How to Open a Dispensary in Arizona

The Bolo Tie State of Arizona legalized medical marijuana in 2010. Besides, it became the 13th state to legalize recreational cannabis in November 2020. The Arizona Department of Health Services (ADHS) is the body granting marijuana licenses in Arizona. It has approved about 143 marijuana licenses so far. Adults aged 21 and older can now legally possess up to one ounce of cannabis. 

It should be mentioned that the state has one of the least complicated sets of cannabis laws. So, if you’ve ever considered opening a dispensary in Arizona, it’s a great time to take a glance at this article and learn how it’s done in Arizona. 

Medical Marijuana

Legalization of medical marijuana started by passing Proposition 203 on November 2nd, 2010. In 2011 ADHS began to accept dispensary applications, and in 2011 Arizona opened its first 99 dispensaries. According to the latest updates, ADHS listed the requirements that medical dispensaries must follow, they are:

• Must be located at least 25 miles away from the next licensed dispensary
• Must be located in an area that was previously registered as a non-profit medical marijuana dispensary location
• If there are multiple applications from the same location, license priority will be determined by the one that serves the most patients in a five-mile radius.
• As an option, a random ballot may also be used to select licensure.

Recreational Marijuana

And by Proposition 207, Arizona legalized recreational marijuana in November 2020, as mentioned above. The ADHS has approved 73 dispensaries to start selling marijuana to adults aged 21 and older. There are a series of pending actions to form requirements, costs, and steps applicants must take to open a recreational dispensary in Arizona. It is a list of requirements known so far:

An adult can possess up to an ounce of marijuana, weigh up to five grams in concentrated form, and grow six plants at home and no more than 12 if there is more than one adult. 

How to Obtain a Cannabis Dispensary License in Arizona

The emerging cannabis market in Arizona has created opportunities for new marijuana licenses. Cannabis licensing for Arizona varies from city to town regulations, though State licensing is mandatory for all applicants. A dual licensee is an entity holding both a Nonprofit Medical Marijuana Dispensary Registration Certificate and a Marijuana Establishment License that may run a single retail location. Here the licensee is allowed to dispense medical cannabis and sell recreational use products as well. Those businesses that have met specific requirements before March 9th, 2021, may apply during an early application window.

When applying for the social equity ownership program and the early application process of licensing is complete, ADHS may issue up to one Marijuana Establishment License for every ten registered medical dispensaries in Arizona. 

What is a Social Equity License in Arizona?

Social equity licenses aim to balance the opportunities and encourage diverse owners of the cannabis industry. This campaign has been designed to benefit individuals and communities damaged by the enforcement of Arizona’s previous marijuana laws. The applicants for the social equity license must live in a designated area where marijuana-related activity is no longer illegal. These districts must have high indicators of poverty and unemployment. There are additional criteria for social equity applicants to meet at least three of them:

• Household income lower than 400% of the federal poverty level in at least 3 of the last five years;
• was convicted of a crime related to marijuana in Arizona;
• Is closely related to someone convicted of a crime related to marijuana in Arizona;
• Has lived at least 3 of the last five years in an area disproportionately affected by enforcement of marijuana laws in Arizona (these areas to be identified by the state in September 2021;
• Complete an ADHD-approved training course.

You are not eligible to apply for a social equity license if you have been convicted of any violent felony, violated the new state or federal laws, and completed your sentence within the last ten years.

Follow the link to see the detailed guide of social equity initial establishment. 

What Are the Requirements to Open a Medical Dispensary in Arizona?

First, you’re to bear in mind to be prepared for new challenges. Not all cities allow   cannabis in the state, and the costs of opening a dispensary can be pretty intense. 

You may not operate more than one medical marijuana dispensary in Arizona. A qualifying doctor must be state licensed.

You must be an Arizona resident for at least three years to apply for a dispensary application. You will also have to consider the following things when opening a cannabis dispensary in Arizona:

• What location you might select for your new dispensary;
• How you will market and advertise your dispensary;
• How you will manage and track inventory;
• How you will handle sales taxes.

Be aware of your local cannabis laws and determine if you may open a dispensary in a selected area. 

How Much Does It Cost to Open a Dispensary in Arizona?

Apart from the costs related to opening a dispensary/retail business there are state financial requirements and fees to be followed:

• Dispensary Registration – $5,000
• Dispensary Agent Identification Card $500
• Dispensary Registration Renewal – $1,000
• Dispensary Agent Identification Card Renewal $500

Additional Fees:

• Dispensary change of location: $2,500
• Cultivation location change: $2,500
• Additional Cultivation site: $2,500

What Amount of Capital Do I Need to Open a Dispensary? 

You’ll have to show that you have at least $500,000 in liquid capital in order to apply for a license. Getting this amount of capital is challenging since most financial institutions avoid funding cannabis companies. So, consider getting investments from cannabis-friendly investment firms. 

Creating a business plan for a new dispensary

If you’ve decided to open a cannabis dispensary in Arizona and are going to apply for the application, try to pre-organize a detailed business plan. It should include: 

• A detailed overview of the cannabis business;
• Information about where the dispensary will be located;
• How the new dispensary will be financed;
• A detailed site plan for the new dispensary, including detailed drawings;
• Information about sourcing and maintaining inventory;
• Information about projected expenses and potential revenue.

What Kind of Point-of-sale Do I Need to Operate a Marijuana Establishment?

Like other states, Arizona cannabis dispensaries must implement POS, which helps them comply with track and trace systems for their marijuana-related products for regulatory and compliance reporting requirements. Arizona has no contracted partner with a state mandatory tracking system such as Leef, Biotrack, or Metrc. However, ADHS requires a corresponding inventory control system to keep records and patient information for medical marijuana. 

Conclusion 

It’s without a doubt that stepping into the cannabis business is really a complicated and elaborate process requiring a lot of  patience and accuracy. Be sure to find the right partners and legal advisers to help you develop a comprehensive business plan and support you with the proper application process.