Be it enacted by the Legislature of the State of Arizona:
Section 1. Section 3-311, Arizona Revised Statutes, is amended to read:
3-311. Definitions
In this article, unless the context otherwise requires:
1. "Agricultural pilot program" means the industrial hemp program that is designed to research the growth, cultivation and marketing of industrial hemp, hemp seeds and hemp products as authorized by this article and rules and orders adopted by the director pursuant to this article.
2. "Crop" means any industrial hemp that is grown under a single industrial hemp license issued by the department.
3. "Grower" means an individual, partnership, company or corporation that propagates industrial hemp under this article and rules and orders adopted by the director pursuant to this article.
4. "Harvester" means an individual, partnership, company or corporation that is licensed by the department to harvest industrial hemp for a licensed grower.
5. "Hemp-derived manufactured impairing cannabinoids":
(a) Means any cannabinoid that is derived from hemp and altered by a chemical reaction that changes the molecular structure of any natural cannabinoid derived from hemp to another cannabinoid with impairing properties that is found naturally in hemp.
(b) Includes all of the following:
(i) Delta-8 tetrahydrocannabinol.
(ii) Delta-10 tetrahydrocannabinol.
(iii) Hexahydrocannabinol.
(iv) Tetrahydrocannabiphoral.
(v) Tetrahydrocannabinol acetate ester.
(c) Does not include any cannabinoid derived from hemp that is produced by decarboxylation from naturally occurring cannabinoid without the use of a chemical catalyst or nonintoxicating cannabinoids derived from hemp, including cannabidiol, cannabinol, cannabigerol, cannabichromene, cannabicyclol, cannabidivarin and cannabivarin.
5. 6. "Hemp products" means all products made from industrial hemp, including cloth, cordage, fiber, fuel, grain, paint, paper, construction materials, plastics and by-products derived from sterile hemp seed or hemp seed oil. Hemp products excludes does not include any product made to be ingested except food made from sterile hemp seed or hemp seed oil.
6. 7. "Hemp seed" means any viable cannabis sativa L. seed that produces an industrial hemp plant that is subject to this article and rules and orders adopted by the director pursuant to this article.
7. 8. "Industrial hemp":
(a) Means the plant cannabis sativa L. and any part of such a plant, whether growing or not, with a delta-9 tetrahydrocannabinol concentration of not more than three-tenths percent on a dry-weight basis.
(b) Does not include hemp-derived manufactured impairing cannabinoids.
8. 9. "Industrial hemp site" means the location in which a grower, harvester, transporter or processor possesses a crop, a harvested crop or hemp seed.
9. 10. "License" means the authorization that is granted by the department to propagate, harvest, transport or process industrial hemp in this state under this article and rules and orders adopted by the director pursuant to this article.
10. 11. "Licensee" means a grower, harvester, transporter or processor with a valid license.
11. 12. "Processor" means an individual, partnership, company or corporation that is licensed by the department to receive industrial hemp for processing into hemp products or hemp seed.
12. 13. "Transporter" means an individual, partnership, company or corporation that is licensed by the department to transport industrial hemp for a licensed grower to a processor.
Sec. 2. Section 13-3408, Arizona Revised Statutes, is amended to read:
13-3408. Possession, use, administration, acquisition, sale, manufacture or transportation of narcotic drugs; classification
A. Except as provided in section 36-2850, paragraph 16 20, subdivision (b), section 36-2852 and section 36-2853, subsection C, a person shall not knowingly:
1. Possess or use a narcotic drug.
2. Possess a narcotic drug for sale.
3. Possess equipment or chemicals, or both, for the purpose of manufacturing a narcotic drug.
4. Manufacture a narcotic drug.
5. Administer a narcotic drug to another person.
6. Obtain or procure the administration of a narcotic drug by fraud, deceit, misrepresentation or subterfuge.
7. Transport for sale, import into this state, offer to transport for sale or import into this state, sell, transfer or offer to sell or transfer a narcotic drug.
B. A person who violates:
1. Subsection A, paragraph 1 of this section is guilty of a class 4 felony.
2. Subsection A, paragraph 2 of this section is guilty of a class 2 felony.
3. Subsection A, paragraph 3 of this section is guilty of a class 3 felony.
4. Subsection A, paragraph 4 of this section is guilty of a class 2 felony.
5. Subsection A, paragraph 5 of this section is guilty of a class 2 felony.
6. Subsection A, paragraph 6 of this section is guilty of a class 3 felony.
7. Subsection A, paragraph 7 of this section is guilty of a class 2 felony.
C. A person who is convicted of a violation of subsection A, paragraph 1, 3 or 6 of this section and who has not previously been convicted of any felony or who has not been sentenced pursuant to section 13-703, section 13-704, subsection A, B, C, D or E, section 13-706, subsection A, section 13-708, subsection D or any other provision of law making the convicted person ineligible for probation is eligible for probation.
D. If the aggregate amount of narcotic drugs involved in one offense or all of the offenses that are consolidated for trial equals or exceeds the statutory threshold amount, a person who is convicted of a violation of subsection A, paragraph 2, 5 or 7 of this section is not eligible for suspension of sentence, probation, pardon or release from confinement on any basis until the person has served the sentence imposed by the court, the person is eligible for release pursuant to section 41-1604.07 or the sentence is commuted.
E. A person who is convicted of a violation of subsection A, paragraph 4 of this section is not eligible for suspension of sentence, probation, pardon or release from confinement on any basis until the person has served the sentence imposed by the court, the person is eligible for release pursuant to section 41-1604.07 or the sentence is commuted.
F. In addition to any other penalty prescribed by this title, the court shall order a person who is convicted of a violation of this section to pay a fine of not less than $2,000 or three times the value as determined by the court of the narcotic drugs involved in or giving rise to the charge, whichever is greater, and not more than the maximum authorized by chapter 8 of this title. A judge shall not suspend any part or all of the imposition of any fine required by this subsection.
G. A person who is convicted of a violation of this section for which probation or release before the expiration of the sentence imposed by the court is authorized is prohibited from using any marijuana, dangerous drug, narcotic drug or prescription-only drug except as lawfully administered by a health care practitioner and as a condition of any probation or release shall be required to submit to drug testing administered under the supervision of the probation department of the county or the state department of corrections, as appropriate, during the duration of the term of probation or before the expiration of the sentence imposed.
H. If a person who is convicted of a violation of this section is granted probation, the court shall order that as a condition of probation the person perform not less than three hundred sixty hours of community restitution with an agency or organization that provides counseling, rehabilitation or treatment for alcohol or drug abuse, an agency or organization that provides medical treatment to persons who abuse controlled substances, an agency or organization that serves persons who are victims of crime or any other appropriate agency or organization.
Sec. 3. Subject to the requirements of article IV, part 1, section 1, Constitution of Arizona, section 36-2801, Arizona Revised Statutes, is amended to read:
36-2801. Definitions
In this chapter, unless the context otherwise requires:
1. "Allowable amount of marijuana":
(a) With respect to a qualifying patient, means:
(i) Two and one-half ounces of usable marijuana.
(ii) If the qualifying patient's registry identification card states that the qualifying patient is authorized to cultivate marijuana, twelve marijuana plants contained in an enclosed, locked facility, except that the plants are not required to be in an enclosed, locked facility if the plants are being transported because the qualifying patient is moving.
(b) With respect to a designated caregiver, for each patient assisted by the designated caregiver under this chapter, means:
(i) Two and one-half ounces of usable marijuana.
(ii) If the designated caregiver's registry identification card provides that the designated caregiver is authorized to cultivate marijuana, twelve marijuana plants contained in an enclosed, locked facility, except that the plants are not required to be in an enclosed, locked facility if the plants are being transported because the designated caregiver is moving.
(c) Does not include marijuana that is incidental to medical use, but is not usable marijuana.
2. "Cardholder" means a qualifying patient, a designated caregiver, a nonprofit medical marijuana dispensary agent or a independent third-party laboratory agent who has been issued and possesses a valid registry identification card.
3. "Debilitating medical condition" means one or more of the following:
(a) Cancer, glaucoma, positive status for human immunodeficiency virus, acquired immune deficiency syndrome, hepatitis C, amyotrophic lateral sclerosis, Crohn's disease or agitation of Alzheimer's disease or the treatment of these conditions.
(b) A chronic or debilitating disease or medical condition or its treatment that produces one or more of the following:
(i) Cachexia or wasting syndrome.
(ii) Severe and chronic pain.
(iii) Severe nausea.
(iv) Seizures, including those characteristic of epilepsy.
(v) Severe and persistent muscle spasms, including those characteristic of multiple sclerosis.
(c) Any other medical condition or its treatment added by the department pursuant to section 36-2801.01.
4. "Department" means the department of health services or its successor agency.
5. "Designated caregiver" means a person who:
(a) Is at least twenty-one years of age.
(b) Has agreed to assist with a patient's medical use of marijuana.
(c) Has not been convicted of an excluded felony offense.
(d) Assists not more than five qualifying patients with the medical use of marijuana.
(e) May receive reimbursement for actual costs incurred in assisting a registered qualifying patient's medical use of marijuana if the registered designated caregiver is connected to the registered qualifying patient through the department's registration process. The designated caregiver may not be paid any fee or compensation for service as a caregiver. Payment for costs under this subdivision does not constitute an offense under title 13, chapter 34 or under title 36, chapter 27, article 4.
6. "Enclosed, locked facility" means a closet, room, greenhouse or other enclosed area that is equipped with locks or other security devices that permit allow access only by a cardholder.
7. "Excluded felony offense" means:
(a) A violent crime as defined in section 13-901.03, subsection B, that was classified as a felony in the jurisdiction where the person was convicted.
(b) A violation of a state or federal controlled substance law that was classified as a felony in the jurisdiction where the person was convicted but does not include:
(i) An offense for which the sentence, including any term of probation, incarceration or supervised release, was completed ten or more years earlier.
(ii) An offense involving conduct that would be immune from arrest, prosecution or penalty under section 36-2811, except that the conduct occurred before December 14, 2010 or was prosecuted by an authority other than the state of Arizona.
8. "Hemp-derived manufactured impairing cannabinoids":
(a) Means any cannabinoid that is derived from hemp and altered by a chemical reaction that changes the molecular structure of any natural cannabinoid derived from hemp to another cannabinoid with impairing properties that is found naturally in hemp.
(b) Includes all of the following:
(i) Delta-8 tetrahydrocannabinol.
(ii) Delta-10 tetrahydrocannabinol.
(iii) Hexahydrocannabinol.
(iv) Tetrahydrocannabiphoral.
(v) Tetrahydrocannabinol acetate ester.
(c) Does not include any cannabinoid derived from hemp that is produced by decarboxylation from naturally occurring cannabinoid without the use of a chemical catalyst or nonintoxicating cannabinoids derived from hemp, including cannabidiol, cannabinol, cannabigerol, cannabichromene, cannabicyclol, cannabidivarin and cannabivarin.
8. 9. "Independent third-party laboratory" means an entity that has a national or international accreditation and that is certified by the department to analyze marijuana cultivated for medical use.
9. 10. "Independent third-party laboratory agent" means an owner, employee or volunteer of a certified independent third-party laboratory who is at least twenty-one years of age and who has not been convicted of an excluded felony offense.
10. 11. "Marijuana" means all parts of any plant of the genus cannabis, whether growing or not, and the seeds of such a plant.
11. 12. "Medical use" means the acquisition, possession, cultivation, manufacture, use, administration, delivery, transfer or transportation of marijuana or paraphernalia relating to the administration of marijuana to treat or alleviate a registered qualifying patient's debilitating medical condition or symptoms associated with the patient's debilitating medical condition.
12. 13. "Nonprofit medical marijuana dispensary" means a not-for-profit entity that acquires, possesses, cultivates, manufactures, delivers, transfers, transports, supplies, sells or dispenses marijuana or related supplies and educational materials to cardholders. A nonprofit medical marijuana dispensary may receive payment for all expenses incurred in its operation.
13. 14. "Nonprofit medical marijuana dispensary agent" means a principal officer, board member, employee or volunteer of a nonprofit medical marijuana dispensary who is at least twenty-one years of age and has not been convicted of an excluded felony offense.
14. 15. "Physician" means a doctor of medicine who holds a valid and existing license to practice medicine pursuant to title 32, chapter 13 or its successor, a doctor of osteopathic medicine who holds a valid and existing license to practice osteopathic medicine pursuant to title 32, chapter 17 or its successor, a naturopathic physician who holds a valid and existing license to practice naturopathic medicine pursuant to title 32, chapter 14 or its successor or a homeopathic physician who holds a valid and existing license to practice homeopathic medicine pursuant to title 32, chapter 29 or its successor.
15. 16. "Qualifying patient" means a person who has been diagnosed by a physician as having a debilitating medical condition.
16. 17. "Registry identification card" means a document issued by the department that identifies a person as a registered qualifying patient, a registered designated caregiver, a registered nonprofit medical marijuana dispensary agent or a registered independent third-party laboratory agent.
17. 18. "Usable marijuana":
(a) Means the dried flowers of the marijuana plant, and any mixture or preparation thereof.
(b) Does not include:
(i) The seeds, stalks and roots of the plant.
(ii) The weight of any non-marijuana ingredients combined with marijuana and prepared for consumption as food or drink.
18. 19. "Verification system" means a secure, password-protected, web-based system that is established and maintained by the department and that is available to law enforcement personnel and nonprofit medical marijuana dispensary agents on a twenty-four-hour basis for verifying registry identification cards.
19. 20. "Visiting qualifying patient" means a person:
(a) Who is not a resident of Arizona or who has been a resident of Arizona less than thirty days.
(b) Who has been diagnosed with a debilitating medical condition by a person who is licensed with authority to prescribe drugs to humans in the state of the person's residence or, in the case of a person who has been a resident of Arizona less than thirty days, the state of the person's former residence.
20. 21. "Written certification" means a document dated and signed by a physician, stating that in the physician's professional opinion the patient is likely to receive therapeutic or palliative benefit from the medical use of marijuana to treat or alleviate the patient's debilitating medical condition or symptoms associated with the debilitating medical condition. The physician must:
(a) Specify the qualifying patient's debilitating medical condition in the written certification.
(b) Sign and date the written certification only in the course of a physician-patient relationship after the physician has completed a full assessment of the qualifying patient's medical history.
Sec. 4. Subject to the requirements of article IV, part 1, section 1, Constitution of Arizona, section 36-2803, Arizona Revised Statutes, is amended to read:
36-2803. Rulemaking; notice; testing of marijuana and marijuana products; fees
A. The department shall adopt rules:
1. Governing the manner in which the department considers petitions from the public to add debilitating medical conditions or treatments to the list of debilitating medical conditions set forth in section 36-2801, paragraph 3, including public notice of, and an opportunity to comment in a public hearing on, petitions.
2. Establishing the form and content of registration and renewal applications submitted under this chapter.
3. Governing the manner in which the department considers applications for and renewals of registry identification cards.
4. Governing nonprofit medical marijuana dispensaries to protect against diversion and theft without imposing an undue burden on nonprofit medical marijuana dispensaries or compromising the confidentiality of cardholders, including:
(a) The manner in which the department considers applications for and renewals of registration certificates.
(b) Minimum oversight requirements for nonprofit medical marijuana dispensaries.
(c) Minimum recordkeeping requirements for nonprofit medical marijuana dispensaries.
(d) Minimum security requirements for nonprofit medical marijuana dispensaries, including requirements to protect each registered nonprofit medical marijuana dispensary location by a fully operational security alarm system.
(e) Procedures for suspending or revoking the registration certificate of nonprofit medical marijuana dispensaries that violate this chapter or the rules adopted pursuant to this section.
5. Establishing application and renewal fees for registry identification cards, nonprofit medical marijuana dispensary registration certificates and independent third-party laboratory certificates, according to the following:
(a) The total amount of all fees shall generate revenues that are sufficient to implement and administer this chapter, except that fee revenue may be offset or supplemented by private donations.
(b) Nonprofit medical marijuana dispensary application fees may not exceed $5,000.
(c) Nonprofit medical marijuana dispensary renewal fees may not exceed $1,000.
(d) The total amount of revenue generated from nonprofit medical marijuana dispensary application and renewal fees, registry identification card fees for nonprofit medical marijuana dispensary agents and independent third-party laboratory agents and application and renewal fees for independent third-party laboratories shall be sufficient to implement and administer this chapter, including the verification system, except that the fee revenue may be offset or supplemented by private donations.
(e) The department may establish a sliding scale of patient application and renewal fees that are based on a qualifying patient's household income and that are reasonable and related to the actual costs of processing applications and renewals.
(f) The department may consider private donations under section 36-2817 to reduce application and renewal fees.
B. The department of health services shall adopt rules that require each nonprofit medical marijuana dispensary to display in a conspicuous location a sign that warns pregnant women about the potential dangers to fetuses caused by smoking or ingesting marijuana while pregnant or to infants while breastfeeding and the risk of being reported to the department of child safety during pregnancy or at the birth of the child by persons who are required to report. The rules shall include the specific warning language that must be included on the sign. The cost and display of the sign required by rule shall be borne by the nonprofit medical marijuana dispensary. The rules shall also require each certifying physician to attest that the physician has provided information to each qualifying female patient that warns about the potential dangers to fetuses caused by smoking or ingesting marijuana while pregnant or to infants while breastfeeding and the risk of being reported to the department of child safety during pregnancy or at the birth of the child by persons who are required to report.
C. The department is authorized to adopt the rules set forth in subsections A and B of this section and shall adopt those rules pursuant to title 41, chapter 6.
D. The department of health services shall post prominently on its public website a warning about the potential dangers to fetuses caused by smoking or ingesting marijuana while pregnant or to infants while breastfeeding and the risk of being reported to the department of child safety during pregnancy or at the birth of the child by persons who are required to report.
E. Before selling or dispensing marijuana or marijuana products to registered qualified patients or registered designated caregivers, nonprofit medical marijuana dispensaries shall test marijuana and marijuana products for medical use to determine unsafe levels of contamination, including unsafe levels of microbial contamination, heavy metals, pesticides, fungicides, growth regulators and residual solvents and confirm the potency of the marijuana to be dispensed. The dried flowers of the marijuana plant are not required to be tested for residual solvents. If a nonprofit medical marijuana dispensary's test results for heavy metals comply with the prescribed requirements for a period of six consecutive months, heavy metal testing for that dispensary's marijuana and marijuana products is required only on a quarterly basis.
F. Nonprofit medical marijuana dispensaries shall:
1. Provide test results to a registered qualifying patient or designated caregiver immediately on request.
2. Display in a conspicuous location a sign that notifies patients of their right to receive the certified independent third-party laboratory test results for marijuana and marijuana products for medical use.
G. The department shall adopt rules to certify and regulate independent third-party laboratories that analyze marijuana cultivated for medical use. The department shall establish certification fees for laboratories pursuant to subsection A of this section. In order to be certified as an independent third-party laboratory that is allowed to test marijuana and marijuana products for medical use pursuant to this chapter, an independent third-party laboratory:
1. Must meet requirements established by the department, including reporting and health and safety requirements.
2. May not have any direct or indirect familial or financial relationship with or interest in a nonprofit medical marijuana dispensary or related medical marijuana business entity or management company, or any direct or indirect familial or financial relationship with a designated caregiver for whom the laboratory is testing marijuana and marijuana products for medical use in this state.
3. Must have a quality assurance program and standards.
4. Must have an adequate chain of custody and sample requirement policies.
5. Must have an adequate records retention process to preserve records.
6. Must establish procedures to ensure that results are accurate, precise and scientifically valid before reporting the results.
7. Must be accredited by a national or international accreditation association or other similar accrediting entity, as determined by the department.
8. Must establish policies and procedures for disposal and reverse distribution of samples that are collected by the laboratory.
H. Through December 31, 2022, the department may conduct proficiency testing and remediate problems with independent third-party laboratories that are certified and regulated pursuant to this chapter and marijuana testing facilities that are licensed and regulated pursuant to chapter 28.2 of this title.
I. Beginning January 1, 2023, the department shall conduct proficiency testing and remediate problems with independent third-party laboratories that are certified and regulated pursuant to this chapter and marijuana testing facilities that are licensed and regulated pursuant to chapter 28.2 of this title. The department may contract for proficiency testing with laboratories that have a national or international accreditation.
J. For the purposes of subsections H and I of this section, remediation may include assessing civil penalties and suspending or revoking a laboratory's certification or a marijuana testing facility's license.
K. The department shall adopt rules that prescribe reasonable time frames for testing marijuana and marijuana products.
L. Notwithstanding any other law, a nonprofit medical marijuana dispensary may not acquire, cultivate, possess, manufacture, deliver, process, transfer, transport, supply, use, sell or dispense hemp-derived manufactured impairing cannabinoids.
Sec. 5. Subject to the requirements of article IV, part 1, section 1, Constitution of Arizona, section 36-2804.05, Arizona Revised Statutes, is amended to read:
36-2804.05. Denial of registry identification card; notice
A. The department may deny an application or renewal of a qualifying patient's registry identification card only if the applicant:
1. Does not meet the requirements of section 36-2801, paragraph 15 16.
2. Does not provide the information required.
3. Previously had a registry identification card revoked for violating this chapter.
4. Provides false information.
B. The department may deny an application or renewal of a designated caregiver's registry identification card if the applicant:
1. Does not meet the requirements of section 36-2801, paragraph 5.
2. Does not provide the information required.
3. Previously had a registry identification card revoked for violating this chapter.
4. Provides false information.
C. The department may deny a registry identification card to a nonprofit medical marijuana dispensary agent if:
1. The agent applicant does not meet the requirements of section 36-2801, paragraph 13 14.
2. The applicant or dispensary did not provide the required information.
3. The agent applicant previously had a registry identification card revoked for violating this chapter.
4. The applicant or dispensary provides false information.
D. The department may conduct a criminal records check of each designated caregiver or nonprofit medical marijuana dispensary agent applicant to carry out this section.
E. The department shall notify the registered nonprofit medical marijuana dispensary in writing of the reason for denying a registry identification card to a nonprofit medical marijuana dispensary agent.
F. The department shall notify the qualifying patient in writing of the reason for denying a registry identification card to the qualifying patient's designated caregiver.
G. Denial of an application or renewal is considered a final decision of the department subject to judicial review pursuant to title 12, chapter 7, article 6. Jurisdiction and venue for judicial review are vested in the superior court.
Sec. 6. Subject to the requirements of article IV, part 1, section 1, Constitution of Arizona, section 36-2850, Arizona Revised Statutes, is amended to read:
36-2850. Definitions
In this chapter, unless the context requires otherwise:
1. "Advertise," "advertisement" 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. "Dual licensee" means an entity that holds both a nonprofit medical marijuana dispensary registration and a marijuana establishment license.
10. "Early applicant" means either of the following:
(a) An entity seeking to operate a marijuana establishment in a county with fewer than two registered nonprofit medical marijuana dispensaries.
(b) A nonprofit medical marijuana dispensary that is registered and in good standing with the department.
11. "Employee," "employer," "health care facility," and "places of employment" have the same meanings prescribed in the smoke-free Arizona act, section 36-601.01.
12. "Excluded felony offense" has the same meaning prescribed in section 36-2801.
13. "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.
14. "Hemp-derived manufactured impairing cannabinoids":
(a) Means any cannabinoid that is derived from hemp and altered by a chemical reaction that changes the molecular structure of any natural cannabinoid derived from hemp to another cannabinoid with impairing properties that is found naturally in hemp.
(b) Includes all of the following:
(i) Delta-8 tetrahydrocannabinol.
(ii) Delta-10 tetrahydrocannabinol.
(iii) Hexahydrocannabinol.
(iv) Tetrahydrocannabiphoral.
(v) Tetrahydrocannabinol acetate ester.
(c) Does not include any cannabinoid derived from hemp that is produced by decarboxylation from naturally occurring cannabinoid without the use of a chemical catalyst or nonintoxicating cannabinoids derived from hemp, including cannabidiol, cannabinol, cannabigerol, cannabichromene, cannabicyclol, cannabidivarin and cannabivarin.
14. 15. "Independent third-party laboratory" has the same meaning prescribed in section 36-2801.
15. 16. "Industrial
hemp" has the same meaning prescribed in section 3-311.
16. 17. "Licensee" means a person that obtains a license pursuant to section 36-2854.
17. 18. "Locality" means a city, town or county.
18. 19. "Manufacture" and "manufacturing" mean to compound, blend, extract, infuse or otherwise make or prepare a marijuana product.
19. 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 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.
20. 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.
21. 22. "Marijuana
establishment" means an entity that is 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.
22. 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 who has not been convicted of an excluded felony offense.
23. 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.
24. 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.
25. 26. "Nonprofit medical marijuana dispensary" has the same meaning prescribed in section 36-2801.
26. 27. "Nonprofit medical marijuana dispensary agent" has the same meaning prescribed in section 36-2801.
27. 28. "Open space" means a public park, public sidewalk, public walkway or public pedestrian thoroughfare.
28. 29. "Process" and "processing" mean to harvest, dry, cure, trim or separate parts of the marijuana plant.
29. 30. "Public place" has the same meaning prescribed in section 36-601.01.
30. 31. "Qualifying patient" has the same meaning prescribed in section 36-2801.
31. 32. "Smoke" means to inhale, exhale, burn, carry or possess any lighted marijuana or lighted marijuana products, whether natural or synthetic.
Sec. 7. Subject to the requirements of article IV, part 1, section 1, Constitution of Arizona, section 36-2854, Arizona Revised Statutes, is amended to read:
36-2854. 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 for marijuana establishment and marijuana testing facility applicants, 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 one marijuana establishment license for every ten pharmacies that have registered under section 32-1929, that have obtained a pharmacy permit from the Arizona board of pharmacy and that operate within this state.
(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 contains no 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 from early applicants beginning January 19,
2021 through March 9, 2021. Not later than sixty days after
receiving an application pursuant to this subdivision, the department shall
issue a marijuana establishment license to each qualified early applicant. If
the department has not adopted final rules pursuant to this section at the time
marijuana establishment licenses are issued pursuant to this subdivision,
licensees shall comply with the rules adopted by the 
department to implement chapter
28.1 of this title except those that are inconsistent with this chapter.
(e) After issuing marijuana establishment licenses
to qualified early applicants, the department shall issue marijuana
establishment licenses available under subdivisions (b) and (c) of 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 subdivisions (b) and (c) of this paragraph, and not later than six months after the department adopts final rules to implement a 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. A dual licensee's initial renewal date, which will be the ongoing renewal date for both the dual licensee's marijuana establishment license and nonprofit medical marijuana dispensary registration, is the earlier of:
(i) The date of the marijuana establishment license renewal.
(ii) The date of the nonprofit medical marijuana dispensary registration renewal.
(h) Beginning September 29, 2021, the department may not issue a marijuana establishment or marijuana testing facility license to an applicant who has an ownership interest in an out-of-state marijuana establishment or marijuana testing facility, or the other state's equivalent, that has had its license revoked by the other state.
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. Not later than December 31, 2023, the department shall require licensees to procure, develop, acquire and maintain a system to track marijuana and marijuana products at all points of cultivation, manufacturing and sale. The system developed and maintained pursuant to this paragraph shall:
(a) Ensure an accurate accounting and reporting of the production, processing and sale of marijuana and marijuana products.
(b) Ensure compliance with rules adopted by the department.
(c) Be capable of tracking, at a minimum:
(i) The propagation of immature marijuana plants and the production of marijuana by a marijuana establishment.
(ii) The processing of marijuana and marijuana products by a marijuana establishment.
(iii) The sale and purchase of marijuana and marijuana products between licensees.
(iv) The transfer of marijuana and marijuana products between premises for which licenses have been issued.
(v) The disposal of marijuana waste.
(vi) The identity of the person making the entry in the system and the time, date and location of each entry into the system, including any corrections or changes to that information.
(vii) Any other information that the department determines is reasonably necessary to accomplish the duties, functions and powers of the department.
(d) Contain a transactional stamp to ensure accuracy, provide for chain of custody of the information and foreclose tampering of the data, human error or intentional misreporting.
5. Tracking, testing, labeling consistent with section 36-2854.01 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 verifying 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. The creation and implementation of a social equity ownership program to promote the ownership and operation of marijuana establishments and marijuana testing facilities by individuals from communities disproportionately impacted by the enforcement of previous marijuana laws.
10. Prohibiting a marijuana testing facility from having any direct or indirect familial relationship with or financial ownership interest in a marijuana establishment or related marijuana business entity or management company. The rules shall include prohibiting a marijuana establishment from having any direct or indirect familial relationship with or financial ownership interest in a marijuana testing facility or related marijuana business entity or management company.
11. Requiring marijuana establishments to display in a conspicuous location a sign that warns pregnant women about the potential dangers to fetuses caused by smoking or ingesting marijuana while pregnant or to infants while breastfeeding and the risk of being reported to the department of child safety during pregnancy or at the birth of the child by persons who are required to report. The rules shall include the specific warning language that must be included on the sign. The cost and display of the sign required by rule shall be borne by the marijuana establishment.
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 $2,000 for each violation. Each day a violation occurs constitutes a separate violation. 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 smart and safe Arizona fund established by section 36-2856.
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.
4. Adopt any other rules that are not expressly stated in this section and 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, 2023, the department may, and not later than January 1, 2025 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 smart and safe Arizona fund established by section 36-2856. 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 smart and safe Arizona fund established by section 36-2856.
J. On request, the department 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.
N. Until the department adopts rules as required by subsection A, paragraph 10 of this section:
1. A marijuana testing facility is prohibited from having any direct or indirect familial relationship with or financial ownership interest in a marijuana establishment or related marijuana business entity or management company.
2. A marijuana establishment is prohibited from having any direct or indirect familial relationship with or financial ownership interest in a marijuana testing facility or related marijuana business entity or management company.
O. Notwithstanding any other law, a marijuana establishment may not acquire, cultivate, possess, manufacture, deliver, process, transfer, transport, supply, use, sell or dispense hemp-derived manufactured impairing cannabinoids.
Sec. 8. Subject to the requirements of article IV, part 1, section 1, Constitution of Arizona, section 36-2856, Arizona Revised Statutes, is amended to read:
36-2856. Smart and safe Arizona fund; disposition of monies; exemption
A. The smart and safe Arizona fund is established consisting of all monies deposited pursuant to sections 36-2854, 42-5452 and 42-5503, 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 the lapsing of appropriations. The state treasurer shall administer the fund.
B. All monies in the smart and safe Arizona 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 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 incurred by the
supreme court and the department 
of
public safety to process petitions for expungement and expungement orders
pursuant to section 36-2862 and to otherwise implement section 36-2862.
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 smart and safe Arizona 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 smart and safe Arizona fund in excess of the amounts paid pursuant to subsection B of this section as follows:
1. 33 Thirty-three percent to community college districts and provisional community college districts, but not to community college tuition financing districts established pursuant to section 15-1409, for the purposes of investing in and providing workforce development programs, job training, career and technical education, and science, technology, engineering and math mathematics programs, as follows:
(a) 15 Fifteen percent of the 33 thirty-three percent divided equally between each community college district.
(b) 0.5 percent of the 33 thirty-three percent divided equally between each provisional community college district, if one or more provisional community college districts exist.
(c) The remainder to community college districts and provisional community colleges districts in proportion to each district's full-time equivalent student enrollment percentage of the total statewide audited full-time equivalent student enrollment in the preceding fiscal year prescribed in section 15-1466.01.
2. 31.4 percent to municipal police departments, municipal fire departments, fire districts established pursuant to title 48, chapter 5 and county sheriffs' departments in proportion to the number of enrolled members for each such agency in the public safety personnel retirement system established by title 38, chapter 5, article 4 and the public safety personnel defined contribution retirement plan established by pursuant to title 38, chapter 5, article 4.1, for personnel costs.
3. 25.4 percent to the Arizona highway user revenue fund established by section 28-6533.
4. 10 Ten percent to the justice reinvestment fund established by section 36-2863.
5. 0.2 percent to the attorney general to use to enforce this chapter, including investigating and taking action as prescribed by title 44, chapter 10, article 7 relating to the sale, marketing and distribution of hemp-derived manufactured impairing cannabinoids, or to grant to localities to enforce this chapter.
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.
Sec. 9. Subject to the requirements of article IV, part 1, section 1, Constitution of Arizona, section 36-2858, Arizona Revised Statutes, is amended to read:
36-2858. Lawful operation of marijuana establishments and marijuana testing facilities
A. Except as specifically and expressly provided in section 36-2857 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 36-2854, 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, or 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 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. Is not 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's premises.
(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:
1. Is subject to the taxes imposed pursuant to title 43.
2. Is not required to submit its annual financial statements or an audit report to the department for purposes of renewing its nonprofit medical marijuana dispensary registration.
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 36-2850, paragraph 21 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 antidiscrimination law.
Sec. 10. Requirements for enactment; three-fourths vote
Pursuant to article IV, part 1, section 1, Constitution of Arizona, sections 36-2801, 36-2803, 36-2804.05, 36-2850, 36-2854, 36-2856 and 36-2858, Arizona Revised Statutes, as amended by this act, are effective only on the affirmative vote of at least three-fourths of the members of each house of the legislature.