November 2020

Proposition 207 Passes in Arizona: Adult Use of Marijuana Is Now Legal

Joe Keene

Proposition 207, titled the Smart and Safe Act (Act), passed on November 3, 2020, with 60% of the popular vote. The Act legalizes marijuana for possession and consumption by adults and allows dispensaries to sell marijuana for adult use.

The Act will become effective on November 30, 2020.[1] Use of marijuana for medical purposes was legalized in Arizona in 2010.

The Act specifically provides for the following:

• Allows adult possession of up to an ounce of marijuana, with no more than five grams in concentrated form. Adults can grow six plants at home, with no more than 12 plants in a house.

• For a person under 21, reduces the penalties for the unlawful use of marijuana to a civil penalty for first violation, petty offense for second violation, and class 1 misdemeanor for subsequent violations.

• Prohibits smoking marijuana in public spaces and open spaces.

• Prohibits consuming marijuana while operating a vehicle.

• Prohibits any edibles shaped like a “human, animal, insect, fruit, toy or cartoon” from being marketed to children.

• In addition to a sales tax, imposes a 16% excise tax on the sale of marijuana and marijuana products under this Act to fund community colleges, infrastructure, public safety, and public health programs.

Marijuana Business Licensing

The Arizona Department of Health Services (DHS) is responsible for adopting rules to regulate the adult use of marijuana, which include the licensing of retail stores and production facilities.[2] A business seeking to sell marijuana must be licensed by DHS. The number of licenses is capped at one license for every ten pharmacies registered in the state and will increase with the number of Arizona pharmacies.[3]

First priority for a dispensary license will be offered to “early applicants” defined as (1) existing medicinal marijuana businesses, and (2) an entity seeking to operate an establishment in a county with fewer than two registered nonprofit medicinal marijuana businesses. An early applicant can submit an application for a license between January 19, 2021, and March 9, 2021. Within 60 days after receiving an application from these early applicants, DHS will begin issuing licenses to qualified early applicants. This means that the earliest licenses would be issued on or about March 19, 2021. After the early applicant licenses are granted, DHS will issue licenses, by random selection, to qualified applicants.

An additional 26 licenses shall be obtained through a social equity program to be created no later than six months after DHS promulgates final rules under the Act. The specific requirements of this program will await its design; however, it will likely allow preferences for potential licensees who come from communities disproportionally impacted by current marijuana laws.

Other Provisions

The Act allows Arizona employers to maintain a drug-free workplace. The employers may adopt “workplace policies restricting the use of marijuana by employees or prospective employees.” The Act “does not require an employer to allow or accommodate the use, consumption, possession, transfer, display, transportation, sale or cultivation of marijuana in a place of employment.”

The Act permits local jurisdictions to ban or restrict marijuana businesses within the local jurisdiction’s boundaries. The Town of Gilbert has indicated it will ban any adult-use marijuana business within its borders, allowing only current medicinal marijuana business to apply for adult-use marijuana licenses.[4]

Finally, the Act establishes a process beginning on July 12, 2021, to allow a person to expunge any “arrest, charge, adjudication, conviction, or sentence” relating to marijuana that occurred before the date of the Act’s passage.[5]

If you have questions regarding the recreational marijuana business or have general questions about Proposition 207, Sacks Tierney attorneys are available to provide advice on these matters.

[1] Under Arizona law, once the election and proposition are certified, the proposition becomes effective. See A.R.S. § 16-648. This certification happens on the fourth Monday following the general election, which this year is on November 30. Id.

[2] The deadline for adopting rules is April 5, 2021. However, it is expected by many in the industry and legal practitioners that the rules will be promulgated in January or February of 2021.

[3] As an example, if 40 more pharmacies open, then four additional licenses will become available.

[4] The Arizona Republic, October 17, 2020

[5] To receive an expungement under the Act, a person may petition the court to have any “arrest, charge, adjudication, conviction or sentence expunged.” Once a petition is filed, the prosecuting agency has 30 days to respond. The court “shall grant the petition unless the prosecuting agency established by clear and convincing evidence that the petitioner is not eligible for expungement.” After an expungement, an individual may state that they have “never been arrested for, charged with, adjudicated or convicted of, or sentenced for the crime that is the subject of the expungement.”