The truth about the future of legalization in Arizona

Published Oct 21, 2020 01:00 p.m. ET
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As November 3rd approaches, Arizona voters who back the legalization of cannabis should not expect too many new business licenses or a wide-open Arizona marijuana market in the southwest state. One of the factors that could change this over time includes the state’s population growth. Does Proposition 207 help the average cannabis business in Arizona?

In the beginning

Proposition 207 allows only the existing 130 vertically integrated medical cannabis companies and 26 new social equity businesses to make up Arizona's whole plant-touching cannabis business industry. Voters like the medical cannabis market and how the cannabis business functions. Stacy Pearson from the Smart and Safe campaign says that voters in the upcoming election like the footprint. The voters, in her opinion, were not freaked out.

The existing businesses, including Harvest Health & Recreation and Curaleaf, are poised to reap a significant windfall with the ballot measure's passing because they will get the advantage of taking the first crack at recreational licenses. Currently, both of the MSOs are among the campaign's biggest funders.

Positivity

If a miracle approves Prop 207, Stacy Pearson projects that Arizona could, with recreational and medical cannabis businesses, become close to a 2-billion-dollar cannabis business market. If approved, Prop 207 could see recreational cannabis business sales in the first-year total around 400 million dollars, and by the year 2024, those numbers are expected to reach 760 million dollars.

Prop 207, also named the Arizona Smart and Safe Act, would allow the rule-making being decided by the state's Department of Health Services, which is already in control of overseeing medical cannabis. There are, however, specific parameters that need to be followed.

  • Prop 207 requires one vertically integrated cannabis company for every ten pharmacies.

  • The addition of adult-use cannabis business licenses can be issued in any county with fewer than two existing MMJ operators.

  • The number of issued licenses would not be carved in stone. Instead, the number of permits would be in relation to the number of pharmacies that operate in Arizona while taking into consideration the locations of pre-existing MML businesses.

  • The number of cannabis licenses approved will depend on the state's headcount.

  • Many rural MMJ license holders have relocated to more urban areas to take advantage of the larger population cities such as Phoenix and the suburbs.

There are opportunities for entrepreneurs to work with license holders, either as growers or manufacturers. This would come to light due to the fact that each business permit is allowed to have one retail location, one cultivation operation, and one manufacturing kitchen. However, the three operations would not be required to be housed in the same location or be run by the same business.

They would, however, need to all be tied to the same cannabis business permit. Another opportunity for the initiative's key business aspects would allow what are currently not-for-profit MMJ cannabis businesses to convert to for-profit entities.

Final words

November 3rd is the date that Pearson is looking forward to as it’s when the upbeat campaign heads into the election, and she believes that it will pass. The time is fast approaching, and cannabis activists in Arizona have their calendars marked to ensure they don’t miss it.

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