Social Justice: ADHS makes changes to equity application rules for dispensary ownership

As the December deadline to apply for 26 coveted social equity cannabis dispensary licenses approaches, the Arizona Department of Health Services recently revised criteria for ownership, bringing a rare round of praise for the department’s efforts.

Social equity advocates such as Arizona NORML and a coalition of stakeholders have been critical of ADHS and previous draft rules because they believed loopholes created incentives for powerful players who already control much of the industry to game the system.

The main change being lauded is a key provision that apparently closes a loophole that would allow a single individual or entity to sponsor an unlimited number of social equity licenses.

The rules now state that anyone entitled to 10% or more of the applicant’s profits is limited to two applications. 

“Arizonans not only voted to legalize cannabis for adult-use but also supported a sustainable social equity program to those Arizonans who have been disproportionately impacted by the harsh prohibition of marijuana,” Arizona NORML Director Mike Robinette said via email. “This new rule now defines a program that is more in accordance with voter expectations and demonstrates the ADHS has been listening to stakeholders and other concerned parties with respect to the social equity program.”

ADHS will accept applications from Dec. 1 through Dec. 14 for a program that was one of several selling points for Prop 207, which passed with 60% of Arizonans voting in favor of legalized pot in 2020.

According to Prop 207, the social equity program must promote the ownership and operation of marijuana dispensaries by individuals from communities disproportionately impacted by the nation’s long war on drugs.

The updated rules also offer some clarification on applicant qualifications, including that household income for three of the last five years must be 400% of the federal poverty guidelines or lower; have a pot-related misdemeanor, an expugnable felony or an old marijuana felony in Arizona; have a close family member convicted of a marijuana-related offense in Arizona; or lived in an area for at least three of the last five years that ADHS has determined to be disproportionately impacted by the enforcement of prior pot laws. (ADHS has yet to define those areas.)

NORML is not happy with a proposed change that requires applicants to complete the expungement process rather than just being eligible and having submitted an expungement application. 

Prop 207 allotted $4 million for an initiative to grant expungement to every eligible Arizonan, but a big push on that front only started at the beginning of September, even though expungements have been available since July 12. 

Robinette said the process can take more than 30 days and will “place a significant burden on applicants, particularly when the department’s expungement project just went live and could flood the courts with filings.”

“We question language that now states that certain arrests and convictions must be expunged prior to the social equity application,” Robinette said. “Given that there are quite possibly hundreds of thousands of people who might have an expungeable arrest or conviction in Arizona, we fear this requirement will place an unfair burden on the applicants to get those arrests or convictions fully expunged prior to the deadline.” 

In February, a coalition of stakeholders from disproportionately impacted communities sent a letter to former ADHS Director Cara Christ in opposition to the first draft of the rules, outlining alternatives to create a more equitable distribution of the licenses.

One of the group’s complaints was that ADHS was not listening to constituents, but apparently, the department received the message and incorporated some vital changes to the rules.

“We are still waiting on final rules relative to the definition of areas that will be deemed disproportionately impacted,” Robinette stated. “Arizona NORML intends to submit public comments celebrating these changes, and will also offer revisions, specifically with respect to the new requirement that certain convictions or arrests must be expunged by the application deadline.”

Potential applicants, and their qualified boards and administrators, must also complete mandatory training offered by ADHS prior to submitting the final application. It is the only approved training accepted by the department.

The free virtual training will be held live Sept. 20-21 and will be available as a recorded session with a live Q&A on Oct. 12-13. Additionally, DHS will offer computer-based training from mid-October through mid-December.

Classes will be taught by industry experts and include two days of content and education focused on operating an adult-use marijuana business, including legal requirements, business practices, regulatory compliance and fundraising, as well as marketing and strategic growth.

ADHS will also offer one-on-one support and clinics to help potential licensees with the application process and the chance to meet with instructors to get questions answered.

ADHS will distribute the licenses via random drawing to be held after the Dec. 14 application deadline. 

For more information on the social equity program and to register for the required training, go to azdhs.gov/SocialEquity.

Roop Acquires Green Med

Last week, Roop Investments, LLC announced the acquisition of dual license dispensary Green Halo in a $30 million cash deal. This acquisition includes Green Halo’s retail operations and its related dispensary, cultivation and manufacturing licenses.

Roop Investments, founded in 2020, is a private company owned and operated by George Roop, a Tucson native and retired mixed martial artist who fought as a bantamweight in the Ultimate Fighting Championship.

“We’ve spent years developing the Tucson Cannabis Campus operation, and this acquisition positions us to lead the market going forward,” Roop stated in a press release. 

According to the release, Tucson Cannabis Campus currently operates a 40,000-square-foot indoor cultivation facility and is building out the first of its multi-acre outdoor grow. The facility is in the planning stage for an additional four 50,000-square-foot buildings that will allow the company to scale its production. 

“We have the infrastructure and the team to meet our goals of being a premier supplier of high-quality cannabis and derivative products,” Roop stated. “Complete supply chain integration coupled with our cultivation capacity will enable us to deliver the highest quality products for the best prices in Arizona.”

Green Halo Executive Director Murray Stein said the company has spent the better part of a year preparing for the sale, and chose Roop over “suitors both big and small, from individual dispensaries to multi-state operation.” 

“At the end of the day, our strong shared commitment to our home city of Tucson, the community, and our common goals of changing people’s lives helped make the decision for us,” he stated. “We are also excited about the opportunity this provides our team members in terms of professional growth and experience.”  ν


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