Arizona Cannabis: From Social Equity Approval to Corporate Cannabis

Arguably one of the most surprising states to legalize recreational cannabis in the recent past is Arizona. During the tumultuous 2020 election, Proposition 207 was passed by a very considerable 20 percent margin, with more than 650,000 votes in favor of the measure. Not only was the passing vote of the bill itself and its very progressive language surprising, but an almost landslide margin vote in a state with such previously strict cannabis laws certainly wasn’t as expected as New Jersey legalizing cannabis on the same night.

From Arpaio to Advocacy: Arizona’s Evolution in Cannabis Legislation

Given the unforgettable fact that the State of Arizona has produced such barbaric law enforcement officers such as former Maricopa County Sheriff Joe Arpaio who was responsible for the arrest, imprisonment, and subjugation of thousands on cannabis charges, the passing of Proposition 207 showed that the Grand Canyon State could move away from strict prohibition.

In fact, when it came to medical marijuana, Arizona was a relatively early adopter in 2010 – unlike a host of other states that took years longer to adopt medical marijuana programs. While the first attempt at recreational cannabis in Arizona failed by a single-digit margin in 2016, the late Senator John McCain, who famously served as a Senator for Arizona for a historic 31 years, voiced support for medical cannabis reform and the 10th Amendment approach of letting the states decide their own cannabis policies.

Arizona’s Social Equity Program: Promises, Progress, and Pitfalls

When Proposition 207 passed in 2020, the state added even further reformative measures such as an extensive and very promising social equity program for the many communities who’ve been impacted by prior prohibitionist policies.

“The Social Equity Ownership Program was designed to promote the ownership and operation of licensed Marijuana Establishments by individuals from communities disproportionately impacted by the enforcement of previous marijuana laws”, the Arizona Department of Health Services explains on its website. The department was so definitively certain of the social equity program’s possibilities and opportunities for those most impacted by previous cannabis laws that it posted a glowing review of the program in May of 2022, with then-Deputy Director for Planning and Operations Don Herrington referring to the program as “a model among states that have created them.”

“According to the law,” Herrington wrote, “awarding social equity licenses should promote the ownership and operation of establishments by individuals from communities disproportionately impacted by enforcement of previous marijuana laws.”

The inclusion of those from communities so horribly devastated by cannabis prohibition into the legal market is absolutely a net positive and a program that could provide tremendous and likely lucrative opportunities for those individuals. However, in a very similar way to other states, such as Illinois, the implementation and arduous licensing process has not been without issue.

A common complaint about Arizona’s social equity program is that many of the 26 different licenses available for potential applicants was acquired by large corporate companies or investor groups. And according to many commentators, these are the entities furthest from being considered “social equity applicants” have control over an overwhelming majority of those licenses.

In July 2023, the Arizona Center for Investigative Journalism released a very damning report highlighting these exact complaints. By then, at least 11 of the 26 licenses were alleged to be in the hands of corporate interests distantly removed from anything resembling social equity applicants. Furthermore, seven of those 26 licenses were tied to a confusing web of convoluted shell LLC companies that obscure the true ownership of these licenses.

The Path to Equity: Arizona’s Social Equity Program in Cannabis Legislation

To combat these widespread issues, Republican State Senator Sonny Borrelli introduced Senate Bill 1262, a bill that he claims would restore the licenses to actual social equity applicants and professionals. It would also allow the Attorney General to pursue legal action against those who’ve caused legitimate social equity applicants to enter into allegedly predatory agreements.

“What we have here is an injustice that needs to be fixed,” Borrelli mentioned during a Arizona Senate hearing in February. “We now have here in Arizona a situation where 24 of 26 of these social equity licenses are now fully controlled by companies or people who do not belong in these special groups to get this license.”

SB 1262 seems initially promising, as it did pass a Senate Health and Human Services Committee with unanimous bipartisan support. That said, three quarters of the House and Senate will need to approve the measure before it’s signed into law. If the bill passes both chambers of the Arizona Legislature and ends up on Governor Katie Hobbs’ desk, she is almost certainly going to be inclined to sign it into law and significantly change the cannabis regime in Arizona.

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