Strike Force: Final cannabis bill of the season is a doozy

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In another legislative session that is dragging on to the monsoons of summer, one lone cannabis bill has settled over the statehouse like a dusty haboob, as strike-everything House Bill 2050 provides an olio of legislative fixes that have drawn mixed reactions from across the marijuana firmament.

While the bill attempts to address several aspects of the business, from research to testing to cost reductions for veterans, a key part of HB2050 seeks to increase access to cannabis and help social equity applicants by changing adult-use licenses to “dual licenses” and allowing medical alongside recreational sales.

The social equity program is designed to repair some of the harms associated with the decades-long war on drugs by giving ownership opportunities to individuals impacted by previous drug laws.

The change in licensing could help solve zoning issues in places like Tucson that are not set up to accommodate adult-use-only establishments. It would also increase access in rural communities where there are vast distances between dispensaries.

The Arizona Department of Health Services classifies medical outlets as “dispensaries” and adult-use as “establishments.”

“HB2050 provides immediate relief to rural medical marijuana patients by allowing the most recent backfill of adult-use establishments in our rural counties to become dual licensed,” Arizona NORML Executive Director Mike Robinette wrote in a recent email. “This would allow them to sell medical marijuana to patients in the five counties that currently do not have a medical marijuana dispensary.”

Not only would that shorten the commute to acquire medicine in the far-flung corners of the state, it would also save rural patients the 16% excise tax charged on adult-use products.

AZNORML has been on a roller coaster with the bill as it has evolved from the remnants of Senate Bill 1402. That bill would have changed 13 rural “backfill” adult-use licenses released in April 2021, meant to establish shops in all of Arizona’s 15 counties, to dual licenses.

Those licenses, however, would have counted against the state’s cap of one medical cannabis license for every 10 pharmacies, a percentage agreed upon with the passage of the Arizona Medical Marijuana Act of 2010 that limits the current number of marijuana outlets in the state to 131 for a population of roughly 7.5 million residents.

That was enough for SB1402 to lose support from the advocacy group that seeks to improve access for citizens and help reduce costs through increased competition. The new bill would not count those licenses against the cap.

AZNORML was neutral on the striker as it passed through the Senate on Tuesday, June 14, but once it moved on to the House, and with the help of an amendment by Sen. David Gowan, (R-Sierra Vista) cosponsored by Sen. Rebecca Rios (D-South Phoenix), the bill garnered NORML support.

The Gowan amendment would tighten cannabis testing rules to ensure a consistent process for safe product on the shelves of local pot shops. It would also allow “secret shoppers” to purchase commercial cannabis off the shelves for independent third-party testing to ensure compliance and accuracy.

But the expansion of licenses was a sticking point for many in the industry, whose economic interests may be adversely affected by increased competition.

The Arizona Dispensary Association, a trade group for dispensary owners, has taken a firm stand against the bill and has lobbied in the halls of legislature to try to stop HB2050, calling out proponents for alleged haste in passing “sweeping changes” to the industry without broader consent.

“HB 2050 has bypassed most all of the legislative and public input required processes,” wrote ADA Executive Director Ann Torrez in a statement to the Weedly. “The legislative process is in place to ensure proper deliberation and resolving problems of public concern. The rules and procedures are in place to provide the opportunity for a thorough consideration of policies before they impact the public as new laws.”

Strike everything amendments are “sometimes used to allow legislators to circumvent the deadlines on introduction of new legislation, deal with an issue that arises after the deadline or revive a bill that has previously been defeated,” according to the azleg.gov website.

Not everyone associated with the ADA is against the bill, though.

Brian Warde, CEO and part owner of the Prime Leaf dispensaries in Tucson, said it is “probably one of the most contested bills [he’s] seen,” since he became involved with the business in 2014.

His stance on the bill has softened, due in part to the idea of increased access for patients and the help it might give to social equity licensees.

Warde also sees the expansion of the number of licenses in the near future anyway, and there is little to be gained by waiting.

“To have more access to dispensaries, medical and adult use, just makes more sense,” Warde said. “It’s true to what we started in this business for, although I understand the opposition.”

For Warde, being in the business has “always been for the patients,” and having easier access to medical marijuana in rural areas makes sense if that is the ultimate stated goal of the program.

According to Jon Udell, AZNORML’s Director of Politics, HB2050 can assist the 26 social equity applicants by helping them get their businesses off the ground within the 18-month timeframe that began in April by “circumventing zoning problems” that exist in urban centers that have not adjusted local regulations to accommodate adult-use licenses.

“There’s virtually nowhere right now that’s zoned appropriately for adult-use only,” he said. “There’s a bunch of places that allow for dual licensees where you have medical as the primary use and adult use as an accessory use, so if we can circumvent the zoning problems by getting this done, it’s huge, huge, huge [for social equity licensees.”[

Another positive would be access to the medical marijuana market, attracting patients who might go to a dispensary to avoid the excise tax.

Udell said he believes some of the opposition to the bill is that it could reward a pair of dispensary owners involved in litigation with ADHS over dispensary applications filed in 2017. But many supporters believe the tradeoff is worth it for the overall good it will do for consumers.

“On balance, it’s good public policy,” he said. “Very few bills are perfect. It is what it is and it’s a pill I’m willing to swallow for the greater good.”

As to the greater good, there are several other positive aspects to HB2050. Aside from efforts to improve product testing, it creates whistleblower protections for cannabis employees who file verified complaints with ADHS, and also waives the state fee for medical marijuana cards for veterans.

Another major piece of the bill would adjust wording of last year’s HB2298, a bill that designated $25 million in $5 million increments from the Arizona Medical Marijuana Fund to perform clinical research on the drug.

“The bill fixes HB 2298 by changing ‘may’ to a ‘shall,’” Udell said. “So now it’s not, they ‘may’ issue up to $5 million, it’s, they ‘shall’ issue $5 million every year for five years. If, for whatever reason, there’s not enough money, they can now tap Prop 207 tax revenue to make sure that program can get funded.”

Warde said the research dollars are another important piece of the puzzle that changed his view on the bill.

“That was one of the high points for me,” he said.

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