Words of Wisdom from Will Humble on April 5, 2011

I attended the forum sponsored by the Arizona Medical Marijuana Association and the Marijuana Policy Project in Phoenix on April 5, 2011.  Will Humble spoke for about 30 minutes then answered questions for about 30 minutes.  Here are my notes from the Director’s presentation:

• The final rules published by the Arizona Department of Health Services on March 28, 2011, are not the actual final rules.  The actual final rules will be the rules that DHS submits to the Arizona Secretary of State on April 14, 2011.  DHS intends to make some changes to the March 28, 2011, version of the rules.

• The final rules will probably require that dispensary license applicants obtain a “comfort” letter from the landlord of the site where the dispensary’s address listed on the application.  Mr. Humble did not use the phrase “comfort” letter.  That is my characterization of what he said, which was the applicant must attach to the application something in writing from the owner of the site where the dispensary will operate that the owner is ok with the applicant using the owner’s address on the application.

• Rather than merely requiring the applicant to affirm that the zoning of the prospective dispensary site is “groovy,” the applicant will be required to get something in writing from the city that the proposed site is in accordance with city zoning, i.e., it is properly zoned and not too close to a prohibited structure or area.

• The March 28, 2011, rules will be modified, but DHS does not intend to make substantive changes.  I submit that the two preceding items, especially the second are substantive changes to the rules.

• Patient and dispensary applications will be submitted online.  DHS’ goal is to reduce DHS costs.

• There is no advantage in submitting a dispensary application early.

• DHS will review dispensary license applications in July and August.  He predicted that there will more applications for licenses in highly populated CHAAs and fewer applications in low populated CHAAs.

• A dispensary in Ajo that is in a low populated CHAA could have a big grow operation and sell marijuana to other dispensaries.

• After a dispensary has been operating for three years, it can move any where in the state subject to proper zoning.

• Dispensary licenses in CHAAs that are located in tribal land will be issued in 2012.

• A dispensary can move any where within its approved CHAA during its first three years, subject to zoning.

• If there are multiple dispensary license applicants who meet all five levels of review in a CHAA, the dispensary registration certificate will be awarded by a lottery conducted by the Arizona Lottery Commission.

• Level five review consists of the applicants providing a letter from a bank that says that the applicant has $150,000 of available capital.  DHS doesn’t care if the available capital is cash in the bank or a line or credit or the ability to borrow $150,000, but it must say that the applicant (not an owner, officer or board member) has the money.  A questioner asked if it would be ok to remove the cash from the bank that day after the bank issued the letter.  Mr. Humble was stumped.  He had not thought of that and the March 28, 2011, version of the rules would not prohibit the removal.

• Concerning the quality of the dispensary applications:  DHS will take into consideration and look to see if the required documents are submitted and appear to be comprehensive, but will not evaluate them for quality.  Not sure what he meant.

• The security and inventory control policies and procedures must show that the applicant will be able to prevent the diversion of marijuana from its intended and state lawful use.

• When asked if the applicant for a dispensary license will be notified if its application is defective and be given a chance to correct any defects, Mr. Humble said he doesn’t know yet.  He said that if the total number of applications for a dispensary license is relatively low, DHS will probably notice applicants of defects and give them a cure period, but will not do so if there are too many applications.  He did not give any indication of when the number of applications would be too many to give defect notices and cure periods.

• He mentioned that the business plan should include references to the Arizona medical marijuana statutes and the DHS rules where appropriate.

• As DHS receives applications for dispensary licenses, it will post the location on its CHAA maps.  He did not say what other information would be made available to the public.

• Subject to applicable zoning requirements, a dispensary agent of a dispensary can deliver marijuana to its patients anywhere in Arizona as long as the agent remains with the marijuana at all times and complies with the DHS delivery rules.

• It is ok to have multiple dispensary applications for the same site.

• If a person or group of people who own one or more entities that apply for multiple dispensary licenses in multiple CHAAs were to win more thann one license, DHS expects and demands that a dispensary be opened in each CHAA.  Not sure how DHS would enforce this.  Would it try to terminate all of the licenses if the group failed to open or operate one of the dispensaries?

• A medical director of a dispensary cannot write certifications for any patient.  Another doctor in the medical director’s medical group can write certifications, but the medical director must disclose that fact to DHS.

• I asked Mr. Humble this question:  Can a for profit corporation get a dispensary license if it has one or more shareholders who own less than 20 percent of the shares and who are not officers or directors of the corporation if these shareholders do not meet the eligibility criteria including they are not residents of Arizona.  He said yes.

Caution:  What Mr. Humble says is not the official position of the DHS and may or may  not actually be implemented by DHS.  His comments are enlightening, but it is the official acts of DHS such as the rules that have legal significance.