Arizona Cannabis Law

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A Guide to Arizona Cannabis Laws

For the latest information visit Arizona’s ADHS website – www.azdhs.gov/licensing/medical-marijuana/index.php

Proposition 207, the Safe and Smart Act, passed into law in November 2020 and legalized marijuana for adult personal use. The statutory provision Prop 207 is found in Arizona Revised Statutes (A.R.S.) Title 36, Chapter 28.2. This voter initiative allows adults over the age of 21 to possess, purchase, transport, or process 1 ounce or less of marijuana or 5 grams or less of marijuana concentrate. The Arizona Department of Health Services (ADHS) is responsible for licensing and regulating marijuana, marijuana retail sales, marijuana growth, and testing facilities in Arizona. The Arizona Department of Revenue (ADOR) is tasked in A.R.S. Title 42, Chapter 5, Article 10 with collecting the excise tax (imposed only by the state) and transaction privilege tax (state, counties, and cities) imposed on adult use marijuana sales.

Arizona Medical Marijuana Act

  • In 2010, voters passed the Arizona Medical Marijuana Act by a narrow margin of just over 50%. The citizen initiative (Proposition 203) called on the Arizona Department of Health Services to create a medical marijuana program.
  • The Medical Marijuana Act authorizes the possession and personal use of up to 2.5 ounces of marijuana by patients with written certification from a physician to alleviate a variety of symptoms associated with conditions (and the treatment prescribed for these conditions) such as cancer, glaucoma, AIDS, Crohn’s disease, and Hepatitis C.
  • Recreational Marijuana Use is Now Legal in Arizona for People Age 21 and Older
  • Similarly to alcohol, it remains illegal for anyone under the age of 21 to possess or consume marijuana under Arizona’s new recreational use laws. It is also a crime to distribute marijuana to a minor, just like it is illegal to give alcohol to someone underage.

Description of the Law (Arizona Rev. Statutes 36-2801, et seq.)

Proposition 203 passed in 2010, allowing use and possession of marijuana for patients with “written certification” from their physician.

The law recognizes “visiting qualifying patients,” those with valid doctor’s recommendations from other medical marijuana states.

Qualifying Illnesses

  • Cancer
  • Glaucoma;
  • HIV/AIDS
  • Hepatitis C;
  • Amyotrophic lateral sclerosis (Lou Gehrig’s disease);
  • Crohn’s disease;
  • Alzheimer’s disease;
  • Any medical condition producing cachexia or wasting syndrome, severe or chronic pain, nausea, seizures, etc. (other conditions subject to state approval).

What’s Allowed

  • Possession: 2.5 ounces of usable marijuana.
  • Cultivation: 12 marijuana plants, none within 25 miles of a licensed dispensary.
  • Caregivers: Must sign a statement promising not to deliver to anyone but the patient to whom you have been designated

Medical Marijuana Cultivation

  • Medical marijuana patients and caregivers can grow marijuana plants at home if they live a certain distance away from the dispensary. More specifically, medical marijuana patients and caregivers can grow their plants if they live 25 miles or more away from a dispensary.
  • Individuals cultivating marijuana for medical use can grow up to twelve plants.

What Is a Marijuana Establishment?

  • A marijuana establishment is an entity recognized by the state of Arizona as a retail location that can legally sell and cultivate marijuana. To be more specific, the licensee present at that establishment is permitted to sell marijuana and other marijuana products to adults over the age of twenty-one.
  • Individuals who want to become licensees for marijuana establishments can get to work now on preparing their applications. Early applications for marijuana establishments will be accepted from Jan. 19, 2021, up to March 9 of the same year.
  • Interested licensees must meet certain criteria.
  • The prospective licensee must first be looking to get established in a county currently being served by fewer than two non-profit medical marijuana dispensaries.
  • Non-profit medical marijuana dispensaries can also apply to become a marijuana establishment. To get their application granted, the dispensary must be registered and have no outstanding issues with the Arizona Department of Health Services.

State Penalties for Non-Medical Marijuana Use

  • Arizona legalized the recreational use of marijuana for adults 21 and older. It is important to note that possession or sale of more than 28 grams is still a crime in Arizona.
  • The classification, amount of incarceration time, and amount of fines associated with marijuana drug charges in Arizona are as follows:

Possession

1 oz

  • Penalty: None
    • Incarceration: None
    • Max. Fine: $0

More than 1 oz to 2.5 oz

  • Penalty: Petty offense
    • Incarceration: None
    • Max. Fine: $300

More than 2.5 oz to less than 2 lbs

  • Penalty: Felony
    • Incarceration: 6 months – 1.5 years
    • Max. Fine: $150,000

2 lbs – less than 4 lbs

  • Penalty: Felony
    • Incarceration: 9 months – 2 years
    • Max. Fine: $150,000

4 lbs or more

  • Penalty: Felony
    • Incarceration: 1.5 – 3 years
    • Max. Fine: $150,000

Sale

Transfer of up to 1 oz*

  • Penalty: No penalty
    • Incarceration: None
    • Max. Fine: $0

Less than 2 lbs

  • Penalty: Felony
    • Incarceration: 1.5 – 3 years
    • Max. Fine: $150,000

2 – 4 lbs

  • Penalty: Felony
    • Incarceration: 2.5 – 7 years
    • Max. Fine: $150,000

More than 4 lbs

  • Penalty: Felony
    • Incarceration: 4 – 10 years
    • Max. Fine: $150,000

*By adults without remuneration

Manufacture/Cultivation

Up to 6 plants**

  • Penalty: No Penalty
    • Incarceration: None
    • Max. Fine: $0

More than 6 plants

  • Penalty: Felony
    • Incarceration: 9 months – 7 years
    • Max. Fine: $150,000

** Non-commercial purposes in a private residence.

Trafficking

Less than 2 lbs

  • Penalty: Felony
    • Incarceration: 2.5 – 7 years
    • Max. Fine: $150,000

2 lbs or more

  • Penalty: Felony
    • Incarceration: 4 – 10 years
    • Max. Fine: $150,000

Hash & Concentrates

Less than 5 g

  • Penalty: No penalty
    • Incarceration: None
    • Max. Fine: $0

5 g to less than 12.5 g

  • Penalty: Petty offense
    • Incarceration: None
    • Max. Fine: $300

12.5 g or more

  • Penalty: Felony
    • Incarceration: 1 – 3.75 years
    • Max. Fine: $150,000

Manufacture, Sale, or Trafficking

  • Penalty: Felony
    • Incarceration: 3 – 12.5 years
    • Max. Fine: $150,000

Paraphernalia

Possession or use

  • Penalty: No penalty
    • Incarceration: None
    • Max. Fine: $0

Miscellaneous

  • Employing a minor in the commission of a drug offense, being convicted of a prior felony, or committing a drug offense in a school zone, lead to an increased sentence.

Driving While Impaired by Marijuana is a Crime

  • Arizona’s DUI laws are not changed by the Smart and Safe Arizona Act. However, in order to be convicted of a DUI for having THC in your body will require the prosecution to prove that you were driving while actually impaired. Simply having a metabolite, like carboxy-THC, in your blood, is not enough alone to convict you of a DUI. Therefore, do not drive, operate a boat, or fly an aircraft if you are under the influence of THC, the psychoactive ingredient of marijuana.

Employers Can Still Prohibit Marijuana Use While Working

  • The new law does not limit your employer’s rights to maintain a drug-and-alcohol-free place of employment. Just like with alcohol, an employer can prohibit you from using marijuana while working.

Don’t Smoke Marijuana in Public Spaces

  • Arizona’s recreational marijuana law does not permit the use of marijuana in “a public place or open space.” Therefore, be very careful where you consume marijuana. Don’t do it in public, anywhere near a school, or while operating your vehicle.

Police Can No Longer Perform a Warrantless Search if They Smell Marijuana

  • A key component of Prop 207 in Arizona is the effect on your 4th Amendment rights to be free from warrantless searches by police. Few people know about this provision, but it’s very important. The new law says, “the odor of marijuana or burnt marijuana does not by itself constitute reasonable articulable suspicion of a crime.” A.R.S. section 36-2852(C).
  • Search and seizure is a very complex area of law. If you have any questions about whether a warrantless police search of your person, vehicle, or home was legal or not, you should consult with an experienced criminal defense attorney immediately.

Expungement Is Now Legal in Arizona, With Limitations

A. Arizona law did not previously support expungement of drug convictions. Now, under the new law, certain marijuana convictions can be expunged. Here’s what you need to know before you apply for expungement.

  • You Can’t Petition Until July 12, 2021. Petitions can be filed beginning on July 12, 2021. Courts will need time to adjust to this new law. So, it is wise to start planning your petition now, and then be ready to file it on July 12, 2021 if you are eligible.
  • Expungement Only Applies to Certain Arrests, Charges, Adjudications, and Convictions. Expungement is limited to very specific types of marijuana offenses, which include:
    • Possessing, consuming, or transporting 2.5 ounces or less of marijuana, of which not more than 12.5 grams was in the form of marijuana concentrate.
    • Possessing, transporting, or cultivating 6 or less marijuana plants at the person’s primary residence for personal use.
    • Possessing, transporting, or using marijuana paraphernalia.
  • Defendants, Defense Attorneys, and Even Prosecutors Can File Petitions. A petition has to be filed for expungement to occur. Expungement is not automatic. And the court “may hold a hearing” on your petition. So it’s important to have all of your facts right before filing.
  • Convictions for Transportation of Large Quantities of Marijuana Are Not Eligible for Expungement. If your case involves several pounds of marijuana possessed or transported for sale, you cannot get your arrest or conviction expunged under the new law.
  • In addition to expunging convictions, courts will also be required to dismiss currently pending charges that meet the eligibility qualifications for expungements.

Medical Marijuana Age Limit (A.R.S. § 36-2801 subsection (15))

  • “Qualifying patient” means a person who has been diagnosed by a physician as having a debilitating medical condition.
  • However, there are different requirements depending on the qualifying patient’s age. If a qualifying patient is under 18 years of age, the custodial parent or legal guardian responsible for healthcare decisions for the qualifying patient must apply for the qualifying patient. The qualifying patient under 18 years of age must also have a designated caregiver.

Medical Marijuana Purchase Limits (A.R.S. § 36-2816 subsection (A))

  • A registered qualifying patient may not directly, or through the patient’s designated caregiver, obtain more than two and one-half ounces of marijuana from registered non-profit medical marijuana dispensaries in any fourteen-day period.

Medical Marijuana Possession (A.R.S. § 36-2801 subsection (1))

  • Regarding the “allowable amount of marijuana”, states:
  • “Allowable amount of marijuana”:
    • With respect to a qualifying patient, means:
      • Two and one-half ounces of usable marijuana.
      • If the qualifying patient’s registry identification card states that the qualifying patient is authorized to cultivate marijuana, twelve marijuana plants contained in an enclosed, locked facility, except that the plants are not required to be in an enclosed, locked facility if the plants are being transported because the qualifying patient is moving.
    • With respect to a designated caregiver, for each patient assisted by the designated caregiver under this chapter, means:
  • Two and one-half ounces of usable marijuana.
  • If the designated caregiver’s registry identification card provides that the designated caregiver is authorized to cultivate marijuana, twelve marijuana plants contained in an enclosed, locked facility, except that the plants are not required to be in an enclosed, locked facility if the plants are being transported because the designated caregiver is moving.
    • Does not include marijuana that is incidental to medical use, but is not usable marijuana.

Medical Marijuana Buying and Selling (A.R.S. § 36-2801(12))

  • Regarding a nonprofit medical marijuana dispensary, states:
    • (12) “Nonprofit medical marijuana dispensary” means a not-for-profit entity that acquires, possesses, cultivates, manufactures, delivers, transfers, transports, supplies, sells or dispenses marijuana or related supplies and educational materials to cardholders. A nonprofit medical marijuana dispensary may receive payment for all expenses incurred in its operation.

Medical Marijuana Cultivation (A.R.S. § 36-2804.02 subsection (A)(3)(f))

  • Regarding cultivation of medical marijuana, states:
  • A qualifying patient may apply to the department for a registry identification card by submitting:
    • An application, including:
    • A designation as to who will be allowed to cultivate marijuana plants for the qualifying patient’s medical use if a registered nonprofit medical marijuana dispensary is not operating within twenty-five miles of the qualifying patient’s home.

Taxes

Medical Marijuana Taxes

  • No excise tax

Adult Use of Marijuana Taxes

  • A 16% excise tax has been placed on adult use marijuana products per A.R.S. § 42- 5452(A).

Medical Marijuana Employment (A.R.S. § 36-2813 subsection (B))

  • Regarding employment protections of medical marijuana, states:
  • Unless a failure to do so would cause an employer to lose a monetary or licensing related benefit under federal law or regulations, an employer may not discriminate against a person in hiring, termination or imposing any term or condition of employment or otherwise penalize a person based upon either:
    • The person’s status as a cardholder.
    • A registered qualifying patient’s positive drug test for marijuana components or metabolites, unless the patient used, possessed or was impaired by marijuana on the premises of the place of employment or during the hours of employment.

Medical Marijuana Delivery (A.R.S. § 36-2801(11))

  • Regarding delivery of adult use marijuana states
  • (11) “Medical use” means the acquisition, possession, cultivation, manufacture, use, administration, delivery, transfer or transportation of marijuana or paraphernalia relating to the administration of marijuana to treat or alleviate a registered qualifying patient’s debilitating medical condition or symptoms associated with the patient’s debilitating medical condition.

Licensing and Registration

  • If your business sells marijuana or marijuana products (see definitions), you will need a transaction privilege tax (TPT) license and a Marijuana Excise Tax (MET) registration number. Proof of licensing with ADHS will be required in order to obtain a MET registration number. Registration for MET cannot be done online. In addition, if you are already licensed for medical marijuana, you must apply to convert your TPT license to reflect the new business activity or if applicable, you must also register as an adult use marijuana retail establishment to report the retail TPT and excise tax.
  • Arizona imposes transaction privilege tax (TPT) on the sale of medical and adult use marijuana. Additionally, a 16% excise tax is also imposed on the sale of adult use marijuana.
  • You will need to complete the paper registration form, Medical, Adult Use or Dual License Transaction Privilege/Use/Excise Tax Application (JTM-1) to get your MET registration number to obtain your TPT license. Form JTM-1 is used to apply for the transaction privilege tax and use tax as well as the MET registration number. It can also be used to register for Employer Withholding and Unemployment Insurance. Registration can not be done online; it must be done by paper. TPT licenses are valid for a calendar year and must be renewed annually.
  • If you already have a TPT medical marijuana license, you will need to complete Form JTM-1 to get your business codes updated to report medical marijuana sales under business code 203, and the adult use marijuana sales under business code 420 (no additional fees will be charged). A new excise tax registration number (MET Registration Number) will subsequently be issued to report the 16% excise tax. There is no MET registration fee. The registration cannot be done online, rather it must be emailed to [email protected]

Arizona Cannabis Advertising Rules

  • The law spells out that dispensaries are allowed to advertise, but they cannot package or label marijuana in a way that’d be appealing to kids; that includes a ban on products that resemble animals, people, fruits, toys or cartoons or with names that are similar to food or drink brands that are marketed to children.
  • State lawmakers this year are also considering further regulations on marijuana advertising, including a restriction on billboards within 1,000 feet of schools, churches, parks and childcare centers.
  • Section 36-2859 – Advertising restrictions; enforcement; civil penalty.
  1. A marijuana establishment or non-profit medical marijuana dispensary may engage in advertising.
  2. An advertising platform may host advertising only if all of the following apply:
    • The advertising is authorized by a marijuana establishment or non-profit medical marijuana dispensary.
    • The advertising accurately and legibly identifies the marijuana establishment or non-profit medical marijuana dispensary responsible for the content of the advertising by name and license number or registration number.
  3. Any advertising under this chapter involving direct, individualized communication or dialogue shall use a method of age affirmation to verify that the recipient is twenty- one years of age or older before engaging in that communication or dialogue. For the

purposes of this subsection, that method of age affirmation may include user confirmation, birth date disclosure or other similar registration methods.

  • It is unlawful for an individual or entity other than a marijuana establishment or dual licensee to do any of the following in a manner that is not authorized by this chapter or rules adopted by the department pursuant to this chapter:
    • Facilitate the delivery of marijuana or marijuana products.
    • Solicit or accept orders for marijuana or marijuana products or operate a platform that solicits or accepts orders for marijuana or marijuana products.
    • Operate a listing service related to the sale or delivery of marijuana or marijuana products.
  • A marijuana establishment that violates this section is subject to disciplinary action by the department pursuant to section 36-2854, subsection B. A non-profit medical marijuana dispensary that violates this section is subject to disciplinary action by the department pursuant to section 36-2816.
  • In addition to any other penalty imposed by law, an individual or entity other than a marijuana establishment or non-profit medical marijuana dispensary that advertises marijuana or marijuana products in violation of this section or otherwise violates this section shall pay a civil penalty of $20,000 per violation to the smart and safe Arizona fund established by section 36-2856. This subsection may be enforced by the attorney general.

Licensing for Cultivation

  • An Arizona cultivation license can be obtained by first becoming a dispensary. Arizona technically only has a dispensary license available as far as facilities go. There is a registration option for growing their own product, which would be a cultivation additional location add-on. This requires additional application materials to be submitted.
  • To become a cultivator in Arizona, you simply need first to become a dispensary. This can be done bat application or after the fact but must be approved by the Department. All details of your operation must be documented in a process map before applying so that you can show proof of procedures, processes, inventory, and location.

Arizona Commercial Grow License Cost

  • The registration cost to become a dispensary in Arizona is $5000, with the renewal cost being $1000. If you end up changing your dispensary location or end up adding a location, such as adding a cultivation site, then you will incur another cost of $2500. In total, getting an Arizona cultivation license will essentially cost you $7500 at the initiation.
  • Seed-To-Sale State Tracking System Arizona is not currently contracted with a state mandatory tracking system such as Leef, BioTrack, or Metrc. However, The Department still expects an adequate inventory control system for safeguarding records and patient information in regard to HIPAA. There should be records consisting of marijuana transfer information, such as where the dispensary gets its product and how much went into inventory. Inventory should be upkept at minimum each morning, taking into account transfers, sales, disposals, harvests, etc. Patients should be sufficiently tracked in accordance with the Arizona Medical Marijuana Program Code. Marijuana that has been cultivated, produced, or disposed of should also be tracked in the inventory system of choice. These records should be kept for a minimum of 5 years.

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