Apply for a Dispensary License in Arizona

Since 2012, the trend for dispensary application processes in most states has been to evaluate applicants using either a set of merit based criteria or random allocation. Four years after the first round of dispensary certificates was allocated in Arizona using mostly random selection, the Department of Health Services has a mandate to allocate additional licenses using a location and patient population based methodology based as outlined in the rules. The Department of Health Services may not allocate dispensary licenses based on merit-based criteria, but property owners and local municipalities have the most power in determining if capable candidates are participating in the 2016 allocation process. It would not surprise us if the majority of licenses are assigned to existing dispensary operators or those who have exceptional locations and are have built relationships with local municipalities over the years.

Although the media has largely focused on mainstream issues relating to marijuana such as the 2016 legalization initiative, the medical marijuana industry in Arizona has been rife with commercial litigation since the Arizona Medical Marijuana Act was enacted. There have been numerous receivers appointed throughout the state as relationships between business partners have soured and judges have had no choice but to leave operations and management to third parties. This industry is not for the thin-skinned. As medical marijuana is a nascent industry, we believe that the trend of commercial litigation that has been prevalent throughout the last four years will continue and cost new entrants significant legal fees that may outweigh return on investment unless preliminary measures are taken.

The majority of litigation in the industry relates to internal disputes between business partners or licensees who believe they are being treated unfairly by the local municipalities that control zoning within their Community Health Analysis Area (CHAA) and are preventing operators from opening their doors. On June 6, 2016, the Arizona Department of Health Services will release about 22 Phoenix area CHAAs that will be open for the next round of applications. Therein lies a conflict, as municipalities like Gilbert and Scottsdale (among others) have already taken measures to limit the number of medical marijuana dispensaries within their jurisdiction.

We helped win one of the eight licenses in Hawaii under our national brand, Final Rules, and have already begun developing a geo-spatial scoring model for the 2016 round of applications in Arizona. We would like to work with groups who have had deep internal business relationships and have secured zoned locations for the reasons above. If you meet this criterion and want to work with us in a long term capacity, we look forward to hearing from you.