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Marijuana in Arizona: Taking a closer look at social equity licenses

A lawsuit claims current rules could enrich a few, and licenses may end up in the hands of multi-state operators.

PHOENIX — If a golden ticket fell into your hands, you'd take it, right? An opportunity for success and prosperity. A chance to give yourself a shot at a better life.

In Arizona, the legalization of recreational marijuana brought such an opportunity for those who qualify. But it might not be as cut and dry as you might think. 

Saturday marks one year since recreational marijuana went on sale in Arizona. Part of the 2020 proposition that legalized recreation marijuana included 26 "Social Equity Licenses." These licenses were meant to help people and communities harmed by the war on drugs.

Every license in Arizona is valuable. The state puts a cap on the number of licenses that can be used to open up dispensaries. Industry experts said a license alone is worth at least $8 million dollars.

"It most definitely is a golden ticket,” Celeste Rodriguez, a social advocate with Acre 41, said.

Rodriguez wants these golden tickets to be used to enrich a community, not only a person.

“It would make a huge difference,” Rodriguez said “It will bring employment to the neighborhood."

However, Rodriguez is concerned that won't happen because of how the system is set up. Prop 207 did not lay out how the licenses would be distributed. The Arizona Department of Health Services set up the rules last year.

To submit an application, 51 percent of the application had to be controlled by someone who fit the qualifications for getting a social equity license. They also needed $4,000.

You can read the full qualification rules on the website for the Arizona Department of Health Services.

Many of the applications were in partnership with existing dispensaries or investors. The state is set to do a random drawing for the 26 social equity licenses sometime in spring 2022.

Rodriguez is concerned that many of the applications are a front to be taken over after the licenses are awarded. While ADHS does not allow prearranged deals, there is no rule preventing a winner of one of these licenses from selling it to anyone after the drawing.

“The rules are set up. People have the freedom to choose who they want to work with. A lot of them have chosen to work with dispensaries, investors, and grandma.” Demitri Downing, co-founder of the Arizona Cannabis trade association said.

According to Acre 41, corporations and investors make up a vast majority of those backing social equity applicants, with seemingly non-affiliated applicants making up roughly 30 percent of the entries.

Downing said winners should not have restrictions on what they do with their licenses. Every qualified applicant received that qualification because they were hurt in some way by the war on drugs.

Overall, Downing wants the system as a whole to operate as a free market.

“The point of having an enterprise or business is to grow it and sell it," Downing said. "So why would you ever restrict someone from doing that?”

“If you weren’t going to take this opportunity of taking 26 social equity licenses and investing, revitalizing the disproportionally affected areas, why even apply?” Rodriguez said.

Rodriguez is concerned that communities could be left behind if these licenses are sold to investors or other dispensaries. There is no requirement for these locations to be in an area of need.

One dispensary, Mint Cannabis, did respond to 12 News questions about how they are operating.

They said they are helping applicants in the process. When asked if they planned to buy the licenses if an applicant was awarded one, they said "We are open to whatever the future brings."

The company said they currently do operate locations in the zip codes applicants had to live in and said in an emailed statement: "Overall, there are a lot of reparations that need to be made, and we hope to help individuals to better their situation."

Acre 41 is part of a lawsuit trying to change the rules of these licenses. They want to require the licenses to be required to always be owned by those who qualify for them and must be required to operate in the communities hurt most by the war on drugs.

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