Arizona may well set the record for fastest-established adult use cannabis industry.
Just one month after voters passed Proposition 207 on Election Day to legalize cannabis for adult use, the state’s Department of Health Services has released draft regulations for the new industry.
Well, sort of new. The first licenses will be awarded to existing medical cannabis businesses in the state. It was, in fact, the medical cannabis business with the largest footprint in the state—and one of the largest in the US—that gave the most money to the adult use campaign: Harvest Health and Recreation. The more than $5 million raised by the campaign came primarily from some of the biggest names in the state and national cannabis industry, including—in addition to Harvest—Curaleaf and Cresco, multistate operators that hold adult use and medical licenses across the country.
At 37 pages, the draft regulations are currently thin. Though, they will expand, especially as regulators gather public comment. Regulators have released a survey along with the draft rules, seeking public input with questions like “What part(s) of the draft rules, do you believe are effective?” and “How can the draft rules be improved?” The survey closes on December 17, the same day a meeting will be held for public comment. The first licensee applications will be accepted on January 19.
In a departure from existing adult use programs, Arizona will not create individual licenses for each part of the supply chain. For example, in California, an entity can choose to obtain a license for cultivation only, and, further, for a particular tier of cultivation, ranging from small to large grows. Arizona, on the other hand, provides only for “marijuana establishments,” and those holding such a license will be allowed to cultivate cannabis, process it into products, and sell cannabis and cannabis products in retail shops, among other activities.
This vertically integrated structure matches the existing medical cannabis program. Those with existing medical cannabis shops who obtain an adult use “marijuana establishment” license will be able to use one storefront for both activities. In addition to existing shops, an “early applicant” can include those who do not currently hold a medical cannabis license, but who want to open an adult use shop in a county where there are fewer than two medical cannabis shops. This early window closes on March 9.
The draft regulations don’t cover a forthcoming Social Equity Ownership Program included in Proposition 207, which will provide for 26 licenses to qualifying applicants. Those licenses cannot be awarded until the Department creates the Program, but, according to the Departments website, it “does not currently have a timeline for this rulemaking.” As Cannabis Wire reported earlier this year, the initial draft of Proposition 207 did not include these licenses.
Going forward, adults 21 and older will be able to cultivate six plants (12 per residence) and to possess up to one ounce of cannabis. The excise tax on cannabis sales will be 16%. And those with certain prior cannabis convictions will be able to get their records expunged.
