What is a Medical Director & Why Does Every Arizona Medical Marijuana Dispensary Need One?

Question:  I am an Arizona physician who is considering offering my services to be the medical director of an Arizona medical marijuana dispensary.  Does every dispensary need a medical director?  What are the duties of the medical director under the Arizona Department of Health Services rules?

Answer:  The Arizona Department of Health Services rules require that every Arizona medical marijuana dispensary hire a medical director.  Proposition 203 did not contain a requirement for a medical director, but DHS decided in its wisdom that every dispensary should spend a lot of money to hire a medical director who must be doctor of medicine who holds a valid and existing license to practice medicine pursuant to A.R.S. Title 32, Chapter 13 or its successor or a doctor of osteopathic medicine who holds a valid and existing license to practice osteopathic medicine pursuant to A.R.S. Title 32, Chapter 17 or its successor and who has been designated by a dispensary to provide medical oversight at the dispensary.  R 9-17-312.

The Arizona Department of Health Services rules (R 9-17-312) for Arizona medical marijuana dispensaries require that every dispensary contract with a medical director who shall provide oversight for the development and dissemination of educational materials for qualifying patients and designated caregivers.  Here is the text of R9-17-312:

A. A dispensary shall appoint an individual who is a physician to function as a medical director.

B. During hours of operation, a medical director or an individual who is a physician and is designated by the medical director to serve as medical director in the medical director’s absence is:

1. On-site, or

2. Able to be contacted by any means possible, such as by telephone or pager.

C. A medical director shall:

1. Develop and provide training to the dispensary’s dispensary agents at least once every 12 months from the initial date of the dispensary’s registration certificate on the following subjects:

a. Guidelines for providing information to qualifying patients related to risks, benefits, and sides effects associated with medical marijuana;

b. Guidelines for providing support to qualifying patients related to the qualifying patient’s self-assessment of the qualifying patient’s symptoms including a rating scale for pain, cachexia or wasting syndrome, nausea, seizures, muscle spasms, and agitation;

c. Recognizing signs and symptoms for substance abuse; and

d. Guidelines for refusing to provide medical marijuana to an individual who appears to be impaired or abusing medical marijuana; and

2. Assist in the development and implementation of review and improvement processes for patient education and support provided by the dispensary.

D. A medical director shall provide oversight for the development and dissemination of:

1. Educational materials for qualifying patients and designated caregivers that include:

a. Alternative medical options for the qualifying patient’s debilitating medical condition;

b. Information about possible side effects of and contraindications for medical marijuana including possible impairment with use and operation of a motor vehicle or heavy machinery, when caring for children, or of job performance;

c. Guidelines for notifying the physician who provided the written certification for medical marijuana if side effects or contraindications occur;

d. A description of the potential for differing strengths of medical marijuana strains and products;

e. Information about potential drug-drug interactions, including interactions with alcohol, prescription drugs, non-prescription drugs, and supplements;

f. Techniques for the use of medical marijuana and marijuana paraphernalia;

g. Information about different methods, forms, and routes of medical marijuana administration;

h. Signs and symptoms of substance abuse, including tolerance, dependency, and withdrawal; and

i. A listing of substance abuse programs and referral information;

2. A system for a qualifying patient or the qualifying patient’s designated caregiver to document the qualifying patient’s pain, cachexia or wasting syndrome, nausea, seizures, muscle spasms, or agitation that includes:

a. A log book, maintained by the qualifying patient and or the qualifying patient’s designated caregiver, to track the use and effects of specific medical marijuana strains and products;

b. A rating scale for pain, cachexia or wasting syndrome, nausea, seizures, muscles spasms, and agitation;

c. Guidelines for the qualifying patient’s self-assessment or, if applicable,assessment of the qualifying patient by the qualifying patient’s designated caregiver; and

d. Guidelines for reporting usage and symptoms to the physician providing the written certification for medical marijuana and any other treating physicians; and

3. Policies and procedures for refusing to provide medical marijuana to an individual who appears to be impaired or abusing medical marijuana.

E. A medical director shall not establish a physician-patient relationship with or provide a written certification for medical marijuana for a qualifying patient.

By |2011-02-12T08:51:04-07:00January 19th, 2011|DHS Rules, Legal Issues, Medical Directors, Questions People Ask|Comments Off on What is a Medical Director & Why Does Every Arizona Medical Marijuana Dispensary Need One?

Beware of the Single Owner Arizona Medical Marijuana Dispensary

Question:  Should I be the sole owner of my Arizona medical marijuana dispensary?

Answer:  Probably not.  Although the Arizona Department of Health Services rules allow an Arizona medical marijuana dispensary to be owned by a single person (a sole proprietor) or a company that has only one owner, I strongly recommend that no dispensary owner be the sole owner of the business.  The reason every dispensary should have at least two owners is to prevent the lose of the valuable dispensary license if the sole owner were to die or to become ineligible to be an owner, officer or director of the business.

Two examples will illustrate the terrible consequences of having a sole owner dispensary business.

Example 1:  Homer Simpson is the sole owner of an Arizona LLC called Bart’s Greenies, LLC.  Homer invested $500,000 to get a dispensary license and open his dispensary in Scottsdale in the food court of the Fashion Square Mall and to set up his 20,000 square foot cultivation farm in Pine Top.  Homer unexpectedly dies from joy and pride while attending Bart’s graduation ceremony at the Penn State University Hershey School of Medicine where Bart received his M.D. degree.  Because the LLC no longer has an owner approved by the Arizona Department of Health Services to be an owner, the LLC’s dispensary license automatically evaporates and so does all of its value.  There is no LLC with a dispensary license to be inherited by Homer’s family.

Example 2:  Same facts as in Example 1 except Homer does not die.  Instead, Homer divorces Marge and defaults on his child support payments for Maggie.  Because Homer is no longer eligible to be an owner, officer or director of an Arizona medical marijuana dispensary the LLC’s dispensary license automatically evaporates and so does all of its value.

Solution:  I recommend that every Arizona medical marijuana dispensary organization have at least two owners so that if one of the owners were to die or cease to be eligible to own an interest in the business, the other owner could continue as the sole owner of the business so that the business does not automatically lose its dispensary license.  Although a husband and wife who jointly own a dispensary are technically do not have a sole owner business, they should consider having another nominal owner in case the husband and wife were killed in a common accident.

Caution 1:  The December 17, 2010, first draft of the proposed rules contains 18 requirements that must be satisfied for a person to become an owner, officer or director of an Arizona medical marijuana dispensary business.  If any owner, officer or director ever becomes ineligible to be an owner, officer or director, the business will automatically lose its license to operate the dispensary.  This risk of automatic termination is one very big reason why all entities that want to obtain a dispensary license need to purchase my Bylaws that contain provisions intended to protect against the loss of the license if an owner, officer or director ceases to be eligible to be an owner, officer or director.  For more about why all dispensaries need properly drafted Bylaws see “Bylaws for Arizona Medical Marijuana Dispensaries.”

Caution 2:  Whenever a business has multiple unrelated owners, the owners must enter into a buy-sell agreement that contains their exit strategy.  Medical marijuana dispensaries especially need a good buy-sell agreement that covers the automatic buy-out of any owner who ceases to be eligible to be an owner.

By |2012-05-13T16:24:48-07:00January 18th, 2011|Legal Issues, Questions People Ask|Comments Off on Beware of the Single Owner Arizona Medical Marijuana Dispensary

Medical Marijuana Backers Air Views at Tempe Council Session

Arizona Republic:  “”A crowd of medical marijuana supporters attended a Tempe City Council meeting to demand that council members respect the ‘will of the voters’ who passed Proposition 203 in November. . . . Many of the medical marijuana advocates took issue with the proposed Tempe ordinance requiring dispensaries be located only in industrial areas and operate only in the daytime.”

By |2012-08-18T10:16:53-07:00January 18th, 2011|Stories & Articles, Zoning|Comments Off on Medical Marijuana Backers Air Views at Tempe Council Session

Arizona Medical Marijuana and Driving Under the Influence (DUI)

In Arizona, there are two ways that you can be charged with a marijuana related DUI:

1. Under the influence of marijuana and impaired to the slightest degree (A.R.S. 28-1381(A)(1))

First, you can be charged with DUI if you are under the influence of marijuana and your driving is found to be “impaired to the slightest degree.” It does not matter if you have a legal prescription for the marijuana. Arizona residents who will now benefit from the new Arizona Medical Marijuana law should be aware that their medical status will not grant them an automatic get-out-of-jail-card when it comes to DUI laws. If the State can prove the marijuana caused impaired driving, you can be charged and convicted of a DUI.

If the prosecutor is charging you with a Section 28-1381(A)(1) charge, he must prove that you were under the influence of marijuana, and your driving was impaired to the slightest degree. To prove you were under the influence of marijuana, the prosecutor will move to submit into evidence a blood or urine test showing the presence of marijuana in your system. A good marijuana DUI defense attorney will examine the evidence to determine how the urine or blood samples were collected and stored, and whether any compelling arguments can be made to suppress the evidence as inadmissible.

A good marijuana DUI defense attorney may also argue that the blood or urine tests do not show you were under the influence of marijuana, despite a test showing the presence of metabolites. Test results do not always distinguish between the psychoactive component of marijuana (“THC”) or its metabolite (“carboxy THC”), which is inactive and does not cause impairment, even though it can stay in your system for weeks. The presence of non-active metabolites do not indicate either impairment or when marijuana was last used or how often it was used.

Even the new Arizona Medical Marijuana law recognizes that someone may have marijuana metabolites that are inactive and do not cause the psychoactive responses caused by THC in marijuana. The new Arizona Medical Marijuana law states that “a registered qualifying patient shall not be considered to be under the influence of marijuana solely because of the presence of metabolites or components of marijuana that appear in insufficient concentration to cause impairment.” The new law recognizes that there are going to be instances of someone lawfully using medical marijuana and still showing metabolites in their system when driving even though they’re not affected by it.

Driving must be impaired to the slightest degree.

In addition to the state having to prove that you were under the influence of marijuana, the prosecutor also has to prove your driving was impaired. You don’t have to crash your vehicle for the prosecutor to prove your driving was impaired. Arizona law only requires the prosecutor to show driving is impaired “to the slightest degree.” The prosecutor will try to prove driving was impaired by introducing evidence of driving errors (even if they are minor), your physical appearance after you were stopped on the road, and performance on any Field Sobriety Tests. Note: decline the FSTs if asked to do so by an officer. These “coordination tests” are extremely difficult to pass and some officers will use them to find fault with whatever you do.  It is naive to think if you show you can pass the coordination tests, the officer will let you go. Remember, you are not required by law to submit to FSTs. However, you ARE required by implied consent law to submit to a blood, breath, or urine test if requested by a police officer. If you do not submit to blood, breath, or urine, the police will get a warrant within minutes to take the sample and you will lose your driver’s license for a year.  But always decline the FSTs as they hurt more than help.

2. Operating a motor vehicle with any trace of marijuana in your system (A.R.S. 28-1381(A)(3))

The second way you can be charged with DUI is by merely operating a motor vehicle with any marijuana or marijuana metabolite (“THC”) in your system. If the prosecutor is charging you with a  Section 28-1381(A)(3) charge, he is not required to prove your driving was impaired, only that it was in your system. This “zero tolerance” law creates an interesting question for medical marijuana users who legally use marijuana, and then drive a car days later when the inactive metabolites may be present. If they are stopped and tested for DUI, how do these medical marijuana patients know the metabolites are present if they do not cause psychoactive symptoms/reactions? A good marijuana DUI defense lawyer may make a constitutional argument that you couldn’t have known inactive metabolites were present in your system and therefore you shouldn’t be criminally liable when you are not under the influence of marijuana. If you have been arrested for marijuana or any drug DUI, you should discuss these charges with an experienced DUI marijuana lawyer.

Penalties and Sentences for DUI marijuana misdemeanors in Arizona:

In Arizona, a first time DUI offense involving marijuana is a misdemeanor punishable by a minimum one day to a maximum six month jail sentence, fines and fees ranging from $1,470 or more, a mandatory substance abuse program, and you must put an ignition interlock device on your car. Additionally, if the conviction involves marijuana alone, your driver’s license will be revoked for one year. Ironically, if you are driving under the influence of marijuana AND alcohol, your license might only be suspended for 90 days because your plea bargain might involve pleading to the alcohol component of the DUI and not the marijuana. However, it’s only logical that alcohol and marijuana mixed together will make your driving more impaired so just don’t do it.

If this is a second misdemeanor DUI involving marijuana or another drug, the minimum jail sentence is 30 days, the fine is increased to a minimum of $3,430 and at least 30 hours of community service will be ordered in addition to an 18 month license revocation and ignition interlock device requirement.

If if the DUI is a third offense within 7 years, or your driver’s license was already suspended or revoked, or there was a child in the vehicle at the time, the DUI is charged as a felony and you could be facing a longer jail and/or prison sentence.

If you are charged with a violation of Arizona law involving marijuana and need experienced legal representation, call me, Karen Boehmer at 602-796-0882.

By |2017-02-11T17:26:53-07:00January 17th, 2011|Marijuana Crimes|Comments Off on Arizona Medical Marijuana and Driving Under the Influence (DUI)

Bylaws for Arizona Medical Marijuana Dispensaries

All Arizona Medical Marijuana Dispensaries Must Have Bylaws

Arizona law requires that all Arizona corporations (for profit and nonprofit) adopt Bylaws.  Since Proposition 203 became law on December 15, 2010, all organizations (not just corporations) that seek a license to own and operate a dispensary in Arizona must adopt Bylaws.  Arizona Revised Statutes Section 36-2806.A states:

The Bylaws of a registered nonprofit medical marijuana dispensary shall contain such provisions relative to the disposition of revenues and receipts to establish and maintain its nonprofit character.”

Bylaws is the name given to the policies and procedures that govern the internal operation of a business organization.  The Merriam-Webster dictionary defines bylaws as “a rule adopted by an organization chiefly for the government of its members and the regulation of its affairs.”

Before Proposition 203 became the law of Arizona Bylaws were used almost exclusively by corporations.  As an Arizona business attorney, I have formed over 3,200 Arizona limited liability companies since I started counting in 2002.  Not one of the LLCs I formed prior to Proposition 203 have Bylaws because the Arizona laws that govern Arizona LLCs do not require Arizona LLCs to adopt Bylaws.  Arizona statutory law requires that all Arizona corporations adopt Bylaws.  Arizona Revised Statutes Section 10-206 (for profit corps) and Section 10-3206.A (nonprofit corps) both contain the following corporate requirement:

“The board of directors of a corporation shall adopt initial bylaws for the corporation.”

If you are part of an organization (regardless of the type of entity) that will seek to obtain a license to own and operate an Arizona medical marijuana dispensary, you must make sure that your organization has Bylaws that contain the specific language required by Arizona medical marijuana law and the Arizona Department of Health Services.  If your organization does not have the required Bylaws, it’s application for a dispensary license will be rejected.

See my article called “Bylaws – We Don’t Need No Stinking Bylaws or Do We?”

By |2017-02-12T07:10:46-07:00January 17th, 2011|Legal Issues|Comments Off on Bylaws for Arizona Medical Marijuana Dispensaries

Text of the Public Comments to the 1st Draft of the Rules

On December 17, 2010, the Arizona Department of Health Services posted a draft of the medical marijuana rules for public comment.  Read the following comments received by ADHS  via its online survey from December 17, 2010, through January 7, 2011:

The Department also received the additional comments below:

By |2011-01-18T19:12:41-07:00January 15th, 2011|DHS Rules|Comments Off on Text of the Public Comments to the 1st Draft of the Rules

Chandler Planners Mull Marijuana Restrictions

Arizona Republic:  “Proposals for [medical marijuana dispensary] restrictions in Chandler, including those below, go before the city’s Planning and Zoning Commission on Wednesday for an advisory vote before it goes to the City Council in February. The 7 p.m. commission meeting is in City Council Chambers, 88 E. Chicago St.”

By |2012-08-18T09:29:36-07:00January 15th, 2011|Zoning|Comments Off on Chandler Planners Mull Marijuana Restrictions

Gilbert Sets Rules for Medical Marijuana Locations, Hours

Arizona Republic:  “As area entrepreneurs prepare to capitalize on a voter-approved initiative legalizing medical marijuana, the Gilbert Town Council approved regulations on where, when and how the pot-based businesses can operate.  Dispensaries and cultivation sites will only be allowed within industrial zoning districts in northwest Gilbert near Morrison Ranch and near Gilbert Road and the Santan Freeway.”

By |2012-08-18T09:34:53-07:00January 15th, 2011|Stories & Articles, Zoning|Comments Off on Gilbert Sets Rules for Medical Marijuana Locations, Hours

Glendale Unveils Medical-marijuana Proposals

Arizona Republic:  “Residents armed with questions attended a community meeting Thursday to hear Glendale’s proposed zoning restrictions on marijuana-related facilities.  City planners propose to allow dispensaries in general-office, general-commercial and heavy-commercial zones and the cultivation in light- and heavy-industrial zones.”

By |2012-08-18T09:37:41-07:00January 11th, 2011|Stories & Articles, Zoning|Comments Off on Glendale Unveils Medical-marijuana Proposals

Alan Sobol Challenges Andrew Meyer to a Verbal Duel

I got an email message from The Consiglieri Group on January 10, 2011, in which Alan Sobol is asking Andrew Meyers of the Arizona Medical Marijuana Association to debate him.  Here’s the text of the challenge:

“The Challenge: Allan Sobol Vs. MPP Local Manager Andrew Meyer.   OPEN CHALLENGE TO ANDREW MEYER.  2 hour Debate/discussion on the contested issues concerning the implementation of the new Arizona Medical Marijuana Act.   Paid conference hall meeting with all proceeds going to AZDHS to offset the cost of applications for low income qualifying patients.  Lets See if Mr, Meyers will respond.”

I’d like to attend, but I’m guessing Mr. Meyer will not accept the challenge.

By |2011-01-15T09:15:00-07:00January 10th, 2011|Stories & Articles|Comments Off on Alan Sobol Challenges Andrew Meyer to a Verbal Duel

Medical Marijuana Raid in San Luis Obispo County Raises Questions

San Luis Obispo Tribune: “on Dec. 27, 45 to 50 officers started serving the search warrants over three days at seven locations. Fifteen people were arrested on various allegations of possessing and selling marijuana. . . . Law enforcement officials say the arrestees were selling and transporting marijuana illegally throughout San Luis Obispo, Santa Barbara and Monterey counties, in violation of the state’s Compassionate Use Act and Medical Marijuana Program.   [The defendants] operated collectives. . . . groups that form to cultivate marijuana for medical purposes for patient and caregiver members. They should only provide a means for facilitating or coordinating transactions between members — and should not purchase marijuana from, or sell to, nonmembers.  They also cannot make a profit.”

By |2017-02-11T17:26:06-07:00January 9th, 2011|California News, Marijuana Crimes|Comments Off on Medical Marijuana Raid in San Luis Obispo County Raises Questions

Arizona Medical Marijuana Association is Alive!

Today the yet to be formed Arizona Medical Marijuana Association (AzMMA) had its attorney send a 17 page letter to the Arizona Department of Health Services with its suggested changes to the December 17, 2010, proposed rules.  For the most part, I think its suggested are good and should be adopted by DHS.  The only change I disagree with is AzMMA’s suggestion to increase the Arizona residency requirement to three years.  Proposition 203 does not contain a requirement that owners of medical marijuana dispensaries be residents of Arizona.  Query:  Could that requirement be an unconstitutional violation of the equal protection clause of the U.S. Constitution?

By |2011-01-18T19:13:56-07:00January 7th, 2011|Stories & Articles|Comments Off on Arizona Medical Marijuana Association is Alive!

Department of Health Services: Medical Marijuana Public Comments

The following was posted on the Arizona Department of Health Services’ blog today:

So far, we’ve received well over 1,300 comments on the Informal Draft Rules that we posted December 17.  Our first comment period ends today.  We’ll be reviewing the comments and revising our initial draft over the next couple of weeks.  We’ll be releasing new draft rules for public comment on Monday, January 31, kicking off our next comment period (which will go through February 18).  After that, we’ll craft the final Rules and publish the finished package on March 28.

The following issues are generating the most comments:

  • The definition/requirements for patient-physician relationship;
  • Adding additional medical conditions including mental illness, PTSD, fibromyalgia, depression, etc.;
  • The fee structure (especially for patients with limited income);
  • The 25 mile limit for patient/caregiver cultivation (which is actually in the Initiative, not the rules);
  • The requirement that dispensaries cultivate 70% of their own product;
  • The processes for approving dispensary registration certificate;
  • The requirement that dispensaries have a medical director;
  • The qualifications for medical directors (e.g. allow other medical professionals including a pharmacist, naturopathic physician, homeopathic physician, family nurse practitioner, physician assistant, or registered nurse to be the medical director);
  • The 2 year residency requirement for dispensary applicants; and
  • The requirement that cultivation facilities be licensed in association with a dispensary (which is actually in the Initiative).

Overall, the comments so far have been constructive and many have been positive and support much of the overall language in informal draft rules.  All the comments on the informal draft rule are part of the public record and will be available for review on our hub 203 website (with personal identifiers removed) by next Wednesday.

By |2011-01-18T19:14:36-07:00January 7th, 2011|DHS Rules|Comments Off on Department of Health Services: Medical Marijuana Public Comments

Medical Marijuana Bill Fails In Illinois State House

CBS Channel 2 Chicago:  “A push to legalize medicinal marijuana failed in the state House [of Illinois] on Thursday.  As WBBM Newsradio 780’s Brian Seay reports, the bill fell four votes short of the 60 it required for passage. The final vote was 60-56.”

By |2011-01-07T07:08:53-07:00January 7th, 2011|Stories & Articles|Comments Off on Medical Marijuana Bill Fails In Illinois State House

Arizona Pharmacy Alliance Comments on Medical Marijuana Rules

Mindy D. Smith, the Chief Executive Officer of the Arizona Pharmacy Alliance sent a letter dated January 7, 2011, to Will Humble, Director of the Arizona Department of Health Services, in which she states the AzPA’s suggested changes to the December 17, 2010, first draft of Arizona’s medical marijuana rules.

By |2011-01-18T19:15:03-07:00January 7th, 2011|DHS Rules|Comments Off on Arizona Pharmacy Alliance Comments on Medical Marijuana Rules

Mesa Tightening Medical Marijuana Rules

Arizona Republic:  “Medical marijuana shops in Mesa will be confined to industrial areas under an ordinance heading for City Council approval in early February.  The council’s third study-session discussion of the state’s new medical marijuana law resulted Thursday in a further tightening of the areas where the council prefers shops to be located.”

By |2012-08-18T09:41:57-07:00January 7th, 2011|Stories & Articles, Zoning|Comments Off on Mesa Tightening Medical Marijuana Rules

Richard Keyt’s Suggested Changes to the DHS Rules

What follows is the text of the suggested changes to the Arizona Department of Health Services’ December 17, 2010, rules that I posted in the comment area on the DHS website today.  Tomorrow, January 7, 2011, is the last day to submit online comments.

1.  Eliminate the requirement for a medical director.  This greatly increases operational costs that will be passed on to the patients.  It’s not in Prop 203 and is unreasonable.  Is there any other retail business in Arizona that must have a medical director?  Do you know if a doctor’s malpractice insurance would cover services to the dispensary?  The doctor may not be covered by malpractice insurance because the insurance company may say that being a medical director for a marijuana dispensary involves an industry that violates federal law and/or does not involve the practice of medicine.

2.  If you retain the medical director, allow licensed pharmacists to be a medical director.

3.  Do not require dispensaries to get a certificate of occupancy.  Many cities (Mesa for example) do not provide a CO,.  It was only a few years ago the Phoenix started issuing them.

4.  Do not require Arizona residency.  It’s not in Prop 203 and is unreasonable.  I don’t believe there is any other type of business in Arizona that must be owned by an Arizona resident.

5.  Give dispensaries guidance on what criteria you will use to select licensees.

6.  Create a preliminary approval so dispensaries can determine they will be able to get a license before spending a large amount of money without any assurance they will actually get a license.  Dispensaries could then build tenant improvements, purchase equipment and hire personnel knowing that they have a good chance of getting the license.  Applicants that are rejected and that do not get preliminary approval, will be spared wasting their money.

7.  Ease up on the requirements for a patient to get a recommendation from a doctor.  As one local doctor wrote recently, doctors can see a patient once and prescribe any number of drugs that are potentially much more harmful than marijuana.

8.  Eliminate or greatly reduce the requirement that a dispensary grow at least 70% of the marijuana it sells.  This growing requirements causes dispensaries to fund and operate a retail business and a farm, both of which are time-consuming and expensive.  Let dispensaries that want to grow more than they sell do so.  It would reduce the capital required by other dispensaries.

By |2011-01-18T19:15:42-07:00January 6th, 2011|DHS Rules, Stories & Articles|Comments Off on Richard Keyt’s Suggested Changes to the DHS Rules

What Legal Contracts Does My Medical Marijuana Dispensary Need?

Question:  What are the various types of contracts needed by all Arizona medical marijuana dispensaries?

Answer:  The following is a list of the contracts that all Arizona medical marijuana dispensaries need.  Because of the unique nature of the business and the risk that an improper action by an employee, independent contract or dispensary agent could cause the loss of a dispensary’s license, it is critically important that the dispensary have very tight contracts that protect the dispensary.  Each contract must be drafted by an attorney who is familiar with and takes into consideration the legal requirements imposed on dispensaries by Arizona’s medical marijuana law and the Arizona Department of Health Services’ rules.  Each dispensary needs:

  1. Lease for the dispensary site
  2. Lease for the cultivation site
  3. Application for Employment
  4. Employment Agreement
  5. Contract with the primary medical director (see “Clauses to Include in a Contract between a Medical Director & a Dispensary)
  6. Contract with the alternate medical director (see “Why Every Arizona Medical Marijuana Dispensary Must Hire a Primary & an Alternate Medical Director“)
  7. Contract with Marijuana Grower Personnel
  8. Authorization to Conduct Background Check
  9. Dispensary Agent Agreement
  10. Employee & Dispensary Agent MMD Law Knowledge Test
  11. Employee Policy Manual
  12. Nondisclosure & Confidentiality Agreement
  13. Independent Contractor Agreement
  14. Premises Security Agreement for security guards
  15. Information Technology Agreement for computer services
  16. Patient Registration Form
  17. Patient Disclosure Form with Receipt
  18. Retail Sales Contract Form with disclosures
  19. Contract to Purchase Marijuana from another Dispensary
  20. Contract to Sell Marijuana to another Dispensary
  21. Marijuana Delivery Contract for anybody who delivers marijuana
  22. Buy-sell Agreement for the Owners of the Dispensary (the exit strategy)

Richard Keyt is an Arizona business lawyer and Arizona medical marijuana attorney.  I’ve practiced business law in Arizona since 1980 and prepared thousands of business contracts.

By |2019-06-14T08:27:46-07:00January 6th, 2011|Legal Issues, Questions People Ask|Comments Off on What Legal Contracts Does My Medical Marijuana Dispensary Need?

How Does My Dispensary Tie Up Land for its Retail & Cultivation Sites?

Question: Must I know my Arizona medical marijuana dispensary and cultivation locations before I file my application with Arizona Department of Health Services to obtain a dispensary license?

Answer:  Yes.  Arizona Revised Statutes Section 36-2804 states:

“Not later than ninety days after receiving an application for a nonprofit medical marijuana dispensary, the department shall register the nonprofit medical marijuana dispensary and issue a registration certificate . . . if . . . The prospective nonprofit medical marijuana dispensary has submitted . . . an application, including:

(i) The legal name of the nonprofit medical marijuana dispensary.

(ii) The physical address of the nonprofit medical marijuana dispensary and the physical address of one additional location, if any, where marijuana will be cultivated, neither of which may be within five hundred feet of a public or private school existing before the date of the nonprofit medical marijuana dispensary application.”

Therefore, Section 36-2804 requires that the application state the name of the dispensary owner and the actual address where the dispensary will sell to patients and where it will grow its marijuana.  Now is the time for all prospective dispensaries to be looking for an buying or leasing the premises where they will operate and grow.  Once you find a site, if the site makes sense and if the zoning allows for the use of the site for a dispensary or cultivation site, you must tie up the site, i.e., enter into a legally binding lease for the premises or a contract to buy it.

Note:  Before you find your site, you must have formed you limited liability company so that it can be the party that signs the lease or purchase contract.  You do not want the personal liability that goes with being the singer on a lease or contract.   If you need me to form your Arizona limited liability company, see the links near the top of the right column of this website.

Because no applicant will know if the applicant will actually receive a dispensary license, it does not make sense for the dispensary to enter into either a lease or a contract to buy unless the lease or contract contains provisions that are unique to the medical marijuana business.  For example, you want a clause in your lease or purchase contract that gives you the option to terminate the lease or purchase option if you do not actually get a license or if you get a license and later lose the license and cannot get it back.  You’ll want a use clause that is appropriate for the business as well as clauses that allow you to make tenant improvements and take actions inside and outside the premises that are necessary to comply with Arizona’s medical marijuana law and the ADHS rules.

By |2012-08-18T09:12:17-07:00January 6th, 2011|Dispensary Leases, Legal Issues, Questions People Ask, Real Estate Issues|Comments Off on How Does My Dispensary Tie Up Land for its Retail & Cultivation Sites?

Arizona Medical Marijuana: Public Comments to be Weighed when Redrafting Rules

Arizona Republic:  “More than 1,000 people have commented on the proposed medical-marijuana rules so far, responding most heavily to a handful of areas that include the definition of doctor-patient relationships and medical directors and limitations on where dispensaries get marijuana. . . .Department officials identified the top 10 suggestions as of Wednesday, including:”

By |2011-01-18T19:22:51-07:00January 6th, 2011|DHS Rules, Stories & Articles|Comments Off on Arizona Medical Marijuana: Public Comments to be Weighed when Redrafting Rules

Glendale to Limit Sites for Medical Marijuana Facilities

Arizona Republic:  “Glendale is proposing a zoning amendment to limit registered non-profit medical marijuana dispensaries to manufacturing and industrial areas of the city.  City staff will host a meeting to gather public comments on the proposed zoning code amendment. Under Proposition 203, the only distance limit prohibits dispensaries from locating within 500 feet of schools.”

By |2012-08-18T09:36:39-07:00January 5th, 2011|Stories & Articles, Zoning|Comments Off on Glendale to Limit Sites for Medical Marijuana Facilities

Arizona Association of Dispensary Professionals Declares War on Arizona Department of Health Services, Marijuana Policy Project & the Arizona Medical Marijuana Association

The Arizona Association of Dispensary Professionals (AZADP) fired a shot across the bow of the Arizona Department of Health Services today when AZADP issued a press release called “AZDHS and MPP Acting in Collusion to limit access to Dispensary Applicants, Monopolization abuses outlined in letter to Arizona Heath Department.”  The article starts:

“We believe that the AZDHS has been influenced by and is conspiring with other organizations, namely the Marijuana Policy Project, (MPP) and their recently established association, the Arizona Medical Marijuana Association, (AzMMA), to create an elitist and monopolistic program where only the wealthy influential, informed sponsors of MPP will qualify for one of the 125 licenses. We believe that the following evidence will show that the AZDHS in collusion with MPP are intentionally developing program rules that are so complicated and costly so as to preclude otherwise qualified applicants merely on the basis of wealth and influence. We believe it is the intention of MPP to control the marketplace.”

If you are interested in obtaining a medical marijuana dispensary license in Arizona, this article is a must read.

FYI:  According to a search of the Arizona Corporation Commission’s website today, there is no entity in Arizona called “Arizona Association of Dispensary Professionals,” but Allan Sobol reserved the name Arizona Association of Dispensary Professionals, Inc., on 11/21/10.

By |2019-06-14T08:24:51-07:00January 4th, 2011|Stories & Articles|Comments Off on Arizona Association of Dispensary Professionals Declares War on Arizona Department of Health Services, Marijuana Policy Project & the Arizona Medical Marijuana Association

Proposed Rules on Medical Marijuana are Illegal, “Cruel and Unreasonable,” Says Valley Doctor

Phoenix New Times:  “Proposed restrictions on Arizona’s voter-approved medical marijuana law are worse than illegal, says one Valley doc — they’re ‘cruel and unreasonable.’  Edgar Suter, a Mesa doctor of nuclear medicine, writes in an a lengthy call-to-arms today that the state Department of Health Services’ suggested rules concerning Proposition 203 probably violate the 1998 Voter Protection Act.”

By |2011-01-05T16:46:06-07:00January 3rd, 2011|Stories & Articles|Comments Off on Proposed Rules on Medical Marijuana are Illegal, “Cruel and Unreasonable,” Says Valley Doctor

Would be Referring Doctor Not happy with First Draft of Rules

Arizona Medical Marijuana:  “The Green Leaf recently asked Dr. Ed Suter, a board certified physician and medical marijuana activist, to share his thoughts on the first draft of medical marijuana regulations released on Dec. 17 by the Arizona Department of Health Services.  Here’s his reaction:”

By |2017-02-11T17:26:04-07:00January 3rd, 2011|DHS Rules, Stories & Articles|Comments Off on Would be Referring Doctor Not happy with First Draft of Rules
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