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ARIZONA STATE SENATE
Fifty-Seventh Legislature, Second Regular Session
marijuana; rural opportunity initiative
Purpose
Establishes the rural opportunity initiative and requires the Department of Health Services (DHS) to issue marijuana establishment licenses to qualified entities and issue nonprofit medical marijuana dispensary registration certificates to each entity that is issued a marijuana establishment license. Contains requirements for enactment for initiatives and referendums (Proposition 105).
Background
In 2010, Arizona voters approved the Arizona Medical Marijuana Act to establish a regulatory system, overseen by DHS, that allows a dispensary to dispense a permissible amount of medical marijuana to a qualifying patient or the qualifying patient's designated caregiver (A.R.S. Title 36, Chapter 28.1). In 2020, Arizona voters approved the Smart and Safe Arizona Act which legalized the sale and use of recreational marijuana to Arizonans who are at least 21 years of age (A.R.S. Title 36, Chapter 28.2).
Current statute
requires DHS to adopt rules to implement, enforce and regulate marijuana,
marijuana products, marijuana establishments and marijuana testing facilities
that include requirements for licensing marijuana establishments. DHS may only
issue one marijuana establishment license for every 10 registered pharmacies
that have obtained a pharmacy permit from the Arizona Board of Pharmacy and
that operate within Arizona. DHS may also only issue a marijuana establishment
license to two marijuana establishments per county that have no registered
nonprofit medical marijuana dispensaries, or one marijuana establishment
license per county that has one registered nonprofit medical marijuana
dispensary. Licenses issued by DHS to marijuana establishments and marijuana
testing facilities are valid for two years (A.R.S.
§ 36-2854).
There is no anticipated fiscal impact to the state General Fund associated with this legislation.
Provisions
1. Establishes the rural opportunity initiative to create tax revenue and economic opportunities for unserved rural communities through the issuance of up to 18 marijuana establishment licenses and up to 18 nonprofit medical marijuana dispensary registration certificates, to create up to 18 additional dual licensees.
2. Requires DHS to issue a nonprofit medical marijuana dispensary registration certificate to each entity that is issued a marijuana establishment license and allow the registration certificate holders to relocate their retail site only to another unserved rural community.
3. Requires DHS to issue marijuana establishment licenses to each entity that is qualified pursuant to the rural opportunity initiative.
4. Requires the issued marijuana establishment licenses to be for a fixed community that has not opted out of the rural opportunity initiative.
5. Allows an entity's retail site to be relocated only to an unserved rural community in accordance with the rural opportunity initiative.
6. Allows DHS to establish ministerial templates and electronic submission systems, of any template or electronic format and to accept filings and request only the information and documentation expressly required by the rural opportunity initiative.
7. Caps the number of marijuana establishment licenses and marijuana dispensary registration certificates that DHS may issue pursuant to the rural opportunity initiative at 18.
8. Requires DHS to post and maintain on the DHS's public website:
a) a current list of unserved rural communities that have opted out of the rural opportunity initiative;
b) a current list of unserved rural communities for which DHS has issued an outlined license;
c) instructions for submitting an opt-out action and for submitting an application; and
d) a notice that no additional licenses or registration certificates are available under the rural opportunity initiative after all marijuana establishment licenses and nonprofit medical marijuana dispensary registration certificates have been issued.
9. Allows an unserved rural community to opt out of the rural opportunity initiative:
a) by submitting to DHS, for a city or town, a certified copy of a resolution or ordinance adopted by the city or town governing body that states the city's or town's intent to opt out; and
b) by submitting to DHS, on behalf of a census designated area in the county, but not on behalf of a city or town, a certified copy of a resolution adopted by the board of supervisors that states the county's intent to opt out on behalf of the census designated area.
10. Deems that the action taken by a city, town or county to opt out of participation in the rural opportunity initiative is effective if received by DHS before DHS issues either a marijuana establishment license or a medical marijuana dispensary registration certificate for that unserved rural community.
11. Stipulates that an action taken by a city, town or county to opt out of participation in the rural opportunity initiative that is received after DHS issues a license or registration certification under the rural opportunity initiative does not affect the validity of any license or registration certificate that is already issued.
12. Requires DHS, 180 days after the general effective date, to accept applications for marijuana establishment licenses and nonprofit medical marijuana dispensary registration certificates, only through an electronic submission system that time stamps each submission to the second and provides the applicant with an electronic receipt.
13. Requires an applicant, for a dual license application, to submit to DHS in a prescribed format:
a) the legal name of the applicant and, if different, the legal name of the proposed marijuana establishment or nonprofit medical marijuana dispensary;
b) the business organization type of the applicant and, if applicable, the state or jurisdiction of formation;
c) the physical address of the proposed retail site and the county in which the proposed retail site is located;
d) the identification of the unserved rural community the applicant seeks to serve;
e) documentation that the applicant is in good standing with the corporation commission, if applicable;
f) the name, title or position, and contact information of each principal officer and each board member of the applicant;
g) the name and residence address of any person who is entitled to a share of at least 10 percent of the profits of the applicant. an application may not require the disclosure of the identity of any person who is entitled to a share of less than 10 percent of the profits of an applicant that is a publicly traded corporation; and
h) an attestation, signed under penalty of perjury by a principal officer, that:
i. the applicant and each person identified has not been convicted of an excluded felony offense;
ii. the applicant does not have 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; and
iii. the information submitted is true, complete and not misleading.
14. Requires an applicant, for the proposed retail site, to submit documentation of:
a) written permission from the owner or authorized legal representative of the owner of the property that authorizes use of the property as a marijuana retail site operating pursuant to both a marijuana establishment license and a nonprofit medical marijuana dispensary registration certificate, which must be signed, notarized and dated within 60 days of the application's submission; and
b) written documentation issued by the local jurisdiction with land use authority over the proposed retail site showing that the proposed retail site complies with local zoning restrictions applicable to a marijuana retail site of a dual licensee.
15. Prohibits a landowner from providing landowner consent for the same property address to more than one applicant.
16. Stipulates that the landowner consent form executed first in time is the only valid landowner consent form.
17. Requires DHS, within 30 working days after receiving an application, to:
a) provide the applicant with written notice that the application is administratively complete; or
b) provide the applicant with written notice of any deficiencies in the application, including a list of the information or documents required by this section that are missing or incomplete.
18. Requires an applicant to submit any missing or incomplete information or documents identified in a notice of deficiencies within 10 working days after receiving the notice.
19. Retracts an application that fails to submit any missing or incomplete information or documents identified in a notice within 10 working days.
20. Deems that an application is complete only if the applicant has submitted all prescribed information and documentation required.
21. Deems that the application is complete on the time and date of the electronic timestamp on the submission.
22. Requires DHS, within 60 working days of a completed application, to approve the application and issue the license and registration certificate or deny the application with a written statement of the specific reasons for denial and the statutory basis for each reason.
23. Allows a marijuana establishment license and a nonprofit medical marijuana dispensary registration certificate application denial to be appealed pursuant to uniform administrative hearing procedures.
24. Requires DHS to issue a marijuana establishment license and a nonprofit medical marijuana dispensary registration certificate for an unserved rural community that has not opted out to the qualified applicant whose complete application to serve that unserved rural community is first received by timestamp.
25. Requires DHS, if there are two or more complete applications that serve the same unserved rural community and have timestamps that are identical to the second, to conduct a random drawing between those applicants at a publicly noticed proceeding within 10 working days of the tie being identified.
26. Stipulates that each entity that is issued a marijuana establishment license and a nonprofit medical marijuana dispensary registration certificate:
a) must be licensed by DHS to operate only one retail location and one off-site location at which the entity may cultivate marijuana and manufacture marijuana products;
b) is not required to operate the entity's retail site for more than 24 hours each week;
c) must open the entity's retail site within 18 months after being issued a marijuana establishment license or the marijuana establishment license becomes invalid; and
d) to move its retail site only to another unserved rural community that has not opted out of the rural opportunity initiative by submitting an application to DHS that includes the prescribed documentation.
27. Stipulates that the proposed retail site identified in an application:
a) must be located within the boundaries of the unserved rural community the applicant seeks to serve;
b) must be located on a parcel that is at least 25 miles from a marijuana retail site as measured from the closest points of both properties; and
c) may not be located in unincorporated territory that is surrounded on all sides by an Indian reservation.
28. Defines unserved rural community as a city, town or census-designated area that has a population of fewer than 50,000 persons and contains one or more parcels of property that are at least 25 miles from a marijuana retail site, as measured from the closest points of both properties.
29. Stipulates that an unserved rural community does not include an unincorporated territory that is surrounded on all sides by an Indian reservation.
30. Defines board member, principal officer, qualified applicant and working day.
31. Makes conforming changes.
32. Requires for enactment the affirmative vote of at least three-fourths of the members of each house of the Legislature (Proposition 105).
33. Becomes effective on the general effective date.
Prepared by Senate Research
February 6, 2026
SB/NRG/hk