Cannabis Group Drafts Rival Plan to Legalize Pot — But Can It Woo Legislators?

A year before a potential vote on recreational marijuana in Arizona, a new group's draft proposal awaits legislative review.
A year before a potential vote on recreational marijuana in Arizona, a new group's draft proposal awaits legislative review.
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The fledgling Arizona Cannabis Chamber of Commerce, which opposes an industry-led recreational marijuana initiative for 2020, is poised to present its own legalization proposal this week.

The small group of marijuana industry representatives, which formed in July, is calling its rival plan the Small Business Liberty Act. That name hints at the group's main goal — to make sure the large-scale dispensaries that already dominate Arizona's medical marijuana program won't also control the recreational market.

But the Arizona Cannabis Chamber of Commerce, or AZC3, has a tough road ahead. To get a proposal on the ballot, the group will have to convince a majority of the Republican-led state Legislature to say yes.

That's why, months ahead of the 2020 legislative session, the group is releasing the full text of its draft referendum in a public meeting on Wednesday, November 13. Board member Mason Cave gave Phoenix New Times a preview of what to expect.

The Small Business Liberty Act would provide 125 new marijuana licenses for entrepreneurs interested in getting into the state’s recreational marijuana business, Cave said. Those licenses would be divided into categories for rural retail licenses, craft production facilities, and shops of different sizes.

Fifty licenses would be distributed in a lottery, 25 at auction, 25 to rural-only applicants and 25 to applicants who would sell marijuana only to businesses.

AZC3 would place the recreational industry under the jurisdiction of the Arizona Department of Liquor Licenses and Control rather than the state health department, which currently manages Arizona’s medical marijuana program.

The proposal leaves the excise tax amount for recreational marijuana sales open-ended, and it gives legislators complete discretion over what to do with those funds.

It also introduces other guidelines, such as a requirement that marijuana companies follow workplace safety laws, and it encourages the liquor department to adopt a cash-free payment system for cannabis purchases.

AZC3’s next step is to solicit feedback from the public, pitch its ideas to state lawmakers, and refine its draft into a final document for the 2020 legislative session. The ultimate goal, Cave said, is to get 50 percent of the Legislature to agree to put the Small Business Liberty Act onto next year’s ballot.

But AZC3 has a long way to go for that to happen. Some legislators don’t support recreational marijuana at all. Some want to pass a legalization bill themselves instead of letting it go to a public vote. Arizona Attorney General Mark Brnovich has said he favors that approach, in part because successful initiatives in Arizona are protected by a law that essentially bans the Legislature from editing them without a three-quarter majority vote. And others may prefer the Smart and Safe Arizona Act, the industry-led initiative that's already been circulated in the state.

The dispensary-backed Smart and Safe Arizona Act has raised over $1.2 million and is expected to easily get enough signatures to land a place on next year’s ballot.

But AZC3 board members, most of whom aren't dispensary owners, but rather growers, manufacturers, or lawyers, have criticized that proposal for limiting the number of new licenses offered to people interested in getting into the industry. Smart and Safe offers 26 new “social equity” licenses and a few new rural licenses, but otherwise gives the first round of recreational licenses only to the companies that are already in the state’s medical marijuana industry.

While the Smart and Safe Arizona Act stipulates a 16 percent sales tax on recreational pot and outlines specific allocations for where that money should go, Cave’s group leaves those decisions to legislators in an attempt to give them input.

But it’s still unclear which, if any, legislators will support AZC3's ideas. Cave said he’s met with about 20 state lawmakers, including Republican Representative T.J. Shope. Some have asked to see the group's draft referendum once it's finished, but nobody has backed it so far.

Cave hasn’t yet met with Democratic State Representative Isela Blanc, who has been public about her misgivings about the Smart and Safe Arizona Act and told New Times she’s looking into proposing an alternative.

Other legislators the board has met with, including Republican Representative Walt Blackman, have declined to support the Small Business Liberty Act or any other that would legalize recreational marijuana in 2020, Cave said.

Demitri Downing, president of the Marijuana Trade Industry Association of Arizona, has publicly endorsed the Smart and Safe Arizona Act. But he said he won't mind if a variety of models for marijuana legalization appear on next year’s ballot.

It’s very possible that the Arizona voters in 2020 could be choosing between three or four different market structures,” he said. “And in a sense that’s kind of exciting.”

Downing said he thinks there’s enough momentum behind the push to legalize recreational marijuana that multiple measures on the ballot won’t split the vote.

"Some would argue that it’s going to undermine the process, but I think people will probably vote for all of them,” he said. “The reason why there’s so much interest is that everyone is certain that it’s going to happen next year.”

Stacy Pearson, a senior vice president at Strategies 360 and the spokesperson for the Smart and Safe Arizona Act, did not respond to a request for comment.

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