
  • Nausea
  • Persistent Muscle Spasms
  • PTSD
  • Seizures

Is home cultivation allowed in Arizona?

Yes, recreational marijuana can be grown by adults aged 21 or older, but cultivation is prohibited to six cannabis plants per an individual’s primary residence and twelve plants at a residence where two or adults may be living. Cultivation must only take place in an enclosed area where the marijuana plants are not visible to the public.

Registered medical marijuana patients can cultivate even more marijuana, up to twelve cannabis plants at any given time, if their residence is located more than 25 miles from a state-licensed dispensary facility.

Where can marijuana be consumed in Arizona?

Arizona marijuana users may only consume cannabis in the privacy of their homes. Cannabis use is illegal in public spaces but it is only a petty offence and no longer a felony.

However, Arizona allows medical patients to consume marijuana in edible form in public as long as you are not operating a vehicle or doing anything else that could constitute negligence if you're under the influence of cannabis.

Retail Cannabis Licensing in Arizona

Everything you need to know about opening a retail cannabis location in Arizona.

What state agency is in charge of cannabis licensing in Arizona?

The Arizona Department of Health Services (ADHS) will establish recreational marijuana regulations on or before April 5, 2021, and will start accepting applications for cannabis recreational store licenses in January 2021.

The ADHS will first accept marijuana establishment license applications from existing nonprofit medical marijuana dispensaries, which would be eligible to hold both nonprofit medical marijuana and for-profit marijuana licenses, and potential marijuana businesses within counties that have one or zero nonprofit dispensaries. So far, state-licensed non-profit medical dispensaries may produce and dispense marijuana to authorized patients only on a not-for-profit basis.

Who can apply for a Marijuana business license?

Only an individual who is at least 21 years of age and has passed a criminal record check for an excluded felony offence may be a principal officer or board member on an application for a cannabis dispensary registration certificate.

Overall, 145 licenses are available for qualified early applicants, and 26 licenses have been reserved for social equity applicants.

Recreational cannabis stores are expected to have the same regulations as medical dispensaries. Any other conditions will be updated here when released.

Is one entity allowed to apply for more than one license?

Yes, but there are conditions. The ADHS may issue a marijuana establishment license (recreational marijuana dispensary license) to no more than two recreational dispensaries per county that contain no medical marijuana dispensaries, or one recreational dispensary license per county that contains one medical marijuana dispensary.

One entity can apply for no more than five dispensary registration certificates for locations in different CHAA (Community Health Analysis Area). An applicant must be prepared to operate every dispensary applied for.

What is the process for obtaining an adult-use marijuana retail license in Arizona?

The ADHS will accept applications from early applicants for marijuana establishment licenses from January 19, 2021, to March 9, 2021, and a license will be issued to qualified applicants within 60 days. Marijuana establishment licenses will be valid for up to a period of 2 years and can be subsequently renewed based on qualifying conditions.

The license fees for recreational stores will be reasonable and must not exceed 5 times the amount of license fees for non-profit dispensaries, which currently cost $5,000 for an initial license and $1,000 for a renewal license, respectively.

Watch this space in 3-6 months from now for more details on the application process.

Arizona Cannabis Retail and Dispensary Establishment Laws

Learn how to remain compliant with Arizona’s cannabis retail laws.

Where can a marijuana dispensary or retail establishment be located?

Arizona State law requires a dispensary to be at least 500 feet away from existing public or private schools. All other zoning requirements are made at the local level. An applicant must attest to meeting local zoning regulations and provide proof in the initial application.

The department may not issue more than one cannabis establishment license for every ten pharmacies in a certain area as per the municipality regulations.

Whom can Arizona marijuana retailers sell to?

Licensed adult-use marijuana retailers may sell cannabis to adults aged 21 and older, with a valid government-issued identification card, and employees are required to check purchasers’ IDs before making the sale.

What products can an Arizona marijuana retailer sell?

Marijuana stores may sell cannabis, cannabis resin, cannabis products, cannabis extracts, seedlings, immature marijuana plants and marijuana paraphernalia.

Can medical marijuana and recreational cannabis be sold in the same dispensary?

Yes, Medical marijuana dispensaries that obtain a recreational marijuana dispensary license could operate both entities in the same/shared location.

On or before April 5, 2021, medical marijuana dispensaries will be able to sell recreational marijuana to adults until the ADHS issues licenses for recreational dispensaries.

What taxes are collected on retail cannabis in Arizona?

Patients buying medical marijuana incur only state and local sales taxes. However, with recreational marijuana, there is a 16% excise tax plus state and local sales taxes, which will put the total tax at about 24%.

Is delivery for cannabis products allowed in Arizona?

Delivery is so far only allowed for medical marijuana. Patients located far from their closest dispensary may opt to use a medical cannabis delivery service. These services will deliver medical cannabis directly to a registered patient’s or designated caregiver’s residence.

On or after Jan 1, 2023, the ADHS can adopt rules to permit recreational marijuana deliveries.

What are the packing and labelling requirements for a cannabis retail store in Arizona?

A marijuana establishment may not:

  • Package or label cannabis products in a false or misleading manner
  • Sell products that resemble the form of a human, animal, insect, fruit, toy or cartoon
  • Sell or advertise marijuana products that resemble or imitate food or drink brands marketed to children

Any marijuana and its products must be sold to consumers in child-resistant packing which should be clearly and conspicuously labelled with contents and all health warnings.

What are the marketing and advertising restrictions in Arizona pertaining to cannabis sales?

A marijuana establishment or non-profit medical dispensary may engage in advertising, as long as the advertisement legibly identifies it by its name and registration/license number but any marketing must not appeal to or target anyone under the age of 21.

What is required of adult-use cannabis dispensaries and retailers in Arizona before conducting sales?

A dispensary is required to be open and available to dispense marijuana to qualifying patients and designated caregivers at least 30 hours per week. The dispensary is also required to provide educational materials for qualifying patients or designated caregivers and to have materials available for the assessment of the therapeutic or palliative use of marijuana for the qualifying patient's debilitating medical condition.

In addition, a dispensary may cultivate marijuana for the dispensary's inventory or to sell to other dispensaries; transport medical marijuana and related paraphernalia; prepare or sell marijuana-infused edible food products; prepare, sell, or dispense marijuana-infused non-edible products; and sell or provide marijuana paraphernalia or other supplies related to the administration of marijuana to qualifying patients and designated caregivers.

Sales regulations for recreational cannabis will be updated here as and when they are released.

Cannabis Tracking and Reporting in Arizona

Every regulated cannabis market has its own tracking and reporting requirements. Find here how Arizona monitors commercial cannabis activity.

What are the tracking, reporting, and inventory control requirements for Arizona marijuana establishments?

Most states require dispensaries and cannabis stores to track and trace all of their cannabis products for regulatory and compliance reporting requirements. Records identifying the source of each ingredient must include the date of receipt of the ingredient, vendor’s name and address, name of the ingredient, etc. A compliant POS software system helps you do all of that without any worries or violations.

There should be records consisting of marijuana transfer information, such as where the dispensary gets its product and how much went into inventory. Inventory should be kept at a minimum each morning, taking into account transfers, sales, disposals, harvests, etc. Patients should be tracked in accordance with the Arizona Medical Marijuana Program Code. Marijuana that has been cultivated, produced, or disposed of should also be tracked in the inventory system of choice. These records should be kept for a minimum of 5 years.

What is Arizona’s official cannabis monitoring system?

Arizona is not currently contracted with a state mandatory tracking system such as Leef, BioTrack, or Metrc. However, the department still expects an adequate inventory control system for safeguarding records and patient information for medical marijuana.

Is Cova compliant with Arizona’s cannabis retail reporting requirements?

Yes. Cova's Cannabis Dispensary POS Software and inventory management system includes all the features needed to keep cannabis retailers compliant, including:

  • ID scanner for age and card verification
  • Integrated inventory and sales tracking and reporting
  • Built-in product equivalency conversions and purchase limit enforcement.
ron-segev

RON SEGEV

Cannabis Business Lawyer & Founding Partner, Segev LLP

Legally reviewed by

RON SEGEV

Ron Segev is the founding partner of Segev LLP. A practical-minded business lawyer with expertise in the cannabis industry, he represents cultivators, dispensaries, CBD extractors, oil extractors, food processors, media and marketing companies, consultancies, and other businesses in the legal cannabis market.

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