Nearly three years after a narrow defeat at the polls, a new attempt to legalize recreational marijuana is underway.
Backers of the initiative, many of the same Arizona medical dispensary owners who supported the 2016 ballot measure, have incorporated lessons learned not just from their 2016 defeat, but from laws and initiatives that passed or failed in other states.
The result: The Smart and Safe Arizona Act, which mirrors the 2016 Campaign to Regulate Marijuana Like Alcohol in some ways, but in others is completely different.
A cap on dispensary licenses
Once again, existing medical marijuana dispensaries would be given a leg up when it comes to obtaining licenses to begin selling recreational weed.
The 2016 initiative limited the number of licenses the state could issue for recreational marijuana sales to about 150 dispensaries – a figure roughly equal to 10% of the number of liquor store licenses in Arizona. Of those licenses, preference would have been given to existing medical dispensaries that applied for a recreational license.
Dispensary owner J.P. Holyoak said at the time that preference was given not to protect the business interests of medical dispensaries, but to ensure new recreational sales would be conducted by those familiar with the industry and in good standing with the Arizona Department of Health Services.
The 2020 initiative takes a similar approach, though a cap on the number of recreational dispensary licenses is linked not to liquor stores, but to pharmacies. The proposed law states that the Department of Health Services may issue no more than one recreational marijuana license for every 10 licensed pharmacies, drug manufacturing facilities or wholesaling facilities in the state – put another way, any place “in which or from which drugs are sold, compounded, dispensed, stocked, exposed, manufactured
or offered for sale.”
Stacy Pearson, a campaign consultant for the Smart and Safe Arizona Act, said that’s exactly how DHS currently calculates the number of medical marijuana licenses it issues. The state has issued 131 medical licenses so far, she said, meaning there would be roughly 131 licenses for recreational sales available if the initiative is approved.
“For ease of management at DHS, we kept the ratio the same,” she said.
Of those recreational licenses, preference would be given to two kinds of applications, referred to as “early applicants” in the initiative. The first are registered nonprofit medical marijuana dispensaries in “good standing” with the Department of Health Services.
If approved, those applicants would be required to co-locate, meaning they’d sell recreational and medical marijuana out of the same facility, Pearson said.
What that means is double the licenses won’t double the number of physical dispensary locations.
Most current medical licensees are expected to apply for recreational licenses as well, Pearson added, though it’s unclear exactly how many will. Of the 131 available medical licenses, roughly 115 are currently operational.
The second applicants are those who seek to operate recreational sales in counties without much in the way of medicinal marijuana sales to begin with, meaning counties “with fewer than two registered nonprofit medical marijuana dispensaries.”
Where the tax revenue goes
The Smart and Safe Arizona Act adjusts which areas of government would receive funding from a 16% excise tax on sales of recreational marijuana.
In 2016, the tax revenue was predominantly allocated to education. The Campaign to Regulate Marijuana Like Alcohol sought to place a 15% excise tax on retail sales of marijuana.
While a portion of those funds would have first be used to implement and enforce the new marijuana laws and regulations, a bulk of prospective revenues were earmarked for public schools: 40% would have helped pay for school construction and maintenance, and another 40% would have been dedicated to funding full-day kindergarten programs. The remaining 20% would have gone to DHS to fund substance abuse awareness programs.
State budget analysts estimated in 2016 that recreational sales would raise more than $123 million in total annual revenue for the state.
Funds raised by the latest initiative would be split among a wider variety of state agencies.
Community college districts would receive 31.4% of the funds, about half of which would be distributed evenly among all districts, approximately half would go to community college districts and provisional community colleges in proportion to their enrollment, and a small percentage would be divided equally among provisional community colleges.
Another 31.4% would be allocated to police, fire departments, and sheriff’s offices. Local infrastructure projects would receive 30% of revenues, with those dollars earmarked for the state’s Highway User Revenue Fund.
In addition, 7% would go to a new Justice Reinvestment Fund, which includes substance abuse awareness and prevention programs, reducing the prison population and creating a program to identify those who are eligible for expungement, and the remaining 0.2% would go to the Attorney General’s Office.
The campaign estimates this initiative will bring in around $300 million in tax revenue, more than double the figure estimated during the 2016 campaign.
Packaging and advertising regulations
One area not addressed by the 2016 initiative was the packaging and marketing of marijuana products, particularly edibles. Three years ago, the anti-marijuana campaign focused on products like marijuana gummies and candies to drum up fear that kids would not just have easier access to marijuana if it were legalized recreational, but that kids would be tempted by a drug designed to look appealing to them.
The No On Prop 205 campaign in 2016 placed signs throughout Maricopa and Pima counties that featured pictures of edible marijuana they claimed were “virtually indistinguishable from popular store-brand, drug-free candy.”
“Would you be able to recognize marijuana? Would your children?” the signs stated.
The 2020 initiative attempts to head off that campaign tactic by regulating the packaging and advertising of marijuana products. Broadly, the proposed law says that marijuana products may not be packaged or labeled “in a false or misleading manner.”
More specifically, dispensaries would be barred from producing and selling marijuana products “that resemble the form of a human, animal, insect, fruit, toy or cartoon” – for example, marijuana gummy bears.
The proposed law also specifically bars the sale of marijuana products with names, not just shapes, “that resemble food or drink brands marketed to children.” As for advertising, dispensaries would be required to specifically highlight themselves as the company responsible for an ad, and must ensure that their advertising efforts are targeted only to adults 21 and older.
Pearson said the inclusion of advertising and packaging restrictions is “not about the campaign as much as it is about good policy. It’s the right thing to do… There’s no interest in the industry to market products to kids.”
She noted that the language was inspired by other states that legalized recreational marijuana without such restrictions aimed at protecting children.
“Dispensary owners are parents too. They have no interest in having products that can be confused with products in Circle K,” Pearson said.
One of the most potent arguments against the 2016 recreational marijuana initiative was that it would hamper employers’ ability to discipline or fire a worker who uses marijuana. The 2016 initiative, Prop. 205, did not address that concern and ultimately failed by roughly 3 percentage points.
Having learned their lesson from that failure, backers of the Smart and Safe Arizona Act have attempted to add air-tight language to ensure that employers can continue to have drug-free workplaces, despite legalization.
Where the 2016 initiative did not require employers to allow or accommodate marijuana consumption, the 2020 initiative explicitly spells out that it “does not restrict the rights of employers to maintain a drug-and-alcohol-free workplace.”
Demitri Downing, the founder of the Marijuana Industry Trade Association, said in March that if the 2020 initiative did not explicitly say employers will maintain all rights and control, he would not support it. Now that the language has come out he says that he likes the way the initiative handled employer protections, and he thinks the voters should as well.
“One of the greatest obstacles that employers deal with is psychological issues, substance abuse issues like caffeine and alcohol, and having that protection is paramount,” Downing said. “The writers got it right and anybody who would argue otherwise is wrong.”
In 2016, various chambers of commerce slammed the initiative as anti-business, with the Tucson Hispanic Chamber, for example, calling the initiative a “tort-lawyer’s dream” and arguing that employers could be sued if they refuse to hire someone who tests positive for marijuana.
Garrick Taylor, a lobbyist for the Arizona Chamber of Commerce and Industry, said in May that was one of its biggest concerns for a new initiative. He said if the initiative drafters properly addressed the issue, it would help the chamber to possibly not oppose it. In 2016, the chamber spent roughly $1.5 million in opposition to legalization. Still, he said that does not mean the chamber would support it either.
“In light of our stiff opposition in 2016, the business community will take some serious convincing,” Taylor said, adding that the chamber is “especially concerned about a voter approved effort that would be nearly impossible to amend going forward.”
But whether the language in the new initiative assuaged the chamber’s concerns is still unclear. Taylor recently told Yellow Sheet Report that the chamber is waiting for everything to go through the Legislative Council before it commits to any stance.
Expunging criminal records
One portion of the initiative likely to attract new voters in the years since the last attempt failed is the inclusion of record expungement.
There was no mention of expungement of criminal records in the 2016 language. And while there isn’t an actual database that can be used to figure out the exact number of people who would qualify for the program, Pearson estimated roughly 150,000 Arizonans would be eligible.
The expungement process would not go into effect until July 12, 2021, and would be for anyone who was arrested, charged, convicted or sentenced for possessing, transporting or consuming up to one ounce of marijuana; possessing, transporting or cultivating up to six plants for personal use, or up to 12 plants per household with more than one adult; or possessing, transporting or using paraphernalia.
However, if the prosecuting agency involved can determine the request for expungement has genuine disputes of fact about whether the petition should be granted, the petition for expungement may be denied.
The Smart and Safe Arizona Act also includes an olive branch of sorts to the legislators, one not contemplated in 2016.
The initiative proposes a list of legislative actions that, were the Legislature to try and amend recreational marijuana laws in the future, would be considered OK in accordance with the Voter Protection Act.
The Voter Protection Act is infamous, particularly among GOP lawmakers who use it as a frequent critique of the initiative process, claiming they are unable to amend voter-approved laws even with the best of intentions because their hands are tied by the that law.
Amending voter-approved laws requires a three-quarters majority vote in both the House and Senate, but the Voter Protection Act also requires that those amendments further the intent of the voter-approved law that’s being amended. To assuage those concerns, the 2020 initiative stipulates that “the People of Arizona declare” that certain acts by the Legislature would “further the purpose” of the law.
The section acts as something of a green light for future legislators to make certain amendments, like reducing or eliminating certain offenses or penalties in the proposed law and increasing the amount of marijuana an individual can lawfully possess.
“We’re trying to give the Legislature as much flexibility as possible for this initiative to evolve,” Pearson said.
The list also contemplates a world in which the federal government passes its own laws to regulate legalized marijuana.
Lawmakers could amend the Smart and Safe Arizona Act “to align more closely with federal laws and regulations in the event that marijuana is legalized or decriminalized by the federal government.” That comes with the caveat that those new laws and regulations can’t be more restrictive or punitive than the law approved by voters.
“The funders of the initiative and the industry itself don’t claim to know every answer,” Pearson said. “Certainly as fast as this industry is evolving, we know there’s things that will need to be addressed.”
Including specific language regarding the Voter Protection Act “speaks to the committee’s intent to make good policy,” she said.