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Arizona’s New Smokin’ Deals

Editor’s Note: The Arizona Department of Health Services Director Will Humble is refusing to accept applications for dispensaries.  He is concerned that Arizona will be subject to lawsuits and he is waiting for a federal court ruling on the issue.  In the meantime, Arizona is issuing identification cards to patients who have a doctor’s recommendation for use of marijuana.

In November 2010, Arizona voters approved Proposition 203, the “Arizona Medical Marijuana Act.” Proposition 203 allows for the use of medical marijuana, its cultivation and sale, and for the establishment of medical marijuana dispensaries (MMDs).

All MMDs must register with the Arizona Department of Health Services. The department may not issue more than one medical marijuana dispensary registration certificate for every 10 pharmacies that have registered under Section 32-1929, have obtained a pharmacy permit from the Arizona Board of Pharmacy, and operate in the State of Arizona.

All applicants for a dispensary registration certificate must submit a Dispensary Registration Certification Application no later than June 30, 2011. The following are some of the requirements of an application (please go to Arizona Health Services website for complete list of requirements):


1) Applicant must show that he/she has $150,000 available to begin operating the dispensary.

2) Fingerprints of the individual, principal officers, or board members.

3) Business plan.

4) Applicant can’t owe any government taxes.

5) Applicant can’t have ever filed for bankruptcy

6) Applicant must not have a felony.

7) $5,000 non-refundable money.

8) Applicant must have a complete application.

9) Etc. Etc.


This seems pretty easy right? Wrong!

Additionally, an applicant must also have documentation of ownership of the physical address of the proposed dispensary or permission from the owner of the physical address for the entity applying for a dispensary registration certificate to operate a dispensary at the physical address. And, the proposed dispensary must be located in a location that is compliant with any local zoning restrictions.

In other words, an applicant must either own a property or have leased a property that conforms to the local jurisdictions. On Feb. 15, 2011, the Flagstaff City Council adopted certain amendments to allow for the use, cultivation and sale of medical marijuana. Under Ord. 2011-03, Amended Feb. 15, 2011, Medical Marijuana Uses: “The minimum requirements of this section shall apply to all medical marijuana dispensaries located in the C-3-E (Highway Commercial District Established) and the UC (Urban Commercial) zoning districts, as well as medical marijuana dispensary offsite cultivation locations established in industrial zones.” Additionally, even if you have a properly zoned location, it still must meet additional requirements including, but not limited to, 500 feet from a community college, university, public, private, parochial, charter, dramatic, dancing, etc., and/or 500 feet from a public library or park, and so on (please review the amendment for complete details).

Therefore, in order to have an MMD in Flagstaff, you must own a legal interest in a C-3- E or Urban Commercial zoned property and that same property cannot be located within 500 feet of the above uses.

That doesn’t leave us with too many choices, but does create opportunities.

I’m not going to get into a discussion about the use of medical marijuana (unless you want to email me and I will tell you my opinion about this and the legalization of marijuana). However, I will say that there is an opportunity here for both landlords and entrepreneurs. Landlords will be able to get above market rents and possibly percentage rents tied to the success of the MMD’s operation. Entrepreneurs are able to get into a potentially lucrative market and at the same time, purchase or lease properties at or near their lowest levels in years. FBN


Mark T. Belsanti, CCIM is owner/agent of da Vinci Realty, LLC. He can be reached at 928-779-3800 Flagstaff, 928-254-1770 Sedona, or mark@davincirealty.com. You can view da Vinci Realty’s website at www.davincirealty.com to view his listings and read past articles.


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