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Arizona's Medical-Marijuana Pioneers Don't Know the Final Rules of the Game Yet -- But They Are Certain of the Prize

At least one major dispute already has erupted among Arizona's fledgling marijuana businesses.

Al Sobol, one of the industry marketers featured in our earlier cover story about Proposition 203 ("Chronic Future," November 25) filed a complaint in January with the U.S. Justice Department, alleging collusion between some would-be dispensary owners and the state Department of Health Services, the agency charged with developing rules for the new medical-marijuana system.

Sobol's a licensed private investigator and former preparer of legal documents (his certificate for the latter has been revoked for the unauthorized practice of law) who works out of a mock dispensary in North Phoenix, offering classes on the marijuana business and guidance for hopeful entrepreneurs. Besides the federal complaint, he also wrote in a January 3 letter to the DHS that he feels some people are getting shut out of the process.

Affiliates of the Arizona Medical Marijuana Policy Project, which put Prop 203 on the ballot, are working with the DHS to make rules "so complicated and costly as to preclude otherwise qualified applicants merely on the basis of wealth and influence," he wrote.

Sobol says contributors and others connected to the Policy Project formed a "round table" that advised the DHS regularly for their own benefit. Some of the strictures they suggested appeared in the first draft of rules put out by the state, such as the proposed requirement of a surety bond and hiring of a medical director.

Opening a dispensary might now cost as much as $500,000, Sobol complained.

True enough, the Prop 203 group, including people who want to open pot businesses, pushed the DHS to create robust rules both before and after the election. DHS e-mails obtained by New Times show that the agency's director, Will Humble, and the Policy Project's Andrew Myers chatted a couple of days after the election results came in.

"Reading your comments over the last couple of days, I think we both have similar goals for the implementation of 203 . . . to put together a responsible rule package," Humble wrote on Sunday, November 14.

"As we indicated during the campaign," Myers wrote back on November 15, "we stand ready to assist you in any way we can. We are deeply committed to the creation of a program that serves the needs of legitimate patients while — as you said — avoiding the excesses of [California and Colorado].

"I truly believe that we can have a fruitful working relationship."

Humble, appointed by former Governor Janet Napolitano, denies that any collusion occurred. He says he stopped discussing rule-making with all representatives of the marijuana industry after the final election results came in.

Similarities between suggestions and the proposed rules do seem coincidental, given that other people — including at least one who campaigned against the proposition — suggested ideas that were later adopted.

In any case, it remains to be seen who will end up with pot stores.

The finalized rules aren't expected until March 28, after public hearings across the state from February 14 through 17.

The DHS will start accepting applications for dispensary licenses on May 1. But it only has 124 licenses to grant — one per dispensary location. Proposition 203, now the law of the land, limits the number of pot shops to a tenth of the pharmacies in the state.

On January 31, the DHS released new draft rules that propose putting no more than one dispensary in arbitrary zones drawn up by the agency a few years ago for statistical purposes. For example, only one dispensary would be allowed in north Tempe and only one in Scottsdale from its southern border to Shea Boulevard. If the agency receives more than one quality application for each zone, one lucky dispensary applicant will be chosen at random by the DHS.

Gordon Hamilton, a member of what he calls the Arizona Medical Marijuana Policy Project's "founder's circle," dismisses Sobol's accusations as nonsense, as does Myers, the Project's front man and leader of the newly formed Arizona Medical Marijuana Association.

The proposed rules certainly do mean more money must be spent up front than some had planned. For instance, one rule requires dispensaries to hire a medical director who must be a physician, though the person could work for more than one shop.

Yet Myers and his association are among those who have argued against many of the rules, including the hiring of a medical director and the need to obtain city approval for a dispensary site before the state can grant an operating license.

Hamilton hopes the rules are rigorous enough to keep out amateurs but not so tough that they will impede the dispensary he plans to open.

What's obvious to outsiders is that competition in the potential billion-dollar-industry already has become ember-hot. With only 124 dispensaries possible, the game has turned into something like Monopoly. In this variation, players must go around the board once, spending money yet buying nothing, before the final rules are known.

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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.
Contact: Ray Stern