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Appellate Court Affirms Medical Marijuana Variance in Phoenix

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By:  Patrick J. Paul

On May 2, 2019, the Arizona Court of Appeals in a memorandum decision, upheld a superior court judgment affirming a variance granted by the City of Phoenix Board of Adjustment (Board) to allow the operation of a medical marijuana dispensary in North Phoenix.  Dreem Green Inc. v. City of Phoenix, 2019 WL 1959618.

In Arizona, the Arizona Department of Health Services (DHS) is authorized to allocate medical marijuana dispensary registration certificates via population-based geographic areas individually  referred to as a Community Health Analysis Area or “CHAA.”  In this instance DHS granted a medical marijuana registration certificate to prospective facility operators for the North Mountain  CHAA, and those certificate holders sought to open a dispensary near Dunlap Ave and Interstate 17 in Phoenix on property zoned C2.  However, the property at issue was 4,943 feet from another dispensary and 366 feet from a residentially zoned S-1 property, meaning without a variance the dispensary operation would violate the Phoenix Zoning Ordinance for setbacks requiring 5,280 feet distance between dispensaries and 500 feet spacing from residential zoning.

The North Mountain CHAA certificate holders sought a variance from a Phoenix zoning hearing officer, were denied, and timely appealed to the Board, which overturned the hearing officer and granted the requested variance.  Thereafter, the owner of an existing dispensary located the closest to the prospective dispensary filed a special action appealing the Board’s decision.  The Superior Court upheld the Board decision and the competing dispensary owner then appealed that decision to the Arizona Court of Appeals.

In upholding the superior court’s affirmation of the Board’s decision, the court specifically focused on two components of the four-part variance test, namely, special circumstances and whether they were self-imposed.  The court found credible evidence to support the Board conclusion that given the property’s location, strict application of City Code would deprive the subject property of privileges of similarly-zoned parcels.  It also noted that while the Board could not grant a use variance or a variance for self-imposed circumstances, it could grant an area variance.  The court determined that the variance at issue was an area variance that would allow the property to be utilized similar to others in the area – namely, as a medical marijuana dispensary.

Additionally, the court found that neither the property owner, nor the CHAA certificate holders were responsible for the locations of the nearby dispensary or the residential lot and thus the conditions from which relief was sought were not self-imposed.  Consequently, the court affirmed the Board’s conclusions and let the variance stand.