Arizona Cities Ban Recreational Marijuana Establishments

Hopefully, in time, these cities will reevaluate the deleterious effects these ordinances have on sales taxes and consumer choice.

Arizonans knew zoning issues could cause headaches for dispensary owners. However, what was unanticipated are the new bans by some of the Arizona cities for recreational marijuana establishments.

Shortly after the passage of Proposition 207, otherwise known as the Smart and Safe Arizona Act (the “Act”), several Arizona cities moved to ban recreational marijuana sales, unless the dispensary is a “dual licensee”. A dual licensee means an establishment that is licensed both as a medical marijuana establishment and an adult use (or recreational) establishment.

The Act specifically allows dispensary owners to hold both licenses (medical and recreational) and to sell both types of products from the same dispensary location. The cities in Arizona, like Mesa, found a way to end run the Act by prohibiting, among other things, recreational only marijuana dispensaries. While Mesa and the other Arizona cities are certainly allowed to pass such ordinances, it certainly appears to frustrate the purpose of the Act, even though apparently lawful to do so.

Why did these cities seek a ban of recreational-only establishments? There have been several theories espoused by others. As the Phoenix New Times reported:

Others have since followed Gilbert[] [Arizona’s] lead, creating de-facto monopolies for existing medical marijuana facilities and building barriers for new players looking to get into the new recreational cannabis market in Arizona. In the weeks after the election, several local governments passed similar laws, including Scottsdale, Mesa, Goodyear, and Surprise. Tempe is currently soliciting public input for its own recreational marijuana regulations.

Not only are recreational-only dispensaries banned in some Arizona cities, but so are marijuana testing facilities. For example, as set forth in Ordinance Number 5601 for the City Mesa, “[t]he operation of a marijuana testing facility is prohibited in the City [of Mesa].” Click here to view the entire Mesa Ordinance.

Mesa likewise has banned (a) “the possession and consumption of marijuana and marijuana products on City property”, (b) “delivery of recreational marijuana and marijuana products within the City”, and (c) “the consumption of marijuana and marijuana products on prohibited property.” See Mesa City Ordinance No. 5601.

Photo by Florian Schneider via Unsplash

In addition to these issues, the new ordinances will also have a negative effect on the new Social Equity Opportunity Program in Arizona. As noted in the New Times Article:

[Mason] Cave [president and chairman of the Arizona Cannabis Chamber of Commerce] added that the new restrictions will create obstacles for people to obtain Prop 207’s 26 so-called social equity licenses, which are intended to go to dispensary operators who come from communities disproportionately impacted by cannabis criminalization.

What is likely the most fascinating part of these new restrictions are the purported reasons for such ordinances. As part of the preamble to the Mesa Ordinance, Mesa provided the following reasons for the new bans:

WHEREAS, the City of Mesa, Arizona (the “City”) finds that Proposition 207 authorizes marijuana establishments and testing facilities to use chemical extraction or chemical synthesis, including butane and other flammable gases, to extract marijuana concentrate, which poses a threat to the health, safety and security of the community and increases the responsibilities of law enforcement and other City departments to respond to violations of state and local laws, including building, electrical, plumbing, and fire codes.

WHEREAS, marijuana contains tetrahydrocannabinol, which remains on Schedule I of the Controlled Substances Act pursuant to 21 United States Code sections 811-814, and any possession or use is a violation of federal law pursuant to 21 United State Code sections 841-865.

According to Mesa, marijuana extraction is so dangerous and it creates such a heavy burden for City employees, that it needs to be banned. What about other industries that use similar extraction and chemical techniques? Will they be banned by Mesa next? Since there are taxes imposed on the sale of marijuana, one would assume that these taxes would cover any such additional expenditures by Mesa. And this argument completely overlooks the fact that medical licensees are not banned from these activities. The reasons for the passage of the new ordinance seem rather flimsy once you dig a little deeper.

The second reason set forth above — that marijuana remains a Schedule I drug — likewise misses the point. Mesa permits the sale of both medical and recreational marijuana by dual licensees, so why does it now use federal law as a justification to ban recreational only marijuana sales and related activities? Again, this seems to defy logic. If the federal ban on marijuana was really such a monumental issue, one would assume that Mesa would seek to ban the sale of medical marijuana as well (to the extent permitted by law). If the federal ban on marijuana is eventually lifted, will Mesa and other cities move to retract these ordinances? That would seem logical if that is truly a sound basis to ban recreational use sales.

Unfortunately, these ordinances seem to have gained traction in the Phoenix area cities. Hopefully, in time, these cities will reevaluate the wisdom of these ordinances and the deleterious effects they have on sales taxes and consumer choice.