Would Be Dispensaries Struggle to Lease a Dispensary Site

My DHS Wish

I continue to talk to many people who are having a very hard time finding a location to operate their Arizona medical marijuana dispensary.   The Arizona Department of Health Services has inadvertently created a nightmarish situation for would-be dispensary owners who do not own the real property on which to operate a dispensary.  The DHS rules coupled with very restrictive city zoning ordinances and many landlords who simply do not want to lease to a medical marijuana dispensary result in many more prospective dispensary tenants than available properly zoned dispensary sites.  A lot of people have told me that they believe that one or more big money outfits are going around Arizona tying up potential sites with the goal of reducing the number of prospective dispensaries that apply for a dispensary license.

A large number of nonprofit entities are all fighting to tie up a small number of properly zoned and available sites throughout Arizona.  This means that there will not be very many dispensary applications filed by the application deadline.  It is a supply and demand problem.  The demand among would-be dispensaries is high and the supply of properly zoned sites with willing landlords is low.  Econ 101 teaches that when demand exceeds supply, the cost of the item (rent) goes up.  Higher rents mean higher prices passed on to patients.  One of DHS’ goals should be to keep the patients cost of medical marijuana down, not be the cause of patients paying higher prices to purchase their medicine.

The current rules and restrictive city zoning ordinances create a bizzaro world where nonprofits that do not have a license to operate an Arizona medical marijuana dispensary are entering into leases and applying for zoning with cities and they will never get a dispensary license.  For many would be dispensaries it is a total waste of time and money, not to mention a waste of the cash-strapped cities’ time and money.

DHS should clarify in the final version of the rules that would be dispensaries need only to affirm on their applications for a dispensary license that their dispensary and grow locations comply with applicable zoning ordinances without the need to actually apply for or receive a city use permit.  The rules should also allow the winners of a license to change the location of their dispensaries and grow facilities after obtaining a dispensary registration certificate, but before obtaining the final dispensary license.  This would allow a dispensary to change locations after obtaining a dispensary registration certificate if the city denies the zoning use permit or any other problem arises with the site location stated in the initial dispensary application.

DHS:  Please amend the rules to solve this terrible problem that will reduce the number of actual dispensaries, increase the number of patients who grow their own and cause higher rents to be passed on to patients.

See “Phoenix Medical Marijuana Locations Reflect Restrictive Zoning.”

By |2011-03-23T07:43:30-07:00March 22nd, 2011|DHS Rules, Legal Issues, Real Estate Issues, Zoning|Comments Off on Would Be Dispensaries Struggle to Lease a Dispensary Site

The Part Local Zoning Plays in the AZ DHS Rules

Sonoran Star Remedies:  “Whoa, hold on there, cowboy!!! . . . There are severe ramifications to having DHS backpedal on the requirement (January 31 draft rules) to have each dispensary be in compliance with local zoning restrictions. I suggest that we take a step back and consider what it would mean to strip away the rights of local municipalities to determine and drive their own zoning process.”

This interesting blog post is apparently in response to “Alan Sobol Adds the Rose Law Group to His List that Includes DHS, MPP & AzMMA” that discusses Alan Sobol’s March 14, 2011, letter to Arizona Department of Health Services Director Will Humble in which he complains about the uncertainty and problems caused by the DHS rules and city zoning ordinances.  The author disagrees with Alan Sobol and suggests that the cities should be able to pick who gets a dispensary license rather than DHS.

By |2015-04-06T18:50:20-07:00March 15th, 2011|DHS Rules, Stories & Articles, Zoning|Comments Off on The Part Local Zoning Plays in the AZ DHS Rules

Alan Sobol Adds the Rose Law Group to His List that Includes DHS, MPP & AzMMA

Alan Sobol’s latest letter to Arizona Department of Health Services Director Will Humble is dated March 14, 2011, and it contains some explosive allegations.  In the letter Mr. Sobol complains about the zoning nightmare created by DHS rules and the cities of Arizona.  He correctly claims that it is the cities of Arizona who are effectively making the decision on who will ultimately get a dispensary license rather than DHS. Here are some choice statements from Mr. Sobol’s letter:

“Although the AZDHS rules are ambiguous and do not specifically require Zoning approval at the first stage of the application process, nevertheless, the Rose Law group has been aggressively pursuing Zoning Approval for their clients. Do they know something that nobody else does? Is Mr. Humble’s final rules going to interpret the current ambiguous rules to mean that you do indeed need ZONING APPROVAL? It is hard to imagine that a State Agency could not have done a better job promulgating their rules, if that was truly their intention.”

“We hereby demand that Mr. Humble immediately clarify his position regarding Zoning Approval with respect to the initial Application process; Is Zoning Approval a requirement or NOT? If zoning approval is a requirement we further demand that the Health Department extend the time for applicants to submit their Dispensary applications. The extended time should be sufficient for all applicants to seek and obtain local Zoning Approval, in any event no less than 60 additional days.”

“we adamantly oppose the requirement that Applicants obtain Zoning approval prior to submission of the initial application. If the Health department requires such zoning approval they are in fact deferring their authority under Title 36 to select the Dispensary licensees to local zoning boards. Under this scenario the Health Department could only consider applicants who were approved by local zoning boards, precluding all others.”

I agree with each of the three statements made above.

Rule R9-17-303.B.5 says the application for a dispensary license must be accompanied by:

“A sworn statement signed and dated by the individual or individuals in R9-17-301 certifying that the dispensary is in compliance with local zoning restrictions

Unfortunately the zoning rules do not explain what it means for “the dispensary is in compliance with local zoning restrictions.” There are two schools of thought on the meaning:

  1. The applicant can make the zoning affirmation if the dispensary site is properly zoned and not too close to a prohibited structure or area.
  2. The applicant can make the zoning affirmation if the application has filed the necessary paperwork with the city and obtained whatever magical city zoning paperwork is required to ultimately operate a medical marijuana dispensary at the site such as a use permit, a variance or a note from the mayor’s mommy saying she really really likes one of the owners of the applicant (I made up the last item).

Ryan Hurley, a zoning attorney with the Rose Law Group was a speaker at a March 3, 2011, seminar sponsored by the State Bar of Arizona.  Ryan said he thought Rule R9-17-303.B.5 meant choice #2.  After the seminar I asked Tom Salow of the DHS if he agreed with Ryan Hurley about the zoning affirmation and he said no – he interpreted the rule to mean choice #1.  Unfortunately it is no legal significance what either Ryan Hurley or Tom Salow think the rule means.  What is important is WHAT DOES THIS RULE ACTUALLY MEAN?  See “Must My Dispensary Obtain a Conditional Use Permit from the City before it can File an Application for an Arizona Medical Marijuana Dispensary License?

DHS needs to clairfy the meaning of the rule.  I hope that the third and hopefully final draft of the rules due March 28, 2011, will clarify this point and make it clear that the applicant need only affirm that its site is properly zoned and not too close to a prohibited structure or area.  It is just stupid and a waste of everybody’s resources for multiple applicants for the one license within a CHAA to go through the actual zoning process and get city zoning approval before the applicant wins the lottery.

Mr. Sobol makes a valid point that the current chaos created by the DHS rules, the CHAAs and local zoning is in effect allowing the zoning authorities to determine who can apply for a license for an Arizona medical marijuana dispensary.  The cities are the gate keepers who decide who gets a site and who doesn’t.  If the rules mean that an applicant for a dispensary license must get city zoning approval before being able to affirm that the site zoning is groovy then the cities are, in fact, selecting which would-be dispensaries will get a dispensary license within their jurisdictions.  This is contrary to Arizona’s medical marijuana laws, which require that DHS determine who gets a dispensary license.

I suggest all would-be dispensaries and their owners to send a letter to Arizona Department of Health Services Director Will Humble and ask him to change the rules to clarify that the affirmation of zoning means only that the site is properly zoned and not too close to a prohibited structure or area.  Send your letter to Will Humble, Director, Arizona Department of Health Services, 150 N. 18th Avenue, Phoenix, AZ 85007.

By |2014-01-05T10:02:10-07:00March 14th, 2011|Legal Issues, Stories & Articles, Zoning|Comments Off on Alan Sobol Adds the Rose Law Group to His List that Includes DHS, MPP & AzMMA