Medical-Marijuana Dispensary Application Avalanche: Lottery to be Held for Competitive Areas; State Rakes in Cash

Hundreds of applications for medical-marijuana dispensaries -- along with their $5,000 application fees -- poured into the state Department of Health Services last week.

The latest update on the Arizona DHS Web site shows 484 applications received in 99 of the 126 districts (a.k.a., "CHAAs,") around Arizona that are allowed to have the facilities, which under state law can cultivate and sell marijuana to qualified patients.

Permits are expected to be granted on August 7. But first will come the review process by DHS, followed by a lottery for the competitive CHAAs. Only one dispensary is allowed in each CHAA.

Despite some setbacks to the industry, such as the ongoing crackdown in California and some ominous court decisions, interest in owning Arizona dispensaries is higher than a Sun Lakes retiree puffing on Purple Rhino.

At least 200 people showed up with applications on Friday, the last day of the May 14-25 turn-in window. Last Wednesday was also busy, says DHS director Will Humble.

Most applicants submitted a cashier's check for the $5,000 fee, though one person brought the money in cash -- a stack of $100 bills, Humble says.

Because of the one-per-CHAA system, 385 disappointed applicants will get a refund of $1,000. Doing the math, that means the DHS will earn slightly more than $2 million.

DHS' medical-marijuana fund still has about $1.5 million from fees collected by patient and caregiver registrations.

"The fund is healthy, that's for sure," Humble says.

Some of the money will be used to pay the expenses for the oversight and inspection of the dispensary locations around the state. Part of the DHS plan is to pay overtime to existing licensing staff who volunteer for pot duty.

With the leftover funds, Humble plans to contract with the University of Arizona's pharmacy school and with state poison-control officials to provide educational materials that can be distributed to the dispensaries, and to offer guidance for the dispensaries' medical directors.

The DHS has already paid some money to the UofA for research into medical conditions that could qualify future patients, Humble says. State law requires the DHS to consider adding new qualifying conditions; a hearing took place last week in which members of the public made presentations about how marijuana helped their post-traumatic stress disorder, migraines, anxiety and depression.

The lottery that will pare down the multiple applications in many of the CHAAs will resemble televised lottery drawings, right down to those air-blowing machines that send little balls with the winning numbers into a tube. The DHS is buying three of the machines -- one for practice, one for the drawing, and one as a back-up. Humble plans to have the process put on a live video feed for computer users.

Once chosen and permitted, would-be operators of dispensaries will need to have secured approval from a local city or county, then obtain a state operating license after an inspection of the facility. The doors can open to the public after that.

If someone who obtains state approval for a dispensary then fails to open or operate the business successfully, the CHAA that the dispensary is in will lay "fallow" until next year's permitting process begins, Humble says.

Qualified patients from Arizona and other states, (don't forget the Arizona's reciprocity provision), will be able to shop in the stores for various strains of marijuana, as well as processed goods like foods and tinctures. Patients can buy up to the statutory limit, two-and-a-half ounces, which is also the maximum that can be possessed at any given time.

Many patients are presumed to be growing pot for themselves now, which they legally won't be able to do once a dispensary opens within 25 miles. However, the cutoff time to stop growing doesn't take effect the moment a dispensary opens, but after the patients' current card expires.

Because of that rule, some pot patients have begun renewing their cards up to six months early, Humble says. When the new card arrives, the savvy patients then have a full 12 months to grow pot, even if a dispensary is open nearby.

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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