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AZ Supreme Court Rules Every County Gets Medical Marijuana License

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by Patrick J. Paul

On August 20, 2020, the Arizona Supreme Court ruled that the Arizona Medical Marijuana Act (AMMA) required the Arizona Department of Health Services (ADHS) to issue at least one medical marijuana license in counties without a dispensary.

The AMMA requires that an individual or entity must apply to ADHS for a dispensary registration certificate before ADHS may approve the individual or entity to operate a dispensary and can only issue a limited number of such certificates. The case presented some unique timing issues on which the Court itself disagreed, with Justice Montgomery dissenting in part.

ADHS is required annually to review existing dispensary certificates to determine if it may issue additional certificates. ADHS is required to initially prioritize the allocation of certificates to counties without a dispensary and then to geographic regions called Community Health Analysis Areas (CHAAs) with the most registry identification cards issued to qualifying patients.

Here, the plaintiff applicant applied for a license in La Paz County in 2016 at a time when the county already had an approved dispensary. That dispensary, however, relocated outside of the county and CHAA shortly after plaintiff’s application, causing the applicant to note the then lack of dispensary. ADHS countered that it was not required to consider the new vacancy, because, at the time of its annual review, it had already accurately determined every county had a dispensary and that it would thus allocate new registration certificates based on other factors.

Initially, the trial court dismissed the complaint noting that the applicable rules do not dictate when during the process of issuing new certificates, ADHS must determine how those certificates will be allocated. The majority determined that the AMMA required ADHS to issue registration certificates and thus open the application process under two distinct circumstances – if the allocation of dispensary certificates is below a required ratio or if a County does not have a dispensary. The majority determined that ADHS is required to issue at least one medical marijuana dispensary registration certificate in each county with a qualified applicant and could not use data obtained from its annual review if use of that data would result in denying a dispensary to a county without one during the application process.

Justice Montgomery in a separate opinion concurring and dissenting in part noted that the crux of the issue was when ADHS could determine whether a county is lacking a dispensary. Here, at the time of initial review, every County had at least one license dispensary and thus Justice Montgomery maintained  that ADHS was within its rights to utilize other criteria for the issuance of additional certificates.

The upshot for future applicants in Arizona is to closely monitor certificate inventory changes even during the ADHS review period and if new facts present, to utilize them in support of consideration for the issuance of new certificates.

The federal Controlled Substances Act continues to criminalize the manufacture, distribution, dispensation, or possession of marijuana, even where state law authorizes its use, and, to date more than 40  states have legalized some form of marijuana. The current lack of vigorous federal enforcement does not change the law itself or negate the possibility that the enforcement position may change.