SHOW LOW — Proposition 207, the citizens’ initiative to legalize marijuana in the state passed by a majority vote on Nov. 3, and last Friday, the Arizona Department of Health Services issued 86 licenses for the sale of “Adult Use Marijuana,” the phrase which identifies users of recreational marijuana, who do not hold a medical marijuana card. Two local dispensaries have not begun selling it yet, but one plans to start on Monday, Feb. 1.
The ADHS has promulgated 43 pages of regulations regarding adult use which became effective Jan. 15. A review of the regulations help in understanding what the new law will look like in practice, and there will be kinks to work out.
Old law vs. new law
First, there are apparent contradictions in the old medical use law and the new recreational law. For example, medical card holders may buy two-and-one-half ounces of marijuana every 14 days, but can’t grow marijuana plants unless the medical card holder lives 25 miles or more from a dispensary. By contrast, a recreational user may possess one ounce of it, but may grow up to six plants at home, up to 12 plants if two adults live there, regardless of how far they live from a dispensary.
So if a card holder has the two-and-one-half ounces, can he or she also possess the one ounce allowed as a recreational user? And if the medical card user and adult roommate grow 12 plants at home down the street from a dispensary, are they violating the medical marijuana law? ADHS doesn’t address these questions in the FAQ portion of their web site.
Taxes and fees
Proponents of the adult user law predicted a drop in the costs of law enforcement, courts and jails. They also pointed to increased tax revenue to the government by the law’s passage. They may be right about that.
Adult users will be taxed 16 percent, an “excise” tax it is called. But the fees charged by the state to distributors are enormous. For example, to get a Marijuana Establishment License, the applicant will fork over $25,000; renewals cost $5,000. To apply for an “approval to operate,” which issues after the license is issued, the cost of that is $2,500.
The regulations also require each establishment to have a designated “marijuana facility agent,” who must provide a type of criminal clearance from the Arizona Department of Public Safety, calls for a fingerprint clearance card. This assures that whoever the facility agent is, he or she hasn’t been convicted of certain felonies. That clearance process costs $300.
Finally, the regulations require the applicant to provide a letter from a bank that it has $500,000 liquidity (usually cash) on hand and that cash is available to use by the applicant.
A look behind the scene
The Independent spoke with an official from SWC, a division of Columbia Care, a medical cannabis company. Adam Goers reported that his company operates a medical dispensary in Tempe, received their license to operate as an adult use facility on Friday and began selling recreational marijuana from its medical marijuana facility the same day. He calls that “co-located.” Goers provided some insight into what that entails.
He said that the facility is inspected by the ADHS and the company’s “compliance department” assures that it is operating lawfully. One big part of the operation is to ensure that the product is tested to ensure that the advertised amount of THC (tetrahydrocannabinol) the pychoactive ingredient in marijuana, is actually the amount in the product. Testing also protects consumers from mold or foreign substances in the product that might get there through the manufacturing, storage and packaging process.
Goers stated that the state will allow testing to be conducted by independent labs, as long as the lab adheres to the requirements of the International Organization for Standardization, or IOS, which has developed requirements for “competency of testing and calibration laboratories,” according to that organization’s website.
There are two on the Mountain: Green Hills Patient Center, Inc. in Show Low and Kompo dispensary in Taylor. The Independent spoke with a person from Kompo who confirmed that they have received their permit and that they will begin selling adult use marijuana on Feb. 1, and will hold a “big sale” on Friday, Feb. 5. Kompo was reported to be planning a move to Show Low, but that is “still a work in progress,” according to the representative who asked not to be named.
Green Hills hasn’t applied for their adult use permit yet. The regulations are specific about what member, officer or partner must submit the application depending on the type of business entity the applicant is. Court records show that Green Hills is in receivership and the regulations don’t specify how a company in receivership applies. That may be the hold up, but the representative with whom the Independent spoke, who also did not want to be named, didn’t know.
But Green Hills has alerted its medical card holders that “Once our application is approved and we receive our Adult Use License, we anticipate an increase in traffic to the dispensary. When that happens, and we will let you know when it does, we highly recommend you visit us and stock up on your favorite medications before the Adult Use customers start shopping here,” according to its website.
Finally, there is the expected role of the federal government in the growing field of commerce. Marijuana is still illegal under federal law, and the U.S. Constitution gives Congress the authority to regulate ‘interstate commerce.” So far the federal government has let the states do that and that is probably why companies like SWC only sell product produced in the state that SWC sells it. If a product crosses state lines, it becomes by definition “interstate commerce,” but in Arizona, it’s a “home-grown” operation.