All Arizona Medical Marijuana Dispensaries Must Have Bylaws

Arizona law requires that all Arizona corporations (for profit and nonprofit) adopt Bylaws.  Since Proposition 203 became law on December 15, 2010, all organizations (not just corporations) that seek a license to own and operate a dispensary in Arizona must adopt Bylaws.  Arizona Revised Statutes Section 36-2806.A states:

“The Bylaws of a registered nonprofit medical marijuana dispensary shall contain such provisions relative to the disposition of revenues and receipts to establish and maintain its nonprofit character.”

Bylaws is the name given to the policies and procedures that govern the internal operation of a business organization.  The Merriam-Webster dictionary defines bylaws as “a rule adopted by an organization chiefly for the government of its members and the regulation of its affairs.”

Before Proposition 203 became the law of Arizona Bylaws were used almost exclusively by corporations.  As an Arizona business attorney, I have formed over 3,200 Arizona limited liability companies since I started counting in 2002.  Not one of the LLCs I formed prior to Proposition 203 have Bylaws because the Arizona laws that govern Arizona LLCs do not require Arizona LLCs to adopt Bylaws.  Arizona statutory law requires that all Arizona corporations adopt Bylaws.  Arizona Revised Statutes Section 10-206 (for profit corps) and Section 10-3206.A (nonprofit corps) both contain the following corporate requirement:

“The board of directors of a corporation shall adopt initial bylaws for the corporation.”

If you are part of an organization (regardless of the type of entity) that will seek to obtain a license to own and operate an Arizona medical marijuana dispensary, you must make sure that your organization has Bylaws that contain the specific language required by Arizona medical marijuana law and the Arizona Department of Health Services.  If your organization does not have the required Bylaws, it’s application for a dispensary license will be rejected.

See my article called “Bylaws – We Don’t Need No Stinking Bylaws or Do We?”