Assigned to GOV &                                                                                                                   FOR COMMITTEE






Fifty-Third Legislature, Second Regular Session




medical marijuana; inspection; testing; appropriation




An emergency measure establishing marijuana cultivated for medical use as an agricultural commodity subject to rules and testing.  Beginning January 1, 2019, establishes inspections of medical marijuana dispensaries including product testing and labeling requirements.  Contains requirements for enactment for initiatives and referendums (Proposition 105).




In 2010, Arizona voters passed The Arizona Medical Marijuana Act (Act) requiring  the Arizona Department of Health Services (ADHS) to adopt and enforce a regulatory system for the distribution of marijuana that is cultivated for medical use (medical marijuana), including a system for approving, renewing and revoking the registration of qualifying patients, designated caregivers, nonprofit dispensaries and dispensary agents (A.R.S. § Title 36, Chapter 28.1). 


Nonprofit medical marijuana dispensaries (dispensaries) must register with ADHS meeting operational standards and record-keeping requirements as established in department rules (A.R.S. § 36-2804).  Registered dispensaries must have a single, secure entrance and security measures to prevent theft and unauthorized access.  All cultivation must take place in an enclosed, locked facility at a physical address provided to ADHS which can only be accessed by registered dispensary agents associated with the dispensary (A.R.S. § 36-2806). A dispensary agent must also register before volunteering or working at a dispensary (A.R.S. § 36-2804.01).


Qualifying patients, with a written certification issued by their physician, may apply for a registry identification card by providing information as outlined. A designated caregiver may also apply if agreeing to be the patient's caregiver and not diverting marijuana to anyone who is prohibited from  possessing marijuana (A.R.S. § 36-2804.02).  As of December 2017, ADHS reported 152,979 qualifying patients, 944 designated caregivers and 4,731 dispensary agents in the state (Arizona Medical Marijuana Program December 2017 Report).


The Medical Marijuana Fund (Fund) was established for the regulation of the Medical Marijuana Program and consists of collected fees, civil penalties imposed and private donations (A.R.S. § 36-2817).  According to the Joint Legislative Budget Committee, the Fund is projected to have revenues of $25 million in FY 2018 and retain a balance of $41.3 million at the end of FY 2018 (FY 2019 Baseline). Since $2,000,000 is appropriated from the Fund for regulating medical marijuana, there is no anticipated fiscal impact to the state General Fund associated with this legislation.





Dispensary Inspections and Product Testing


1.      Requires ADHS, beginning January 1, 2019, to inspect dispensary premises for:

a) sanitary conditions for storing and processing medical marijuana; and

b) mold in any building operated by the dispensary.


2.      Requires ADHS, beginning January 1, 2019, to collect samples for testing of each medical marijuana product to confirm:

a)  the product does not contain mold;

b) the product is correctly labeled; and

c) the product's disclosure document reflects any chemical used in producing the medical marijuana product and the actual contents.


3.      Directs ADHS to establish remediation requirements for dispensaries where an inspection violation is found.


4.      Permits ADHS to contract with a third-party independent laboratory to collect and test medical marijuana product samples.


5.      Stipulates if a medical marijuana product is incorrectly labeled or a disclosure document is inaccurate, based on the test results, the product will be returned to the dispensary to be correctly labeled before being dispensed.


6.      Stipulates all medical marijuana products from a dispensary must be in childproof containers with a label containing:

a) the registered qualifying patient's name; and

b) registry identification card number. 


7.      Stipulates the medical marijuana product must include a written disclosure listing all chemical compounds used during product cultivation as tested.


Inspection Powers


8.      Allows the Director of the Arizona Department of Agriculture (Director) to enter at reasonable times into or on a private property where medical marijuana is cultivated to determine compliance or noncompliance with any rules or orders.


9.      Requires the Director or their agent to notify the dispensary or the designated caregiver when entering the property, if the notice is practicable and doesn't inhibit enforcement.




Medical Marijuana


10.  Establishes medical marijuana, cultivated by a dispensary or designated caregiver, as an agricultural commodity as defined by the Arizona Department of Agriculture (AZDA) rules.


11.  Stipulates beginning January 1, 2019, medical marijuana is subject to agricultural rules and regulation.


12.  Allows the Director to adopt any necessary rules for:

a) cultivating medical marijuana; and

b) mandatory testing of medical marijuana, cultivated by a dispensary or designated caregiver, by independent third-party laboratories.


13.  Specifies designated caregiver, marijuana, medical use and nonprofit medical marijuana dispensary have the same meanings prescribed in the Act.

Certification and Reporting


14.  Requires a person providing laboratory analysis of medical marijuana to apply for a certificate from the state agricultural laboratory.


15.  Requires the Director to adopt rules, including sampling and testing, to certify laboratories analyzing medical marijuana.


16.  Requires a certified laboratory to report test results, unless otherwise directed, only to the following:

a)       the dispensary or designated caregiver cultivating the marijuana;

b)      ADHS; or

c)       the state agricultural laboratory.


17.  Exempts employees of ADHS, AZDA or any third-party testing facility from statute criminalizing the possession of any amount of medical marijuana and is used as a required testing sample.

Registration of Dispensary Agents and Patients


18.  Permits a registered dispensary agent to use their same registration, for employment or volunteer work, at any registered dispensary owned by the same corporation with the same board of directors or principal officers.


19.  Requires the registered dispensary agent, within 10 days of starting employment or volunteer work at a different dispensary, to inform the ADHS of the dispensary's name and location.


20.  Requires a qualifying patient to pay the following:

a) a $50 application fee; and

b) a $25 renewal fee for a registry identification card.




21.  Removes ADHS' ability to establish a sliding scale of patient application and renewal fees based on a qualifying patient's household income.


22.  Appropriates $2,000,000 in FY 2019 from the Fund to AZDA for the purpose of regulating marijuana as an agricultural commodity.


23.  Adds marijuana cultivated for medical use by a nonprofit medical marijuana dispensary or a designated caregiver to the definition of plant or crop


24.  Adds seeds of marijuana cultivated for medical use by a nonprofit medical marijuana dispensary or a designated caregiver to the definition of agricultural seed.


25.  Refers to this act as the Medical Marijuana Reform Act.


26.  Makes technical and conforming changes.


27.  Requires for enactment the affirmative vote of at least three-fourths of the members of each house of the Legislature (Proposition 105).


28.  Becomes effective on signature of the Governor, if the emergency clause is enacted.


Prepared by Senate Research

January 30, 2018