Arizona to Begin Accepting New Medical-Marijuana Store Applications

Feel left out of the Arizona medical-marijuana business?

The Arizona Department of Health Services just announced that it will begin taking applications for new dispensaries this summer.

This is the first time the state will be reviewing new applications for dispensary operating certificates since a lottery was held in 2012 that resulted the current roll-out in Arizona of nearly 90 medical-cannabis retail stores.

The lack of a revised rules process for the medical-marijuana program, a situation detailed in a New Times article last week, won't impact the new application process, says Holly Ward, DHS spokeswoman.

The DHS announced the news on its website late last week: "The Department will accept dispensary registration certificate applications this summer, following the allocation process and requirements in rules. This announcement will be updated at least 30 calendar days before the date the Department begins accepting applications. More information will be posted on this Dispensary webpage as it becomes available."

Amateurs need not apply. The nonprofit companies that run dispensaries involve teams of people who know to run a successful small business, navigate a maze of regulations, negotiate with property owners and — most importantly — have access to a healthy stash of cash, because it'll be expensive to launch such a business. However, one requirement the original dispensaries had to meet that no longer exists is the rule requiring applicants to have $150,000 in the bank, because that rule was repealed in December 2012.

Four geographic locations in the state where dispensaries can go, all in southern Arizona, didn't have any applicants in 2012, according to Lori Nicks, a would-be dispensary operator seeking to open one of the businesses. Nicks says she and her partners spent "six digits" preparing the real-estate and zoning permits necessary to open a new dispensary but were stymied by the state's refusal to consider new applicants.

Arizona medical-marijuana rules state that when two or more applicants for an area meet the same criteria, the state will select one at random. In 2012, the state used a machine to pull numbered balls, lottery-style, to select from among 200 applicants.

The need for the state to consider new dispensary applicants also is about to become more acute this year, as also explained in last week's article, because dispensaries assigned to one of the state's locations originally in 2012 have the right to move to a different location after three years. Several dispensaries will become eligible to move this year, potentially leaving some geographic locations vacant of any medical-pot shops — which would allow an expansion of home cultivation by patients.

After voters enacted the medical-marijuana law, the DHS assigned one dispensary certificate to each of those locations — called Community Health Analysis Areas, or CHAAs — in order to exploit the 2010 law's ban on patients' growing cannabis within 25 miles of an open dispensary. With one dispensary per CHAA, more than 90 percent of the state became a no-grow area for patients. But as the state's existing rural dispensaries leave their CHAAs and head for urban areas with more potential customers, large swaths of the state would be left open for home cultivation, a situation that disturbs the cannabis-prohibition set.

Last week, state Representative Vince Leach (R-Saddlebrooke) sponsored a bill that would prevent dispensaries from moving out of the CHAAs in which they were originally assigned.

One way to keep dispensaries in the CHAAs would be to allow new dispensaries to open in any vacated CHAAs. That, ostensibly, is one purpose behind the state's move to start taking new applications.