Arizona Organix Steps Out as the State's First Authorized Medical-Marijuana Dispensary

A business in Glendale has become Arizona's first licensed medical-marijuana dispensary under a voter-approved 2010 law.

It's called Arizona Organix — but it would have been more fitting had the owners dubbed the place Target and adopted the mega-chain's red concentric logo.

This is hostile territory — the land of Maricopa County Attorney Bill Montgomery, who claims that anyone selling marijuana can be prosecuted regardless of the state law, and Sheriff Joe Arpaio, who'll do anything for a headline.

Montgomery, who also strongly opposes abortion and pornography, is trying his best to become a hero to social conservatives. In August, he partnered with Arizona Attorney General Tom Horne to file a motion in Superior Court that seeks to reverse the will of voters — allowing dispensaries and marijuana cultivation — by having a judge declare that the state law is preempted by the federal prohibition against pot.

A ruling on the motion by Judge Michael Gordon is expected any day now. But Montgomery and Arpaio could use another test case.

So far, Arizona Organix owners Ben Myer, Bill Myer (Ben's father), and Ryan Wells have stuck out their heads only halfway.

Their store was authorized on November 15 to sell marijuana by the Arizona Department of Health Services, but it isn't open yet. A sign on the door at Arizona Organix (5301 West Glendale Avenue), which is in a high-profile location between a pet-food store and an antique shop, says, "We hope to be operating within a few weeks" and asks interested customers to sign up on an e-mail list.

The situation frustrates some in the medical-marijuana community, because the DHS said it would begin notifying newly qualified patients who are within a 25-mile radius of the store that they are forbidden from growing marijuana. Arizona law allows patients to grow up to 12 plants each, but not if an operating dispensary is open within a 25-mile zone.

However, on Monday afternoon, DHS director Will Humble announced that it had allowed the dispensary to delay the effective day of operation until the retail store opens, meaning the 25-mile exclusion won't be triggered just yet.

Other dispensaries could open before Arizona Organix. DHS inspectors were scheduled to visit a Tucson dispensary on November 20. But the legal battlefield remains hazy for any marijuana-related business in Arizona.

Wells tells New Times that he and the Myers still are trying to figure out when to open, even though they've been working on the dispensary project for two years.

"This has been such a long road for us; a lot of my feelings are pretty well dulled by this point. The next hurdle is to open and see what happens," Wells says.

They're wondering what Arpaio might do: "He's always in our minds for the worst."

But that's not the only hurdle. Arizona Organix hasn't yet found a cultivation site in which to grow the marijuana that will be sold to qualified patients.

The city of Glendale, which approved the dispensary earlier this year, doesn't allow medical-marijuana retail stores to grow pot on-site. The company's looking for a roomy warehouse to turn into an indoor greenhouse. Landlords, fearing reprisals from the feds, have been more than hesitant.

"Nine out of 10 say no," Wells says. He adds that obtaining a site still appears possible, as they're in negotiations with several property owners.

In theory, the medical-pot shop could open with donated marijuana on the shelves. Patients and caregivers can only possess up to 2.5 ounces at any given time under state law, but growing 12 plants generates more than 2.5 ounces. Arizona law allows patients and registered caregivers, who can cultivate for up to five patients each, to give their excess marijuana away to authorized dispensaries.

Wells says Arizona Organix possibly could find people who want to donate their marijuana, but he says it's not good business to open with a limited supply only to run out before replacement pot from a cultivation site is ready for sale. Being the only operating, official medical-pot store in the Valley would make it popular, for sure. And the location already has been operating as a compassion club, which distributed marijuana to dues-paying members, ostensibly without requiring anything of value in return.

Until last week, the Alternative Health Clinic used what is now Arizona Organix's address and phone number. "Very easy process to get high-quality medicine," says a February 14 comment on the clinic's listing.

Similar businesses have sprung up all over the state since the passage of the Medical Marijuana Act. They're a result, in part, of the vacuum created when Governor Jan Brewer canceled the dispensary portion of the law by executive order in May 2011. After two failures in court to block the law, the Republican governor was ordered by a state judge in January to carry out the wishes of voters. Ninety-seven applicants for dispensaries were selected at random by the state.

Meanwhile, Valley police agencies have raided several compassion clubs, claiming they were operating outside of the medical-marijuana law. New clubs have opened to replace some of those that closed. The raids typically are preceded by an undercover "buy" at the club by an officer with a medical-marijuana card. It's unknown whether Alternative Health Clinic was under investigation by any law enforcement agency when Arizona Organix took over at the location.

No "flags" were raised about the evolution from a compassion club at the same address, says Arizona Organix's lawyer, Ryan Hurley, who's spoken out against such clubs in the past.

The compassion clubs — along with dispensaries and cultivation sites — have been declared illegal by AG Horne. Hurley says it's possible under state law that caregivers could be reimbursed by patients for the cost of growing marijuana, thus permitting a small cannabis club to operate within the boundaries of state statute. But he says he continues to have concerns about the way other compassion clubs do business.

Once Arizona Organix or other dispensaries nail down their cultivation sites, no one knows whether the feds will try to shut them down. A May 2011 letter by former Arizona U.S. Attorney Dennis Burke to Governor Brewer suggested that the federal government may target "large" marijuana-cultivation sites whether or not they're authorized under state license. Brewer used the letter as ammunition to carry out her legal attack on the voter-approved law, which she'd opposed publicly in 2010, but Burke said Brewer was distorting his stance for political purposes.

New Arizona U.S. Attorney John Leonardo hasn't said he would or wouldn't order raids of dispensaries or grow sites operating within the guidelines of Arizona law.

Complicating matters, or perhaps easing them, voters in Colorado and Washington this month legalized marijuana for recreational use by adults. The federal government hasn't yet responded to the challenge. Whether newly re-elected President Barack Obama handles the rebellious states with a crackdown or capitulation could have consequences for Arizona's medical-pot program.

Also, the U.S. Court of Appeals for the D.C. Circuit held hearings last month on whether marijuana should remain as a Schedule 1 drug, with no accepted medical use, under U.S. Law; a decision is pending.

Taking marijuana from seeds or clones to mature plants that can be dried and sold to patients would take two to three months. Once open, Arizona Organix is expected to sell a wide range of indica and sativa buds and possibly smokable hashish or a powdered concentrate called kief. Pot-infused "edibles" probably also will be available, once the business passes a separate state inspection required whenever food is sold to the public.

Assuming the store opens and money begins to roll in, another hurdle will quickly present itself. Most U.S. banks have declined to allow any marijuana-related businesses to hold accounts. Hurley says no one has ordered them to do that, but "they've made internal risk decisions and decided this is not a good thing to get into."

Credit-card companies also don't want to deal with dispensaries, though Hurley says Arizona Organix, a registered nonprofit corporation in Arizona, can use "alternate payment systems," similar to PayPal, to take credit cards from patients. However, the banking problem will be a "constant challenge," requiring the company to do a lot of its transactions in cash.

Then, the problem becomes what to do with all that cash. And how to pay the Internal Revenue Service for taxes on products and services sold that violate federal law. And how to cut payroll checks for its directors, "budtenders," and other staff members.

Meanwhile, the state of Arizona supposedly will track the inventory of the dispensary from seeds to sale.

Other would-be dispensary owners are watching Arizona Organix carefully, waiting to make their own move until they see if the company gets hassled.

Arizona Organix is the first state-approved dispensary, but the history of marijuana in this country still is being written.

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Ray Stern has worked as a newspaper reporter in Arizona for more than two decades. He's won numerous awards for his reporting, including the Arizona Press Club's Don Bolles Award for Investigative Journalism.