Proposed Arizona Medical Marijuana Rules / Regulations Issued by the Arizona Department of Health Services on December 17, 2010

Arizona Governor Jan Brewer signed a proclamation on December 14, 2010, that caused Arizona Proposition 203 to become law as of the following day.  The Arizona Department of Health Services now has 120 days ending on April 14, 2010, to prepare regulations that govern Arizona’s brand new medical marijuana patients and the dispensing and growing industry.  Today, December 17, 2010, DHS issued the first draft of its proposed Title 9, Health Services Chapter 17.Department of Health Services – Medical Marijuana Program.  Here are some of the interesting revelations I found in my quick skim through the proposed regulations:

  • “Entity” means a person as defined in A.R.S. § 1-215., which states:

“Person” includes a corporation, company, partnership, firm, association or society, as well as a natural person. When the word “person” is used to designate the party whose property may be the subject of a criminal or public offense, the term includes the United States, this state, or any territory, state or country, or any political subdivision of this state that may lawfully own any property, or a public or private corporation, or partnership or association. When the word “person” is used to designate the violator or offender of any law, it includes corporation, partnership or any association of persons.”

  • Each dispensary must have a “Medical director” who is a doctor of medicine who holds a valid and existing license to practice medicine pursuant to A.R.S. Title 32, Chapter 13 or its successor or a doctor of osteopathic medicine who holds a valid and existing license to practice osteopathic medicine pursuant to A.R.S. Title 32, Chapter 17 or its successor and who has been designated by a dispensary to provide medical oversight at the dispensary.
  • Dispensary registration fee = $5,000
  • Dispensary renewal fee = $1,000
  • Fee to change the location of a dispensary = $2,500
  • Fee to change the location of a cultivation site = $2,500
  • Fee to get or renew a qualifying patient card = $150
  • Fee to get or renew a designated caregiver card = $200
  • Fee to get or renew a dispensary agent card = $200
  • A registration packet for a dispensary is not complete until the applicant provides the Department with written notice that the dispensary is ready for an inspection by the Department.
  • Officers and board members of a dispensary must give DHS a copy of their Arizona driver’s license
  • Number of working days applicable to applications for a dispensary:  overall time frame = 90; time for applicant to complete application = 90; admin completeness 30; substantive review time = 60

Regulations Applicable to Arizona Medical Marijuana Dispensaries

  • Dispensaries can be individuals, corporations (for profit and nonprofit), limited liability companies, partnerships, joint ventures and any other business organization
  • “Each principal officer or board member of a dispensary is an Arizona resident and has been an Arizona resident for the two years immediately preceding the date the dispensary submits a dispensary certificate application.”  I am very surprised by this requirement.  Proposition 203 does not contain any language that restricts who can own a dispensary or that requires owners be residents of Arizona or any other state or country.
  • The application must state whether a principal officer or board member:

1.  Is a physician currently making qualifying patient recommendations

2.  Has not provided a surety bond or filed any tax return with a taxing agency – This does not make any sense.

3.  Has unpaid taxes, interest, or penalties due to a governmental agency.

4.  Has an unpaid judgment due to a governmental agency.

5.  Is in default on a government-issued student loan.

6.  Failed to pay court-ordered child support.

7.  Is a law enforcement officer.

8.  Is employed by or a contractor of the Department

  • The application must state the name and license number of the dispensary’s medical director
  • The application must state if the dispensary and, if applicable, the dispensary’s cultivation site are ready for an inspection by the Department
  • The application must state if the dispensary and, if applicable, the dispensary’s cultivation site are not ready for an inspection by the Department, the date the dispensary and, if applicable, the dispensary’s cultivation site will be ready for an inspection by the Department
  • The application must state the name and title of each principal officer and board member
  • The application must contain a copy of the business organization’s articles of incorporation, articles of organization, or partnership or joint venture documents, if applicable.
  • The application must contain an attestation signed and dated by the principal officer or board member that the principal officer or board member is an Arizona resident and has been an Arizona resident for at least two consecutive years immediately preceding the date the dispensary submitted the dispensary certificate application.
  • The application must include a copy of the certificate of occupancy or other documentation issued by the local jurisdiction to the applicant authorizing occupancy of the building as a dispensary and, if applicable, as the dispensary’s cultivation site.
  • The application must include a copy of the dispensary’s by-laws containing provisions for the disposition of revenues and receipts.
  • The application must include a business plan demonstrating the on-going viability of the dispensary as a non-profit organization.
  • The application must state whether a registered pharmacist will be onsite or on-call during regular business hours and if the dispensary will provide information about the importance of physical activity and nutrition onsite.
  • The dispensary must employ or contract with a medical director.
  • A dispensary shall cultivate at least 70% of the medical marijuana the dispensary provides to qualifying patients or designated caregivers.  This is a surprise and probably a problem and increased costs for many dispensaries.
  • A dispensary shall not provide more than 30% of the medical marijuana cultivated by the dispensary to other dispensaries.  Another surprise!
  • A medical director may only serve as a medical director for three dispensaries at any time.
  • The building used by a dispensary or the dispensary’s cultivation site shall have a flushable toilet with running water, soap in a dispenser and toilet tissue.
  • DHS will deny an application for a dispensary if a principal officer or board member:

1.   Is not a resident of Arizona or has not been a resident of Arizona for at least two consecutive years immediately preceding the date the application for the dispensary registration certificate is submitted.

2.  Is a physician currently making qualifying patient recommendations.

3.  Is a law enforcement officer.

4.  Is an employee of or a contractor with the Department.

  • The Department may deny an application for a dispensary registration certificate if a principal officer or board member of the dispensary:

1.  Has not provided a surety bond or filed any tax return with a taxing agency.

2.  Has unpaid taxes, interest, or penalties due to a governmental agency.

3.  Has an unpaid judgment owed to a governmental agency.

4.  Is in default on a government-issued student loan.

5.  Failed to pay court-ordered child support.

6.  Provides false or misleading information to the Department.