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Final state rules will aid rural pot shops

(Illustration by Gabe Turner/Arizona Capitol Times)

(Illustration by Gabe Turner/Arizona Capitol Times)

Since voters passed Proposition 203 in November, the Arizona Department of Health Services has been racing against the clock to get rules and regulations in place that will guide Arizona’s medical marijuana program.

According to Prop. 203, also known as the Arizona Medical Marijuana Act, ADHS by April 15, must be able to begin certifying qualified medical marijuana patients based on information provided by medical doctors. By May 1, they must be prepared to accept marijuana dispensary applications. As Will Humble, the department director, put it: “It’s crunch time.”

Before those deadlines, however, the Health Department will put out the final version of the rules governing the state’s medical marijuana dispensaries on March 31. This will be the third version of the rules, as the agency has taken public input and published previous drafts of the rules released in December and January.

In an interview with the Arizona Capitol Times, Humble previewed some of the changes in the rules from the January draft. He said he’s particularly pleased with the agency’s plan concerning how dispensary licenses will be distributed, one of the most contentious parts of the rules.

“An overwhelming number of comments are about how the dispensary licenses will work,” Humble said. “I believe that what we have coming will go a long way to address the comments people made.”

Humble said his department has struggled with the dispensary-location issue since passage of Prop. 203, as the new law allows only 125 dispensaries throughout the state. Judging by zoning and use permit applications submitted to cities, he said interest so far in owning and operating dispensaries looks as though it will lead to many more applications for licenses than what’s permitted, particularly in the densely populated metro areas around Phoenix and Tucson.

And that is where the challenge lies for the Health Department. That high level of interest could have resulted in dispensaries clustering only in metro areas, leaving the state’s rural areas underserved or not served at all. To initially address the problem, Health Department officials indicated in the version of the rules released in January that they would grant dispensary licenses using already-established geographic districts called Community Health Assessment Areas (CHAAs).

These districts were established in 2005 for measuring Health Department data unrelated to medical marijuana, and are intended to provide reasonable access to services throughout the state, including rural areas.

The Health Department’s January rules outlined a lottery system for potential dispensary owners, where one license would be given out for each geographical division of the state, based roughly on population densities indicated by the CHAAs. Humble said his department received numerous complaints about the proposed lottery system, because it meant that anyone who could pony up the $5,000 application fee might end up with a dispensary, even if another applicant had much better qualifications and capitalization.

To help address that concern, Humble said the department will use a more detailed application for the dense, urban areas where he expects numerous applicants.

“We’ll have some yes/no questions as an additional filter before they get into the random selection. We’ll ensure that they can be solvent, that (applicants) haven’t gone bankrupt before,” Humble said. “That will cut down on the number of applications we receive in those areas. But if we applied that to Ajo and Kingman, it could lead to getting no applications at all. So it’s a hybrid application process, with additional criteria for urban areas.”

To help ensure that each area of the state gets a dispensary, Humble and Health Department officials came up with a way to encourage potential pot dispensary owners who would have otherwise applied for the metro areas to set up shop in the rural areas.

Humble will reveal a plan in the March 31 final version of the rules that will allow rural dispensaries to have much larger growing operations than those in urban areas. That way, rural dispensaries can offset the financial disadvantage of serving fewer overall patients by selling marijuana to urban dispensaries, which will only be allowed a small cultivation operation.

“So in Ajo, maybe a dispensary will only have 50 or 100 patients, but they can have a much larger growing facility, then contract with a dispensary in north Tempe,” Humble said.

Once actual applications begin coming into the Health Department, Humble said, the agency will post a live, online tally of how many applications have been submitted for any given CHAA.

“People will be able to see where the gaps are,” Humble said. “So if there’s only two days left to submit an application, and nobody has applied for the Ajo CHAA, and if it’s someone’s lifelong dream to own a dispensary, they could submit an application for one of those areas where there’s less interest.”

final rules: what to expect

Department of Health Services Director Will Humble urged the public to expect several changes in the final version that will govern Arizona’s medical marijuana program. Humble is confident that the final rules to be released March 31, compared to the version released in January, will provide the groundwork for an unrivaled state medical marijuana program, particularly in terms of restricting recreational users from getting into the system. Here is a summary of the major changes:

Medical Director Requirement: One issue that has repeatedly come up in public comments submitted following two earlier drafts of the rules is the requirement to have a physician who serves as a medical director for dispensaries. The medical director would act as a watchdog for abuses of the program, and be able to provide qualified medical advice to patients or dispensary owners.

Humble said the complaint is that employing such a medical director will drive up the cost of the marijuana, but that he is inclined to leave the requirement in place, because he believes the oversight will be indispensable in keeping the program legitimately medical.

Edible Marijuana: Humble said “edible marijuana” products have been a sticky issue for department officials as well, and that he believes the rules governing them will have to be very detailed and strict in the final version. In the previous draft rules, the Health Department outlined a plan for allowing marijuana to be transported to commercial kitchens, prepared and transported back to dispensaries. Humble said he has become aware of how this could lead to widespread diversion of marijuana, and that the final rules will likely only allow dispensaries to prepare the edible products.

Nonprofit Status: The precise requirements of dispensaries to maintain their nonprofit nature will also be spelled out in the final rules, as Humble said he is interested in making sure pot stores don’t turn into money-making ventures, far outside of what was intended in Proposition 203.

Inspections: A large number of comments suggested the Health Department require inspection of the marijuana for potency and chemical adulteration, but Humble said final rules will probably not require those inspections.

“That’s going beyond the scope of our expertise,” Humble said. “And it would add a cost to the patients.”

Whether individual dispensaries want to pursue product inspection on their own, Humble said, will be up to them in the end.

Home-cultivation: Among the public comments that ask the Health Department to make rules that contradict Prop. 203 is the provision allowing home-cultivation. The small section of Prop. 203 that makes home-growing possible says that if a qualified medical marijuana patient lives more than 25 miles from an operating dispensary, they can grow pot in their home.

And although the home-growing provision makes it more difficult to prevent some otherwise medical marijuana from being diverted into the black market, Humble said there’s simply nothing he or the Health Department can do to change that part of the new law.

Defining Impairment: One issue that falls outside the Health Department’s rulemaking authority, but which has received a lot of public comment, is the definitions for impairment and rules for dealing with impaired medical marijuana patients.

“We just can’t reach into the impairment issue,” Humble said.

Humble added that his department simply does not have the ability to address some of the comments and complaints his department has received over the past few months.

“I break the comments into three categories,” Humble said. “First, we have the good comments, which we’ve tried to consider in our rule making. Then we have comments that urge us to change parts of Prop. 203, which we can’t do. And we’ve gotten comments about things that are just plain outside of our authority.”

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