Arizona: Recreational cannabis sales begin weeks earlier than expected

In a move that gave local cannabis watchers—and many dispensary owners—a serious case of whiplash, the Arizona Department of Health Services gave the green-light to recreational pot sales late last month, catching a lot of people in the industry off guard.

Harvest Enterprises, Inc., founded by CEO and Tempe native Steve White, had the first-ever Arizona adult use sale in its Scottsdale location and Harvest became the first Tucson-area dispensary to sell recreational marijuana, with patients waiting in line for hours outside the midtown outlet at 2734 E. Grant Road, on opening weekend.

Harvest’s opening came after the AZDHS allowed recreational cannabis sales to begin, letting dispensary owners know adult-use recreational sales can move forward as soon as licenses are approved and dispensaries are set up to handle both aspects of the market.

“This has been really surprising and gives an opportunity for us to have a conversation about how we don’t say a lot of good things about government,” White said. “But this is really a bang-up job by the

department.”

White, who spent $2 million advocating for cannabis legalization last year, said it was important for Harvest to be the first applicant and first seller of legal cannabis in the state and his 15 locations throughout the state are all legally selling weed to adults over the age of 21.

Each application cost $25,000, so White also had to shell out $375,000 to get an early lead on the competition.

But even he was surprised by the speed at which AZDHS reacted during a global pandemic.

Applications for adult-use sales began on Jan. 19, but were restricted to existing medical marijuana establishments that qualified for early “dual license” applications. The language of Proposition 207 that legalized cannabis use for adults over the age of 21 gave AZDHS two months to review and approve

applications.

By the end of the week, though, 86 licenses had been approved. Several Tucson dispensaries have also been authorized for recreational sales, including Desert Bloom Re-Leaf Center (8060 E. 22nd St.), Green Med/Purple Med (6464 E. Tanque Verde and 1010 S. Freeway Drive), Prime Leaf (4220 E. Speedway and 1525 N. Park Ave.) and Nature Med (5390 W. Ina Road in Marana).

Desert Bloom began legal sales last week, while Nature Med has announced it will open to recreational sales on Feb. 25 and Prime Leaf is shooting for March 1.

Most dispensaries are not yet ready to start recreational sales, as there are several barriers to immediately expanding, not the least of which is the current state of the coronavirus pandemic still raging through the state.

Some dispensaries may also run into space issues, as local ordinances put caps on square footage, and there are likely going to initially be supply problems and employee shortages, as industry workers are required to become “licensed agents” through an application process with AZDHS.

In preparation for legalized sales, Harvest began laying the groundwork before Prop 207 even passed. That included licensing hundreds of employees, a process White says was difficult, but AZDHS handled it well.

“It’s not super easy to get hundreds of employees licensed,” he said. “The AZDHS portal was really good, again.”

Most cannabis advocates and those following the process expected sales to begin in late March or early April, but with last week’s announcement, the door opened for an accelerated timetable.

“We were certainly surprised by the speed with which adult-use establishment licenses were issued, given the fact that the early application process began on Tuesday and there were 86 licenses approved by the end of the day on Friday,” said Southern Arizona NORML President Mike Robinette. “We were hearing the earliest openings of adult-use establishments would be mid-March into April. We are happy to see retail marijuana sales commence in such an expedited manner allowing Arizona to be the fastest state to go from a voter-approved initiative to granting licensing for marijuana products to be sold to individuals 21 years of age and older.”

Locally, aside from Harvest, it will be a few weeks for other dispensaries to get up and running with dual sales.

“For us, it’s COVID—public and employee safety,” said Brian Warde, co-owner and CEO of Prime Leaf in Tucson. “Realistically you could have 150 people in line and might see over 1,000-plus patients a day most days.”

Just from the standpoint of current patient patronage, that means to properly social distance Prime Leaf’s two locations would need the equivalent of three football fields of space each to accommodate the current patient load. Warde says he is also waiting for inoculations for his employees that realistically won’t happen before March 1, his target date to kick off adult-use sales.

“Managing the inventory and workflow to ensure medical patients don’t run out of what they need, is also a big consideration,” he said. “We want to give patients what they have come to expect, and not allow the adult-use market to alter our patients’ experience. So [we’re] slow rolling it to make sure we are in the best possible position to meet everyone’s expectations.”

Moe Asnani, owner of Tucson’s Downtown and D2 dispensaries and co-founder of iLava, said that while he wasn’t prepared for the announcement and does not have a definite timeline, the number of calls he’s received asking about recreational weed has added pressure to get started as soon as possible.

“There are two main holdups: capital and inventory. There is also an issue with compliance for employees and we’re hiring as much as we can. It doesn’t take very long, though, because of the electronic system already in place,” Asnani said. “I am building out some proprietary tech to streamline the process and reduce wait times while limiting our employee risk to large crowds and COVID-19.”

Another factor on the supply side of the equation is the need for product testing on the medical side, due to a law that took effect on Nov. 1, 2020.

“There still exists testing backlogs in inventory from mandatory testing that began on medical marijuana,” Robinette said. “That testing will carry over to adult-use products as well.”