REFERENCE TITLE: recreational; adult use; marijuana

 

 

 

 

State of Arizona

House of Representatives

Fifty-fourth Legislature

Second Regular Session

2020

 

 

 

HB 2871

 

Introduced by

Representatives Blanc: Andrade, Cano, Powers Hannley, Rodriguez

 

 

AN ACT

 

Amending section 36‑2817, Arizona Revised Statutes; amending title 36, Arizona Revised Statutes, by adding chapter 28.2; amending title 42, chapter 5, Arizona Revised Statutes, by adding article 10; amending title 43, chapter 1, article 1, Arizona Revised Statutes, by adding section 43‑108; relating to marijuana.

 

 

(TEXT OF BILL BEGINS ON NEXT PAGE)

 


Be it enacted by the Legislature of the State of Arizona:

Section 1.  Subject to the requirements of article IV, part 1, section 1, Constitution of Arizona, section 36-2817, Arizona Revised Statutes, is amended to read:

START_STATUTE36-2817.  Medical marijuana fund; private donations

A.  The medical marijuana fund is established consisting of fees collected, civil penalties imposed and private donations received under this chapter.  The department shall administer the fund.  Monies in the fund are continuously appropriated.

B.  The director of the department may accept and spend private grants, gifts, donations, contributions and devises to assist in carrying out the provisions of this chapter.

C.  Monies in the medical marijuana fund do not revert to the state general fund at the end of a fiscal year.

D.  On the effective date of this amendment to this section, the director of the department shall transfer the following sums from the medical marijuana fund for the following purposes:

1.  $15,000,000 to the Arizona teachers academy fund established by section 15-1655.

2.  $10,000,000 to the department to fund:

(a)  The formation and operation of councils, commissions and programs dedicated to improving public health, including teen suicide prevention, improving youth health, substance abuse prevention and addressing adverse childhood experiences.

(b)  the Arizona poison control system established pursuant to section 36-1161, the Arizona health improvement plan, the child fatality review team established pursuant to section 36-3501, the chronic pain self management program and the maternal mortality review program.

3.  $10,000,000 to the governor's office of highway safety to distribute grants for the following purposes:

(a)  Reducing impaired driving, including conducting training programs and purchasing equipment for detecting, testing and enforcing laws against driving, flying or boating while impaired.

(b)  Equipment, training and personnel costs for dedicated traffic enforcement.

4.  $2,000,000 to the department to implement, carry out and enforce chapter 28.2 of this title.

5.  $2,000,000 to the department of health services to develop and implement, in conjunction with the department of economic security and other state agencies, a social equity ownership program to promote the ownership and operation of marijuana establishments and marijuana testing facilities by individuals from communities that are disproportionately impacted by the enforcement of previous marijuana laws.  For the purposes of this paragraph, "marijuana establishment" and "marijuana testing facility" have the same meanings prescribed in section 36-2851.

6.  $1,000,000 to the department to fund programs and grants to qualified nonprofit organizations for education, community outreach and social equity programs related to chapter 28.2 of this title.

7.  $1,000,000 to the Adult use marijuana fund established by section 36-2857. END_STATUTE

Sec. 2.  Title 36, Arizona Revised Statutes, is amended by adding chapter 28.2, to read:

CHAPTER 28.2

RECREATIONAL ADULT USE OF MARIJUANA

START_STATUTE36-2851.  Definitions

In this chapter, unless the context requires otherwise:

1.  "Advertise" and "advertising" mean any public communication in any medium that offers or solicits a commercial transaction involving the sale, purchase or delivery of marijuana or marijuana products.

2.  "Child-resistant" means designed or constructed to be significantly difficult for children under five years of age to open, and not difficult for normal adults to use properly.

3.  "Consume", "consuming" and "consumption" mean the act of ingesting, inhaling or otherwise introducing marijuana into the human body.

4.  "Consumer" means an individual who is at least twenty-one years of age and who purchases marijuana or marijuana products.

5.  "Cultivate" and "cultivation" mean to propagate, breed, grow, prepare and package marijuana.

6.  "deliver" and "delivery" mean the transportation, transfer or provision of marijuana or marijuana products to a consumer at a location other than the designated retail location of a marijuana establishment.

7.  "Department" means the department of health services or its successor agency.

8.  "Designated caregiver" has the same meaning prescribed in section 36-2801.

9.  "Disproportionately impacted area" means a geographic area that has had historically high rates of arrest, conviction and incarceration related to marijuana crimes.

10.  "Dual licensee" means an entity that holds both a nonprofit medical marijuana dispensary registration and a marijuana establishment license.

11.  "Employee" has the same meaning prescribed in section 36‑601.01.

12.  "Employer" has the same meaning prescribed in section 36‑601.01.

13.  "excluded felony offense" has the same meaning prescribed in section 36-2801.

14.  "Good standing" means that a nonprofit medical marijuana dispensary is not the subject of a pending notice of intent to revoke issued by the department.

15.  "Health care facility" has the same meaning prescribed in section 36-601.01.

16.  "independent third‑party laboratory" has the same meaning prescribed in section 36-2801.

17.  "Industrial hemp" has the same meaning prescribed in section 3‑311.

18.  "Locality" means a city, town or county.

19.  "Manufacture" and "manufacturing" mean to compound, blend, extract, infuse or otherwise make or prepare a marijuana product.

20.  "Marijuana":

(a)  Means all parts of the plant of the genus cannabis, whether growing or not, as well as the seeds from the plant, the resin extracted from any part of the plant, and every compound, manufacture, salt, derivative, mixture or preparation of the plant or its seeds or resin.

(b)  Includes cannabis as defined in section 13-3401.

(c)  Does not include industrial hemp, the fiber produced from the stalks of the plant of the genus cannabis, oil or cake made from the seeds of the plant, sterilized seeds of the plant that are incapable of germination, or the weight of any other ingredient combined with marijuana to prepare topical or oral administrations, food, drink or other products.

21.  "Marijuana concentrate":

(a)  Means resin extracted from any part of a plant of the genus cannabis and every compound, manufacture, salt, derivative, mixture or preparation of that resin or tetrahydrocannabinol.

(b)  Does not include industrial hemp or the weight of any other ingredient combined with cannabis to prepare topical or oral administrations, food, drink or other products.

22.  "Marijuana establishment" means an entity licensed by the department to operate all of the following:

(a)  A single retail location at which the licensee may sell marijuana and marijuana products to consumers, cultivate marijuana and manufacture marijuana products.

(b)  A single off-site cultivation location at which the licensee may cultivate marijuana, process marijuana and manufacture marijuana products, but from which marijuana and marijuana products may not be transferred or sold to consumers.

(c)  A single off-site location at which the licensee may manufacture marijuana products and package and store marijuana and marijuana products, but from which marijuana and marijuana products may not be transferred or sold to consumers.

23.  "Marijuana facility agent" means a principal officer, board member or employee of a marijuana establishment or marijuana testing facility who is at least twenty-one years of age and has not been convicted of an excluded felony offense.

24.  "Marijuana products" means marijuana concentrate and products that are composed of marijuana and other ingredients and that are intended for use or consumption, including edible products, ointments and tinctures.

25.  "Marijuana testing facility" means the department or another entity that is licensed by the department to analyze the potency of marijuana and test marijuana for harmful contaminants.

26.  "nonprofit medical marijuana dispensary" has the same meaning prescribed in section 36-2801.

27.  "nonprofit medical marijuana dispensary agent" has the same meaning prescribed in section 36-2801.

28.  "Open space" means a public park, public sidewalk, public walkway or public pedestrian thoroughfare.

29.  "Places of employment" has the same meaning prescribed in section 36-601.01.

30.  "Process" and "processing" mean to harvest, dry, cure, trim or separate parts of the marijuana plant.

31.  "Public place" has the same meaning prescribed in section 36‑601.01.

32.  "qualifying patient" has the same meaning prescribed in section 36-2801.

33.  "Smoke" means to inhale, exhale, burn, carry or possess any lighted marijuana or lighted marijuana products, whether natural or synthetic. END_STATUTE

START_STATUTE36-2852.  Applicability of chapter

This chapter does not do any of the following:

1.  Restrict the rights of employers to maintain a drug‑and‑alcohol-free workplace or affect the ability of employers to have workplace policies restricting the use of marijuana by employees or prospective employees.

2.  Require an employer to allow or accommodate the use, consumption, possession, transfer, display, transportation, sale or cultivation of marijuana in a place of employment.

3.  Allow driving, flying or boating while impaired to even the slightest degree by marijuana and have more than five nanograms per milliliter of tetrahydrocannabinol in the person's blood or prevent this state from enacting and imposing penalties for driving, flying or boating while impaired to even the slightest degree by marijuana and have more than five nanograms per milliliter of tetrahydrocannabinol in the person's blood.

4.  Allow an individual who is under twenty-one years of age to purchase, possess, transport or consume marijuana or marijuana products.

5.  Allow the sale, transfer or provision of marijuana or marijuana products to an individual who is under twenty-one years of age.

6.  Restrict the rights of employers, schools, day care centers, adult day care, health care facilities or corrections facilities to prohibit or regulate conduct otherwise allowed by this chapter when such conduct occurs on or in their properties.

7.  Restrict the ability of an individual, partnership, limited liability company, private corporation, private entity or private organization of any character that occupies, owns or controls property to prohibit or regulate conduct otherwise allowed by this chapter on or in such property.

8.  Allow any person to:

(a)  Smoke marijuana in a public place or open space.

(b)  Consume marijuana or marijuana products while driving, operating or riding in the passenger seat or compartment of an operating motor vehicle, boat, vessel or aircraft or another vehicle used for transportation.

9.  Prohibit this state or a political subdivision of this state from prohibiting or regulating conduct otherwise allowed by this chapter when such conduct occurs on or in property that is occupied, owned, controlled or operated by this state or a political subdivision of this state.

10.  Authorize a person to process or manufacture marijuana by means of any liquid or gas, other than alcohol, that has a flashpoint below one hundred degrees fahrenheit, unless performed by a marijuana establishment.

11.  Require a person to violate federal law or to implement or fail to implement a restriction on the possession, consumption, display, transfer, processing, manufacturing or cultivation of marijuana if by so doing the person will lose a monetary or licensing‑related benefit under federal law.

12.  Supersede or eliminate any existing rights or privileges of any person except as specifically set forth in this chapter.

13.  Limit any privilege or right of a nonprofit medical marijuana dispensary under chapter 28.1 of this title except as expressly set forth in this chapter.

14.  Limit any privilege or right of a qualifying patient or designated caregiver under chapter 28.1 of this title. END_STATUTE

START_STATUTE36-2853.  Allowable possession and personal use of marijuana; marijuana products and marijuana paraphernalia

A.  Except as specifically and expressly provided in sections 36‑2852 and 36-2854 and notwithstanding any other law, the following acts by an individual who is at least twenty‑one years of age are lawful, are not an offense under the laws of this state or any locality, may not constitute the basis for detention, search or arrest, and cannot serve as the sole basis for seizure or forfeiture of assets, for imposing penalties of any kind under the laws of this state or any locality or for abrogating or limiting any right or privilege conferred or protected by the laws of this state or any locality:

1.  Possessing, consuming, purchasing, processing, manufacturing by manual or mechanical means, including sieving or ice water separation but excluding chemical extraction or chemical synthesis, or transporting one ounce or less of marijuana, except that not more than five grams of marijuana may be in the form of marijuana concentrate.

2.  Possessing, transporting, cultivating or processing not more than six marijuana plants for personal use at the individual's primary residence, and possessing, processing and manufacturing by manual or mechanical means, including sieving or ice water separation but excluding chemical extraction or chemical synthesis, the marijuana produced by the plants on the premises where the marijuana plants were grown if all of the following apply:

(a)  Not more than twelve plants are produced at a single residence where two or more individuals who are at least twenty-one years of age reside at one time.

(b)  Cultivation takes place within a closet, room, greenhouse or other enclosed area on the grounds of the residence equipped with a lock or other security device that prevents access by minors.

(c)  Cultivation takes place in an area where the marijuana plants are not visible from public view without using binoculars, aircraft or other optical aids.

3.  Transferring one ounce or less of marijuana, of which not more than five grams may be in the form of marijuana concentrate, to an individual who is at least twenty-one years of age if the transfer is without remuneration and is not advertised or promoted to the public.

4.  Transferring up to six marijuana plants to an individual who is at least twenty‑one years of age if the transfer is without remuneration and is not advertised or promoted to the public.

5.  Acquiring, possessing, manufacturing, using, purchasing, selling or transporting paraphernalia relating to the cultivation, manufacture, processing or consumption of marijuana or marijuana products.

6.  Assisting another individual who is at least twenty-one years of age in any of the acts described in this subsection.

B.  Notwithstanding any other law, a person with more than five nanograms per milliliter of tetrahydrocannabinol in the person's blood is guilty of violating section 28-1381, subsection A, paragraph 3 only if the person is also impaired to the slightest degree.

C.  Notwithstanding any other law, the odor of marijuana or burnt marijuana does not by itself constitute reasonable articulable suspicion of a crime.  This subsection does not apply when a law enforcement officer is investigating whether a person has violated section 28‑1381.END_STATUTE

START_STATUTE36-2854.  Violations; classification; civil penalty; enforcement

A.  Notwithstanding any other law and except as otherwise provided in this chapter, a person who possesses an amount of marijuana greater than the amount allowed pursuant to section 36-2853, but not more than two and one‑half ounces of marijuana, of which not more than twelve and one‑half grams is in the form of marijuana concentrate, is guilty of a petty offense.

B.  Notwithstanding any other law, a person who is under twenty-one years of age and who possesses, consumes, transports or transfers without remuneration one ounce or less of marijuana, of which not more than five grams is in the form of marijuana concentrate, or paraphernalia relating to the consumption of marijuana or marijuana products:

1.  For a first violation, shall pay a civil penalty of not more than $100 to the adult use marijuana fund established by section 36‑2857 and in the court's discretion may be ordered to attend up to four hours of drug education or counseling.

2.  For a second violation, is guilty of a petty offense and in the court's discretion may be ordered to attend up to eight hours of drug education or counseling.

3.  For a third or subsequent violation, is guilty of a class 1 misdemeanor.

C.  A person who smokes marijuana in a public place or open space is guilty of a petty offense.

D.  Except as otherwise provided in chapter 28.1 of this title and notwithstanding any other law, any unlicensed person who cultivates marijuana plants pursuant to section 36-2853 where they are visible from public view without using binoculars, aircraft or other optical aids or outside of an enclosed area that is equipped with a lock or other security device that prevents access by minors is guilty of:

1.  For a first violation, a petty offense.

2.  For a second or subsequent violation, a class 3 misdemeanor.

E.  A person who is under twenty‑one years of age and who misrepresents the person's age to any other person by means of a written instrument of identification or who uses a fraudulent or false written instrument of identification with the intent to induce a person to sell or otherwise transfer marijuana or a marijuana product to the person who is under twenty-one years of age is guilty of:

1.  For a first violation, a petty offense.

2.  For a second or subsequent violation, a class 1 misdemeanor.

F.  A person who is under twenty-one years of age and who solicits another person to purchase marijuana or a marijuana product in violation of this chapter is guilty of:

1.  For a first violation, a petty offense.

2.  For a second or subsequent violation, a class 3 misdemeanor. END_STATUTE

START_STATUTE36-2855.  Rules; licensing; early applicants; fees; civil penalty; legal counsel

A.  The department shall adopt rules to implement and enforce this chapter and regulate marijuana, marijuana products, marijuana establishments and marijuana testing facilities.  those rules shall include requirements for:

1.  Licensing marijuana establishments and marijuana testing facilities, including conducting investigations and background checks to determine eligibility for licensing applicants for marijuana establishment and marijuana testing facilities, except that:

(a)  An application for a marijuana establishment license or marijuana testing facility license may not require the disclosure of the identity of any person who is entitled to a share of less than ten percent of the profits of an applicant that is a publicly traded corporation.

(b)  The department may not issue more than two hundred fifty marijuana establishment licenses.  The department shall allocate the licenses throughout this state by population.

(c)  Notwithstanding subdivision (b) of this paragraph, the department may issue a marijuana establishment license to not more than two marijuana establishments per county that does not contain registered nonprofit medical marijuana dispensaries, or one marijuana establishment license per county that contains one registered nonprofit medical marijuana dispensary.  Any license issued pursuant to this subdivision shall be for a fixed county and may not be relocated outside of that county.

(d)  The department shall accept applications for marijuana establishment licenses beginning July 1, 2021.  Each application shall include a narrative that establishes a goal of diversity in ownership, management, employment and contracting to ensure that diverse participants and groups are afforded an equal opportunity.

(e)  the department shall issue marijuana establishment licenses under this paragraph by random selection and according to rules adopted pursuant to this section.  At least sixty days before any random selection, the department shall prominently publicize the random selection on its website and through other means of general distribution intended to reach as many interested parties as possible and shall provide notice through an email notification system to which interested parties can subscribe.

(f)  Notwithstanding any other provision of this paragraph, and not later than six months after the department adopts final rules to implement the social equity ownership program pursuant to paragraph 9 of this subsection, the department shall issue twenty‑six additional marijuana establishment licenses to entities that are qualified pursuant to the social equity ownership program.

(g)  Licenses issued by the department to marijuana establishments and marijuana testing facilities shall be valid for a period of two years.

(h)  A license issued by the department for a marijuana establishment reverts back to the department if the marijuana establishment is not open for business within one year after the license is issued.

2.  Licensing fees and renewal fees for marijuana establishments and marijuana testing facilities in amounts that are reasonable and related to the actual cost of processing applications for licenses and renewals and that do not exceed five times the fees prescribed by the department to register or renew a nonprofit medical marijuana dispensary.

3.  The security of marijuana establishments and marijuana testing facilities.

4.  Marijuana establishments to safely cultivate, process and manufacture marijuana and marijuana products.

5.  Tracking, testing, labeling and packaging marijuana and marijuana products, including requirements that marijuana and marijuana products be:

(a)  Sold to consumers in clearly and conspicuously labeled containers that contain accurate warnings regarding the use of marijuana or marijuana products.

(b)  Placed in child-resistant packaging on exit from a marijuana establishment.

6.  Forms of government-issued identification that are acceptable by a marijuana establishment to verify a consumer's age and procedures related to verifying a consumer's age consistent with section 4‑241.  Until the department adopts final rules related to verifying a consumer's age, marijuana establishments shall comply with the proof of legal age requirements prescribed in section 4-241.

7.  The potency of edible marijuana products that may be sold to consumers by marijuana establishments at reasonable levels on consideration of industry standards, except that the rules:

(a)  Shall limit the strength of edible marijuana products to not more than ten milligrams of tetrahydrocannabinol per serving or one hundred milligrams of tetrahydrocannabinol per package.

(b)  Shall require that if a marijuana product contains more than one serving, it must be delineated or scored into standard serving sizes and homogenized to ensure uniform disbursement throughout the marijuana product.

8.  Ensuring the health, safety and training of employees of marijuana establishments and marijuana testing facilities.

9.  Establishing and implementing a social equity ownership program to promote the ownership and operation of marijuana establishments and marijuana testing facilities by individuals from disproportionately impacted areas. 

B.  The department may:

1.  Subject to title 41, chapter 6, article 10, deny any application submitted or deny, suspend or revoke, in whole or in part, any registration or license issued under this chapter if the registered or licensed party or an officer, agent or employee of the registered or licensed party does any of the following:

(a)  Violates this chapter or any rule adopted pursuant to this chapter.

(b)  Has been, is or may continue to be in substantial violation of the requirements for licensing or registration and, as a result, the health or safety of the general public is in immediate danger.

2.  Subject to title 41, chapter 6, article 10, and unless another penalty is provided elsewhere in this chapter, assess a civil penalty against a person that violates this chapter or any rule adopted pursuant to this chapter in an amount not to exceed $1,000 for each violation.  Each day a violation occurs constitutes a separate violation.  The maximum amount of any assessment is $25,000 for any thirty-day period.  In determining the amount of a civil penalty assessed against a person, the department shall consider all of the factors set forth in section 36-2816, subsection H.  All civil penalties collected by the department pursuant to this paragraph shall be deposited in the adult use marijuana fund established by section 36-2857.

3.  At any time during regular hours of operation, visit and inspect a marijuana establishment, marijuana testing facility or dual licensee to determine if it complies with this chapter and rules adopted pursuant to this chapter.  The department shall make at least one unannounced visit annually to each facility licensed pursuant to this chapter.  The department shall post the inspection reports on its public website.

4.  Adopt any other rules not expressly stated in this section that are necessary to ensure the safe and responsible cultivation, sale, processing, manufacture, testing and transport of marijuana and marijuana products.

C.  Until the department adopts rules permitting and regulating delivery by marijuana establishments pursuant to subsection d of this section, delivery is unlawful under this chapter.

D.  On or after January 1, 2021, the department may, and not later than January 1, 2022 the department shall, adopt rules to permit and regulate delivery by marijuana establishments.  the rules shall:

1.  Require that delivery and the marijuana and marijuana products to be delivered originate from a designated retail location of a marijuana establishment and only after an order is made with the marijuana establishment by a consumer.

2.  Prohibit delivery to any property owned or leased by the united states, this state, a political subdivision of this state or the Arizona board of regents.

3.  Limit the amount of marijuana and marijuana products based on retail price that may be in a delivery vehicle during a single trip from the designated retail location of a marijuana establishment.

4.  Prohibit extra or unallocated marijuana or marijuana products in delivery vehicles.

5.  Require that deliveries be made only by marijuana facility agents in unmarked vehicles that are equipped with a global positioning system or similar location tracking system and video surveillance and recording equipment and that contain a locked compartment in which marijuana and marijuana products must be stored.

6.  Require delivery logs necessary to ensure compliance with this subsection and rules adopted pursuant to this subsection.

7.  Require inspections to ensure compliance with this subsection and rules adopted pursuant to this subsection.

8.  Include any other provisions necessary to ensure safe and restricted delivery.

9.  Require dual licensees to comply with the rules adopted pursuant to this subsection.

E.  Except as provided in subsection D of this section, the department may not permit delivery of marijuana or marijuana products under this chapter by any individual or entity. in addition to any other penalty imposed by law, an individual or entity that delivers marijuana or marijuana products in a manner that is not authorized by this chapter shall pay a civil penalty of $20,000 per violation to the adult use marijuana fund established by section 36-2857.  This subsection may be enforced by the attorney general.

F.  All rules adopted by the department pursuant to this section shall be consistent with the purpose of this chapter.

G.  The department may not adopt any rule that:

1.  Prohibits the operation of marijuana establishments, either expressly or through requirements that make the operation of a marijuana establishment unduly burdensome.

2.  Prohibits or interferes with the ability of a dual licensee to operate a marijuana establishment and a nonprofit medical marijuana dispensary at shared locations.

H.  Notwithstanding section 41-192, the department may employ legal counsel and make an expenditure or incur an indebtedness for legal services for the purposes of:

1.  Defending this chapter or rules adopted pursuant to this chapter.

2.  Defending chapter 28.1 of this title or rules adopted pursuant to chapter 28.1 of this title.

I.  The department shall deposit all license fees, application fees and renewal fees paid to the department pursuant to this chapter in the Adult use marijuana fund established by section 36-2857.

J.  On request, the department of health services shall share with the department of revenue information regarding a marijuana establishment, marijuana testing facility or dual licensee, including its name, physical address, cultivation site and transaction privilege tax license number.

K.  Notwithstanding any other law, the department may:

1.  License an independent third-party laboratory to also operate as a marijuana testing facility.

2.  Operate a marijuana testing facility.

L.  The department shall maintain and publish a current list of all marijuana establishments and marijuana testing facilities by name and license number.

M.  Notwithstanding any other law, the issuance of an occupational, professional or other regulatory license or certification to a person by a jurisdiction or regulatory authority outside this state does not entitle that person to be issued a marijuana establishment license, a marijuana testing facility license or any other license, registration or certification under this chapter. END_STATUTE

START_STATUTE36-2856.  Marijuana facility agents; registration; card; rules

A.  A marijuana facility agent shall be registered with the department before working at a marijuana establishment or marijuana testing facility.

B.  A person who wishes to be registered as a marijuana facility agent or renew the person's registration as a marijuana facility agent shall:

1.  Submit a completed application on a form prescribed by the department and pay a nonrefundable fee that is reasonable and related to the actual cost of processing applications submitted pursuant to this section.

2.  Submit evidence that the applicant holds a current level I fingerprint clearance card issued pursuant to section 41-1758.07, or submit a full set of the applicant's fingerprints for the purpose of obtaining a state and federal criminal records check pursuant to section 41‑1750 and Public Law 92‑544.  The department of public safety may exchange this fingerprint data with the federal bureau of investigation without disclosing that the records check is related to this chapter and acts allowed by this chapter.  The department of public safety shall destroy each set of fingerprints after the criminal records check is completed.

C.  If the department determines that an applicant meets the criteria for registration under this chapter and rules adopted pursuant to this chapter, the department shall issue the applicant a marijuana facility agent card that is valid for two years.

D.  A registered marijuana facility agent may be employed by or associated with any marijuana establishment or marijuana testing facility. a marijuana establishment or marijuana testing facility shall promptly notify the department when it employs or becomes associated with a new marijuana facility agent.  a marijuana facility agent shall promptly notify the department when the marijuana facility agent is employed by or becomes associated with a marijuana establishment or marijuana testing facility and when the marijuana facility agent is no longer employed by or associated with a marijuana establishment or marijuana testing facility.

E.  A nonprofit medical marijuana dispensary agent of a dual licensee who has applied to be registered as a marijuana facility agent may serve as a marijuana facility agent of that dual licensee until the department has approved or rejected the agent's application.

F.  The department shall adopt rules to implement this section. END_STATUTE

START_STATUTE36-2857.  Adult use marijuana fund; disposition; exemption

A.  The adult use marijuana fund is established consisting of all monies deposited pursuant to sections 36-2855, 42-5452 and 42-5453, private donations and interest earned on those monies. monies in the fund are continuously appropriated.  Monies in the fund and its accounts may not be transferred to any other fund except as provided in this section, do not revert to the state general fund and are exempt from the provisions of section 35-190 relating to lapsing of appropriations.  The state treasurer shall administer the fund.

B.  All monies in the adult use marijuana fund must first be spent, and the state treasurer shall transfer monies from the fund, to pay:

1.  The actual reasonable costs incurred by the department of health services to implement, carry out and enforce this chapter and rules adopted pursuant to this chapter.

2.  The actual reasonable costs incurred by the department of revenue to impose and enforce the tax authorized and levied by section 42‑5452.

3.  The actual reasonable costs to implement section 36-2863.

4.  The actual reasonable costs incurred by the state treasurer to administer the fund.

5.  Any other mandatory expenditure of state revenues required by this chapter to implement or enforce the provisions of this chapter.

C.  The state treasurer may prescribe forms necessary to make transfers from the adult use marijuana fund pursuant to subsection B of this section.

D.  On or before June 30 and December 31 of each year, the state treasurer shall transfer all monies in the adult use marijuana fund in excess of the amounts paid pursuant to subsection B of this section as follows:

1.  Ten percent to the justice reinvestment fund established by section 36‑2864 for social equity programs and justice reinvestment programs.

2.  Thirty percent to early childhood development and health programs administered pursuant to title 8, chapter 13.

3.  Eight percent to nonprofits serving disproportionately impacted areas.

4.  Eight percent to child care programs serving children whose parents are incarcerated.

5.  Eight percent to behavioral health programs that provide drug rehabilitation, employment opportunities and housing.

6.  Six percent to community colleges and provisional community college districts.

7.  thirty percent to secondary education.

E.  The monies transferred and received pursuant to this section:

1.  Are in addition to any other appropriation, transfer or other allocation of monies and may not supplant, replace or cause a reduction in other funding sources.

2.  Are not considered local revenues for the purposes of article IX, sections 20 and 21, Constitution of Arizona. END_STATUTE

START_STATUTE36-2858.  Localities; marijuana establishments and marijuana testing facilities

A.  A locality may:

1.  Enact reasonable zoning regulations that limit the use of land for marijuana establishments and marijuana testing facilities to specified areas.

2.  Limit the number of marijuana establishments or marijuana testing facilities, or both.

3.  Prohibit marijuana establishments or marijuana testing facilities, or both.

4.  Regulate the time, place and manner of marijuana establishment and marijuana testing facility operations.

5.  Establish reasonable restrictions on public signage regarding marijuana, marijuana establishments and marijuana testing facilities.

6.  Prohibit or restrict delivery within its jurisdiction.

B.  A county may exercise its authority pursuant to subsection A of this section only in unincorporated areas of the county.

C.  A locality may not enact any ordinance, regulation or rule that:

1.  Is more restrictive than a comparable ordinance, regulation or rule that applies to nonprofit medical marijuana dispensaries.

2.  Makes the operation of a marijuana establishment or marijuana testing facility unduly burdensome if the locality has not prohibited marijuana establishments or marijuana testing facilities.

3.  Conflicts with this chapter or rules adopted pursuant to this chapter.

4.  Prohibits the transportation of marijuana by a marijuana establishment or marijuana testing facility on public roads.

5.  Restricts or interferes with the ability of a dual licensee or an entity eligible to become a dual licensee to operate a nonprofit medical marijuana dispensary and a marijuana establishment cooperatively at shared locations.

6.  Except as expressly authorized by this section or section 36‑2852, prohibits or restricts any conduct or transaction allowed by this chapter, or imposes any liability or penalty in addition to that prescribed by this chapter for any conduct or transaction constituting a violation of this chapter. END_STATUTE

START_STATUTE36-2859.  Lawful operation of marijuana establishments and marijuana testing facilities

A.  Except as specifically and expressly provided in section 36-2858 and notwithstanding any other law, it is lawful and is not an offense under the laws of this state or any locality, may not constitute the basis for detention, search or arrest, and may not constitute the sole basis for seizure or forfeiture of assets or the basis for imposing penalties under the laws of this state or any locality for:

1.  A marijuana establishment, or an agent acting on behalf of a marijuana establishment, to:

(a)  Possess marijuana or marijuana products.

(b)  Purchase, sell or transport marijuana and marijuana products to or from a marijuana establishment.

(c)  Sell marijuana and marijuana products to consumers, except that a marijuana establishment may not sell more than one ounce of marijuana to a consumer in a single transaction, not more than five grams of which may be in the form of marijuana concentrate.

(d)  Cultivate, produce, test or process marijuana or manufacture marijuana or marijuana products by any means, including chemical extraction or chemical synthesis.

2.  An agent acting on behalf of a marijuana establishment to sell or otherwise transfer marijuana to an individual under twenty-one years of age, if the agent reasonably verified that the individual appeared to be twenty‑one years of age or older by means of a government-issued photographic identification in compliance with rules adopted pursuant to section 36-2855, subsection A, paragraph 6.

3.  A marijuana testing facility, or an agent acting on behalf of a marijuana testing facility, to obtain, possess, process, repackage, transfer, transport or test marijuana and marijuana products.

4.  A nonprofit medical marijuana dispensary or a marijuana establishment, or an agent acting on behalf of a nonprofit medical marijuana dispensary or a marijuana establishment, to sell or otherwise transfer marijuana or marijuana products to a nonprofit medical marijuana dispensary, a marijuana establishment or an agent acting on behalf of a nonprofit medical marijuana dispensary or a marijuana establishment.

5.  Any individual, corporation or other entity to sell, lease or otherwise allow property or goods that are owned, managed or controlled by the individual, corporation or other entity to be used for any activity authorized by this chapter, or to provide services to a marijuana establishment, marijuana testing facility or agent acting on behalf of a marijuana establishment or marijuana testing facility in connection with any activity authorized by this chapter.

B.  This section does not preclude the department from imposing penalties against a marijuana establishment or marijuana testing facility for failing to comply with this chapter or rules adopted pursuant to this chapter.

C.  A marijuana establishment may be owned or operated by a publicly traded company.

D.  Notwithstanding any other law, a dual licensee:

1.  May hold a marijuana establishment license and operate a marijuana establishment pursuant to this chapter.

2.  May operate on a for‑profit basis if the dual licensee promptly notifies the department of health services and department of revenue and takes any actions necessary to enable its for‑profit operation, including converting its corporate form and amending its organizational and operating documents.

3.  Must continue to hold both its marijuana establishment license and nonprofit medical marijuana dispensary registration, regardless of any change in ownership of the dual licensee, unless it terminates its status as a dual licensee and forfeits either its marijuana establishment license or nonprofit medical marijuana dispensary registration by notifying the department of such a termination and forfeiture.

4.  Shall submit its annual financial statements or an audit report to the department for the purposes of renewing its nonprofit medical marijuana dispensary registration.

5.  May not be required to:

(a)  Employ or contract with a medical director.

(b)  Obtain nonprofit medical marijuana dispensary agent or marijuana facility agent registrations for outside vendors that do not have regular, unsupervised access to the interior of the dual licensee.

(c)  Have a single secure entrance as required by section 36-2806, subsection C, but may be required to implement appropriate security measures to deter and prevent the theft of marijuana and to reasonably regulate customer access to the premises.

(d)  Comply with any other provision of chapter 28.1 of this title or any rule adopted pursuant to chapter 28.1 of this title that makes its operation as a dual licensee unduly burdensome.

E.  Notwithstanding any other law, a dual licensee that elects to operate on a for-profit basis pursuant to subsection D, paragraph 2 of this section is subject to the taxes imposed pursuant to title 43.

F.  Notwithstanding any other law, a dual licensee must conduct both of the following operations at a shared location:

1.  Sell marijuana and marijuana products to consumers pursuant to this chapter.

2.  Dispense marijuana to registered qualifying patients and registered designated caregivers pursuant to chapter 28.1 of this title.

G.  Notwithstanding chapter 28.1 of this title or any rule adopted pursuant to chapter 28.1 of this title, a dual licensee may engage in any act, practice, conduct or transaction allowed for a marijuana establishment by this chapter.

H.  Notwithstanding any other law:

1.  An individual may be an applicant, principal officer or board member of more than one marijuana establishment or more than one dual licensee regardless of the establishment's location.

2.  Two or more marijuana establishments or dual licensees may designate a single off-site location as prescribed in section 36-2851, paragraph 22, subdivision (c) to be jointly used by those dual licensees or marijuana establishments.

I.  Marijuana establishments, marijuana testing facilities and dual licensees that are subject to applicable federal or state antidiscrimination laws may not pay their employees differently based solely on a protected class status such as sex, race, color, religion, national origin, age or disability.  this subsection does not expand or modify the jurisdictional reach, provisions or requirements of any applicable anti-discrimination law. END_STATUTE

START_STATUTE36-2860.  Advertising restrictions; enforcement; civil penalty

A.  A marijuana establishment or nonprofit medical marijuana dispensary may engage in advertising.

B.  An advertising platform may host advertising only if both of the following apply:

1.  The advertising is authorized by a marijuana establishment or nonprofit medical marijuana dispensary.

2.  The advertising accurately and legibly identifies the marijuana establishment or nonprofit medical marijuana dispensary responsible for the content of the advertising by name and license number or registration number.

C.  Any advertising under this chapter involving direct, individualized communication or dialogue shall use a method of age affirmation to verify that the recipient is twenty-one years of age or older before engaging in that communication or dialogue.  For the purposes of this subsection, that method of age affirmation may include user confirmation, birth date disclosure or other similar registration methods.

D.  It is unlawful for an individual or entity other than a marijuana establishment or dual licensee to do any of the following in a manner that is not authorized by this chapter or rules adopted by the department pursuant to this chapter:

1.  Facilitate the delivery of marijuana or marijuana products.

2.  Solicit or accept orders for marijuana or marijuana products or operate a platform that solicits or accepts orders for marijuana or marijuana products.

3.  Operate a listing service related to the sale or delivery of marijuana or marijuana products.

E.  A marijuana establishment that violates this section is subject to disciplinary action by the department pursuant to section 36-2855, subsection B.  A nonprofit medical marijuana dispensary that violates this section is subject to disciplinary action by the department pursuant to section 36-2816.

F.  In addition to any other penalty imposed by law, an individual or entity other than a marijuana establishment or nonprofit medical marijuana dispensary that advertises marijuana or marijuana products in violation of this section or otherwise violates this section shall pay a civil penalty of $20,000 per violation to the adult use marijuana fund established by section 36‑2857.  This subsection may be enforced by the attorney general. END_STATUTE

START_STATUTE36-2861.  Packaging; restrictions on particular marijuana products

A.  A marijuana establishment may not:

1.  Package or label marijuana or marijuana products in a false or misleading manner.

2.  Manufacture or sell marijuana products that resemble the form of a human, animal, insect, fruit, toy or cartoon.

3.  Sell or advertise marijuana or marijuana products with names that resemble or imitate food or drink brands marketed to children, or otherwise advertise marijuana or marijuana products to children.

B.  A marijuana establishment that violates this section is subject to disciplinary action by the department pursuant to section 36-2855, subsection B. END_STATUTE

START_STATUTE36-2862.  Contracts; professional services

A.  It is the public policy of this state that contracts related to marijuana establishments and marijuana testing facilities are enforceable.

B.  A person that is licensed, certified or registered by any department, agency or regulatory board of this state is not subject to disciplinary action by that entity for providing professional assistance to a prospective or registered marijuana establishment, marijuana testing facility or other person for any lawful activity under this chapter.END_STATUTE

START_STATUTE36-2863.  Automatic expungement and sealing of records; marijuana possession; petition; expungement order; requirements; definition

A.  The court shall expunge the record of a person's arrest, conviction and sentence for possessing marijuana in violation of section 13‑3405, subsection A, paragraph 1.  A person whose record is expunged shall be treated in all respects as if the person was never arrested, convicted or sentenced.

B.  Within one year after the effective date of this section, all law enforcement agencies in this state and the clerk of the court in each county shall identify and seal all records in the entity's possession or control that are related to a person's arrest, conviction and sentence for possessing marijuana in violation of section 13‑3405, subsection A, paragraph 1.

C.  If a person is arrested for, charged with or indicted for a violation of section 13‑3405, subsection A, paragraph 1 and the court or a prosecutor dismisses or vacates the complaint, information or indictment, the person is found not guilty or a criminal charge is not filed against the person in the Superior Court or a municipal court or justice court within fourteen days after the arrest or court disposition, all law enforcement, grand jury, prosecuting agency and court records that pertain to the arrest or charge shall be sealed.  The clerk of the court or the person who is charged with retaining and controlling the records may not disclose to anyone the existence of the records or any information that pertains to any charge that was sealed.  This subsection does not prohibit an arrested, charged or indicted person or the person's heirs from filing a petition with the court or the clerk of the court to seal the records, and, if granted, the records shall be sealed.

D.  The clerk of the court, any person who is charged with retaining and controlling the records or any law enforcement agency that has information contained in the sealed records may not disclose to anyone, except the subject of the record on submission of satisfactory proof of the subject's identity, information that pertains to any charge that is sealed under this section.  The clerk of the court or a person who is charged with retaining and controlling the records shall forward a notice of the sealing to any law enforcement agency that the clerk or person knows received disseminated information concerning the arrest, and the law enforcement agency shall seal the disseminated information.  the clerk of the court or a person who is charged with retaining and controlling the records shall provide adequate security measures to safeguard against unauthorized access to or dissemination of the records or, on the request of the subject of the records, cause the actual physical destruction of the records, except that the clerk of the court or person may not cause the actual physical destruction of the records until three years after the date of the final disposition of the criminal case to which the records pertain.  A person who has a record sealed may state that the person has never been arrested within the meaning of the law with respect to the proceedings that are sealed and may swear so under oath.

E.  Beginning one year AFTER THE effective date of this section, if a person's arrest, conviction or sentence is not expunged and sealed pursuant to subsections A, B, C and D of this section for possessing marijuana pursuant to section 13‑3405, subsection A, paragraph 1, the person may petition the court that pronounced sentence to expunge the person's record of arrest, conviction and sentence or, If the person was Indicted but the charges were dismissed, the person was found not guilty or the conviction was vacated, may petition the court of proper jurisdiction in the city, town or county that filed the charges against the person or where the arrest occurred to expunge the person's arrest record or court record, or both.

F.  The court shall grant a petition for expungement without a hearing.  The court may dismiss a petition that does not meet the requirements prescribed in this section only after a hearing.  The court shall provide a copy of the petition for expungement to the prosecutor and allow the prosecutor to respond to the petition and request a hearing.  

G.  After the court grants a petition for expungement or after an automatic expungement under subsection A of this section:

1.  The court shall issue an order or minute entry to the petitioner that states that the expungement order expunges any record of the petitioner's arrest, conviction and sentence and that the clerk of the court will notify the department of public safety, the prosecutor and the arresting law enforcement agency, if applicable, of the expungement order.

2.  On order of a court, the clerk of the court shall seal all records relating to the expunged arrest, conviction and sentence and allow the records to be accessed only by the person whose record was expunged, the person's attorney or a peace officer for a lawful purpose.

3.  The department of public safety shall seal and separate the expunged record from the department's records and inform all appropriate state and federal law enforcement agencies of the expungement.  The department may not charge the successful petitioner a fee to research and correct the petitioner's criminal history record.

4.  The arresting and prosecuting agencies shall clearly identify in each agency's files and electronic records that the petitioner's arrest or conviction and sentence is expunged.

5.  a person whose conviction is expunged pursuant to this section may state, in all instances, that the person has never been arrested for, charged with or convicted of the crime that is the subject of the conviction, including in response to questions on employment, housing, financial aid or loan applications.

H.  A conviction for an offense that is committed in another jurisdiction and that if committed in this state would not constitute an offense in this state may not be used against the petitioner or prohibit the petitioner from obtaining an expungement.

I.  this section does not affect The right Of the person whose record is expunged to appeal from the conviction or sentence or to rely on it in any subsequent proceeding for the same offense.

J.  This section does not apply to any law enforcement, prosecuting agency or court record that pertains to an information or indictment that contains more than one count while the case is pending or, if the case is disposed of, only when all counts are entitled to expungement pursuant to this section.

K.  For the purposes of this section, "record" includes every photograph of the person and all palm prints and fingerprints taken or made of the person.  Record does not include a court record or transcript of the proceedings that is made or prepared by an official court reporter, assistant court reporter or monitor. END_STATUTE

START_STATUTE36-2864.  Justice reinvestment fund; exemption; distribution; definition

A.  The justice reinvestment fund is established consisting of all monies deposited pursuant to section 36-2857 and interest earned on those monies.  Monies in the fund are continuously appropriated.  Monies in the fund and its accounts may not be transferred to any other fund except as provided in this section, do not revert to the state general fund and are exempt from the provisions of section 35-190 relating to lapsing of appropriations.  The state treasurer shall administer the fund.

B.  All monies in the justice reinvestment fund must first be spent, and the state treasurer shall transfer monies from the fund, to pay:

1.  The reasonable costs incurred by the state treasurer to administer the fund.

2.  The reasonable administrative costs incurred by the department to carry out its duties pursuant to this section.

C.  On or before June 30 and December 31 of each year, the state treasurer shall transfer all monies in the justice reinvestment fund in excess of the amounts paid pursuant to subsection B of this section as follows:

1.  Thirty‑five percent to county public health departments, in proportion to the population of each county according to the most recent United States decennial census, for the purpose of providing justice reinvestment programs or distributing grants to qualified nonprofit organizations to provide justice reinvestment programs in that county.

2.  Thirty-five percent to the department for the purpose of distributing grants to qualified nonprofit organizations that provide justice reinvestment programs in this state.

3.  Thirty percent to the department for the purpose implementing the social equity ownership program established pursuant to section 36‑2855 and providing grants to social equity applicants to assist in developing the applicant's marijuana establishment business.

D.  Grants made pursuant to this section are exempt from title 41, chapter 23, and each grantee shall provide the granting agency with an annual report detailing the use of granted monies.

E.  Monies transferred and received pursuant to subsection C of this section are not considered local revenues for the purposes of article IX, section 20, Constitution of Arizona.

F.  The state treasurer may prescribe forms necessary to make transfers pursuant to subsection b of this section.

G.  For the purposes of this section, "justice reinvestment programs" means initiatives or programs that focus on any of the following:

1.  Public and behavioral health, including evidence-based and evidence‑informed substance use prevention and treatment and substance use early intervention services.

2.  Restorative justice, jail diversion, workforce development, industry‑specific technical assistance or mentoring services for economically disadvantaged persons in communities that are disproportionately impacted by high rates of arrest and incarceration.

3.  Addressing the underlying causes of crime, reducing drug‑related arrests and reducing the prison population in this state.

4.  Creating or developing technology and programs to assist with restoring civil rights and expunging criminal records. END_STATUTE

START_STATUTE36-2865.  Transaction privilege tax; use tax; additional taxes prohibited; exception

A.  For purposes of the transaction privilege tax and use tax levied and collected pursuant to title 42, chapters 5 and 6, marijuana and marijuana products are tangible personal property defined in section 42‑5001 and are subject to the transaction privilege tax in the retail classification and use tax.

B.  Except as provided in subsection A of this section and section 42‑5452, this state and localities may not levy or collect additional taxes of any kind on the sale of marijuana or marijuana products and may not levy or collect any fees or assessments of any kind on the sale of marijuana or marijuana products or on the licensing, operations or activities of marijuana establishments or marijuana testing facilities, unless the fee or assessment is of general applicability to individuals or businesses that are not engaged in the sale of marijuana or marijuana products.

C.  The prohibition imposed by subsection b of this section does not apply to uniform increases to the transaction privilege tax rate for the retail classification or use tax rate by this state or a locality or to uniform increases to fees or assessments allowed by subsection B of this section. END_STATUTE

START_STATUTE36-2866.  Enforcement of this chapter; special action

A.  If the department fails to adopt rules necessary to implement this chapter on or before June 1, 2021, or fails to begin accepting applications as provided in section 36-2855, subsection A, paragraph 1, subdivision (d), any citizen may commence a special action in superior court to compel the department to perform the actions mandated under this chapter.

B.  If the department fails to issue a license or send a notice of denial within sixty days after receiving a complete marijuana establishment application pursuant to section 36‑2855, subsection A, paragraph 1, subdivision (d), the applicant may commence a special action in superior court to compel the department to perform the actions mandated under this chapter.

C.  Notwithstanding chapter 28.1 of this title, if the department fails to issue any marijuana establishment licenses pursuant to section 36-2855, subsection A, paragraph 1, subdivision (d) on or before April 5, 2021, each nonprofit medical marijuana dispensary in good standing may begin to cultivate, produce, process, manufacture, transport and test marijuana and marijuana products and may sell marijuana and marijuana products to consumers until the department issues licenses to operate marijuana establishments.  If this occurs, nonprofit medical marijuana dispensaries in good standing shall:

1.  Be treated as marijuana establishments for all purposes under this chapter, and the establishments' nonprofit medical marijuana dispensary agents shall be treated as marijuana facility agents for all purposes under this chapter.

2.  Comply with the rules adopted by the department to implement chapter 28.1 of this title, except those that are inconsistent with this chapter. END_STATUTE

Sec. 3.  Title 42, chapter 5, Arizona Revised Statutes, is amended by adding article 10, to read:

ARTICLE 10.  MARIJUANA AND MARIJUANA PRODUCTS

START_STATUTE42-5451.  Definitions

In this article, unless the context otherwise requires:

1.  "Consumer" has the same meaning prescribed in section 36‑2851.

2.  "Designated caregiver" has the same meaning prescribed in section 36‑2801.

3.  "dual licensee" has the same meaning prescribed in section 36‑2851.

4.  "Marijuana" has the same meaning prescribed in section 36‑2851.

5.  "marijuana establishment" has the same meaning prescribed in section 36‑2851.

6.  "Marijuana products" has the same meaning prescribed in section 36‑2851.

7.  "Nonprofit medical marijuana dispensary" has the same meaning prescribed in section 36‑2801.

8.  "Qualifying patient" has the same meaning prescribed in section 36‑2801. END_STATUTE

START_STATUTE42-5452.  Levy and rate of tax; effect of federal excise tax

A.  There is levied and the department shall collect an excise tax on all marijuana and marijuana products sold to a consumer by a marijuana establishment at a rate of sixteen percent of the price of the marijuana or marijuana product sold.  This subsection does not apply to marijuana dispensed to a registered qualifying patient or registered designated caregiver pursuant to title 36, chapter 28.1 by a dual licensee or nonprofit medical marijuana dispensary.

B.  If the United States levies and collects an excise tax on marijuana and marijuana products, the aggregate of federal and state excise taxes may not exceed a rate of thirty percent of the price of the marijuana or marijuana product sold, and the tax levied pursuant to subsection A of this section shall be lowered accordingly and automatically on the effective  date of the federal excise tax.

C.  A product subject to the tax imposed by this section may not be bundled with a product or service that is not subject to the tax imposed by this section.

D.  The tax levied and collected pursuant to this section may not be included in computing the tax base, gross proceeds of sales or gross income of a marijuana establishment for the purposes of this chapter and chapter 6 of this title and is not subject to any transaction privilege, sales, use or other similar tax levied by a county, city, town or special taxing district.

E.  Notwithstanding section 42‑3102, the department shall deposit all monies levied and collected pursuant to this section in the adult use marijuana fund established by section 36-2857. END_STATUTE

START_STATUTE42-5453.  Return statement and payment by marijuana establishment; penalty; interest; rules; confidential information

A.  The tax imposed by this article is due and payable, together with a return statement prescribed by the department, for each month on or before the twentieth day of the succeeding month.

B.  A marijuana establishment that fails to pay the tax imposed by this article within ten days after the date the payment is due is subject to and shall pay a penalty determined under section 42-1125, plus interest at the rate determined pursuant to section 42-1123, from the time the tax was due and payable until paid.  The department may waive any penalty or interest if it determines that the marijuana establishment has made a good faith attempt to comply with the requirements of this article.

C.  The monthly return statement prescribed by the department shall include an accounting of the quantity of marijuana that is sold by a marijuana establishment that is subject to the tax imposed by this article during the tax month.

D.  All penalties and interest collected pursuant to this section shall be deposited in the adult use marijuana fund established by section 36‑2857.

E.  The department may adopt rules that are necessary or convenient to enforce this article, except that those rules may not conflict with title 36, chapter 28.2.

F.  The department of revenue may share confidential information as defined in section 42‑2001 with the department of health services for its use in determining whether a marijuana establishment, marijuana testing facility or dual licensee is in compliance with tax obligations under this title or title 43. END_STATUTE

Sec. 4.  Title 43, chapter 1, article 1, Arizona Revised Statutes, is amended by adding section 43-108, to read:

START_STATUTE43-108.  Subtraction from gross income; ordinary and necessary expenses; marijuana establishments and marijuana testing facilities; definitions

A.  Notwithstanding any other law, in computing Arizona adjusted gross income or Arizona taxable income for a taxpayer, all ordinary and necessary expenses paid or incurred during the taxable year in carrying on a trade or business as a marijuana establishment, marijuana testing facility or dual licensee that elects to operate on a for-profit basis pursuant to title 36, chapter 28.2 shall be subtracted from Arizona gross income to the extent not already excluded from Arizona gross income.

B.  For the purposes of this section, "dual licensee", "marijuana establishment" and "marijuana testing facility" have the same meanings prescribed in section 36-2851. END_STATUTE

Sec. 5.  Requirements for enactment; three-fourths vote

Pursuant to article IV, part 1, section 1, Constitution of Arizona, section 36-2817, Arizona Revised Statutes, as amended by this act, is effective only on the affirmative vote of at least three-fourths of the members of each house of the legislature.

Sec. 6.  Requirements for enactment; two-thirds vote

Pursuant to article IX, section 22, Constitution of Arizona, this act is effective only on the affirmative vote of at least two-thirds of the members of each house of the legislature and is effective immediately on the signature of the governor or, if the governor vetoes this act, on the subsequent affirmative vote of at least three-fourths of the members of each house of the legislature.