August 31, 2012

UPDATE: AZ Medical Marijuana Dispensary Outcome

August 31, 2012
arizona medical marijuana dispensary lottery machine

arizona medical marijuana dispensary lottery machineResults Of The Arizona Medical Marijuana Dispensary Lottery

It has been one crazy month for medical marijuana in Arizona. On Tuesday, August 7 the Arizona Department of Health Services held a bingo style lottery where 69 dispensaries were picked at random to see which of the 437 dispensaries that applied would be given the opportunity to open shop. The process was set up was so that applicants were only entered into a lottery with others who had applied in their district, with winners being granted registration certificates — the first major step on the road to being awarded a formal permit. Despite claiming a goal to set high standards for the medical marijuana industry in Arizona, the Arizona Department of Health Services decided to award registration certificates to applicants based on a true lottery, rather than a competitive merit based system as adopted by nearly every other medical marijuana state with a state permitting process.

Officials divided the state into 126 districts (labeled “CHAA’s” by AZDHS), almost 30 of which are in Maricopa County. In addition to the 69 registration certificates granted by lottery, an additional 27 applicants were granted certificates in CHAA’s where they were the only qualified applicant. The state failed to award registration certificates in 27 more CHAA’s due to no applications having been filed, the majority of which were on Native American lands, which technically fall under federal jurisdiction. In order to determine who would qualify for a registration certificate, the Department of Health Services examined the applications based on security plans, operation procedures, $150,000 proof of capital, and zoning compliance, among other things. Yet in the end, the Department rejected only three applications as unfit for the lottery, giving little weight to the merits of the applications and leaving the awarding of registration certificates to a true lottery process. All winners now have one year to submit a second round and pass state inspection on their dispensary and cultivation facility locations before opening. The first dispensaries are expected to open their doors by the end of the year.

Although this is clearly a progressive move that will create the safe access the medical marijuana patients of Arizona have been looking for since the Arizona Medical Marijuana Act (AMMA) was passed in 2010, it is not free from opposition. Gov. Jan Brewer has been opposed to the AMMA from the start, stating that “I took it to court and I was ruled against, (with a judge) saying that I had to implement the law,” Brewer recalled last Thursday. “So we moved forward under the direction of the court.” It’s disappointing that Gov. Brewer wants to abolish safe access for patients in Arizona who need it most, but the fact that she tried and failed to strike down the new dispensary system is quite a relief. Unfortunately, the fight is far from over.

Just last week, Arizona Attorney General Tom Horne announced that his office was issuing a non-binding legal advisory stating that the dispensary permitting portion of the Arizona Medical Marijuana Act is preempted by federal law and cannot go into effect. While this opinion has no actual impact on the program, AG Horne announced his intention to seek a federal preemption ruling in state court. Should a state judge rule that the federal Controlled Substances Act supersedes the Arizona Medical Marijuana Act, Horne made it clear the state would cease permitting any dispensaries and shut down any that are operational.

Tom Horne’s proclamation has turned attention in the state to a White Mountain Wellness v. Maricopa County, a lawsuit filed by applicants in the Sun City CHAA who were denied zoning approval because County Attorney and staunch medical marijuana opponent Bill Montgomery refused to allow county zoning officials from granting zoning approval to any dispensary operators, claiming that by doing so his employees would be violating federal law. Officials divided the state into 126 areas, almost 30 of which are in Maricopa County.

Let me be blunt, the reasoning as to why the Department of Health Services decided to go with a bingo lottery to decide who would be allowed to submit applications is beyond me. They are trying to protect themselves by setting high standards for applicants, but why didn’t they just have an application period in which a committee or Department official eliminated amateur dispensary operators from those who have a legitimate model in place, ready to go? If the state was trying to avoid lawsuits that would bring even more heat and attention to the issue, this was not the appropriate way to go about choosing proper applicants. This decision will inevitably lead to unprepared and unprofessional operators being granted permits, potentially leading to poorly run dispensaries that could give the entire program a bad name.

“While the state of Arizona should be commended for setting up a regulatory model for dispensaries and cultivation sites that is among the best in the country” stated Kris Krane, managing partner at 4Front Advisors, a consulting company that works with dispensary operators who adhere to the most professional best practice standards in the industry, “it is a shame that they chose to select permit winners through a lottery rather than a merit based system.” Krane went on to comment about the pending lawsuit, “It is outrageous that a government which has been such a strong proponent of states’ rights on issues like immigration would turn around and argue that federal law preempts and supersedes state law when it comes to medical marijuana. The voters of Arizona have now approved medical marijuana three times at the ballot box. It is about time elected officials in the state started respecting the will of the voters and allow patients to access the medicine they need.”

Kris Krane serves as a principal and managing partner at 4Front Advisors, the nation’s leading medical marijuana dispensary consulting firm that is dedicated to ensuring the highest standards of operations in the industry. Prior to forming 4Front, Kris served as director of client services for CannBe, where he helped develop many of the best practices that have become the backbone of 4Front Advisors’ operations.

Follow Sam on Twitter @SeriouslySamuel

Published with special permission from the National Cannabis Coalition


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