Arizona recently legalized recreational marijuana, and the market for cannabis products is expected to grow significantly in the coming years. This presents a unique opportunity for entrepreneurs looking to enter the cannabis industry in the state.

One advantage of opening a marijuana dispensary in Arizona is that it has a large population and a high demand for cannabis products. This means there is a potential for a large customer base, which can translate into higher profits for a business.

Arizona also has a well-regulated and organized system for licensing and regulating marijuana dispensaries, making it relatively easy to start a business in this industry. The state has already issued licenses to several dispensaries, and more are expected to open in the coming months.

Medical Marijuana: Yes

Recreational Marijuana: No

Decriminalized: -

In-Home Cultivation: Yes (If no dispensary within 25 miles)

2020 legislative session begins as ballot effort continues

In August last year, Smart and Safe Arizona, the campaign leading the effort to legalize marijuana for adult use through a voter referendum, submitted petition language to put an adult-use legalization initiative on the 2020 ballot. The group needs to collect 237,645 valid voter signatures by July 2 to qualify.

The proposed initiative would allow adults 21 and older to possess up to one ounce of marijuana and cultivate up to six marijuana plants in their home. It designates the Arizona Department of Health Services, which regulates the state's existing medical marijuana program, as the chief regulatory agency in charge of licensing and overseeing adult-use marijuana businesses and testing facilities. If approved by voters next year, the law would also create a pathway for people with prior marijuana convictions to expunge their records. A portion of the revenue raised by the proposal’s 16% tax on marijuana sales would be deposited into a Justice Reinvestment Fund to support grants and programs related to public health, technology to identify those eligible for expungement, nonprofit services, and expanding participation in the industry for those from communities disproportionately harmed by prohibition. Read a more detailed summary of the initiative here.

Meanwhile, the state’s legislative session has begun with several marijuana policy reform bills already introduced.

2019 legislative session ends with improvements to medical marijuana program; Supreme Court rules infused products are legal under medical law

Marijuana policy reform advocates in Arizona saw important progress in 2019. Gov. Doug Ducey signed legislation that requires dispensaries to have all medical marijuana tested by third-party laboratories for potency and contaminants by November 1, 2020. The new law also makes patient registry cards valid for two years instead of one, which will save each of the state’s roughly 200,000 patients hundreds of dollars over the next decade.

In May 2019, the Arizona Supreme Court ruled that concentrates, edibles, and other infused products are legal under the state’s medical marijuana law, ending a controversy based on an inaccurate reading of the 2010 voter-backed law.

A March 2019 poll showed a majority of likely Arizona voters support legalizing marijuana for adult use, with only 41% opposed. Advocates are preparing a campaign to put legalization on the state’s 2020 ballot.

Medical marijuana in Arizona

On November 2, 2010, Arizona voters enacted a medical marijuana initiative — Proposition 203 — with 50.13% of the vote. Arizona Department of Health Services (DHS) finalized dispensary and registry identification card regulations on March 28, 2011. On April 14, 2011, it began accepting applications for registry cards that provide patients and their caregivers with protection from arrest. DHS was preparing to accept dispensary applications starting in June and to register one dispensary for every 10 pharmacies in the state, totaling 125. However, on May 27, 2011, Gov. Jan Brewer led a federal lawsuit seeking a declaratory judgment on whether Arizona’s new medical marijuana program conflicted with federal law. Her lawsuit was rejected in 2012.

To qualify under Arizona’s program, patients must have one of the listed debilitating medical conditions: cancer; HIV/AIDS; hepatitis C; glaucoma; multiple sclerosis; amyotrophic lateral sclerosis (ALS); Crohn’s disease; agitation of Alzheimer’s disease; PTSD; or a medical condition that produces wasting syndrome, severe and chronic pain, severe nausea, seizures, or severe and persistent muscle spasms.

Registered patients may possess up to 2.5 ounces of marijuana and may designate one caregiver to possess it on their behalf. Arizona’s law also provides that any patient living 25 miles or more away from a dispensary can cultivate marijuana. Those allowed to cultivate can grow up to 12 plants. Arizona honors visiting patients’ out-of-state registry identification cards for up to 30 days, but they are not valid for obtaining marijuana.

The law also includes extensive civil discrimination protections for medical marijuana patients in the areas of employment, housing, education, organ transplants, and child custody, visitation, and parental rights.

The Arizona Legislature has rolled back some of Prop. 203’s protections, like possibly allowing an employer to fire a medical marijuana patient based on a report alleging workplace impairment from a colleague who is "believed to be reliable." The legislature also passed H.B. 2585, which contradicts Prop. 203 by adding medical marijuana patient data to the prescription drug-monitoring program. In 2015, the legislature undermined patient protections again with the passage of H.B. 2346, which specifies that nothing requires a provider of workers’ compensation benefits to reimburse a person for costs associated with the medical use of marijuana.

In September 2017, the Arizona Department of Child Services issued a new regulation saying that if an individual is a medical marijuana patient, then he or she would not be eligible to become a foster parent.