The Arizona social justice cannabis program is facing a legal challenge

An Arizona nonprofit and a group of potential investors filed a lawsuit against the state’s cannabis social equity program last week, claiming its rules would result in lucrative marijuana pharmacy licenses for communities harmed by the war on drugs, that would be taken over by existing companies.

The lawsuit brought by the Greater Phoenix Urban League and Acre 41, a group of female investors hoping to apply for a cannabis business license as social justice applicants, alleges that the rules drawn up by the Arizona Department of Health Services (ADHD) regulate the Program does not live up to the goals of Proposition 207, the vote on cannabis legalization passed by voters last year.

“The final rules enacted by ADHD functionally create 26 ‘lottery tickets’ for qualified persons”, it says in the complaint, “instead of a regime of continuous possession and operation of social justice.”

The lawsuit names Arizona State, Governor Doug Ducey, the Department of Health and the agency’s director, Don Herrington, as defendants in the lawsuit. The lawsuit was filed Thursday in the Maricopa County Superior Court. Plaintiffs in this case want the court to invalidate the regulations and order ADHD to write new regulations that are in line with the intent of Proposition 207.

Proposition 207 requires that regulators promote “ownership and operation” in the state’s new cannabis industry for adult use by members of communities disproportionately harmed by cannabis prohibition policies. In October, ADHD published its program rules, which include 26 cannabis pharmacy approvals for applicants who meet at least three out of four criteria set out in the regulation. The health department plans to start accepting applications later this year and award licenses through a lottery early next year, although the lawsuit is set to postpone further action until the case is decided by the court.

Arizona plaintiffs fear “straw man” applicants

Celestia Rodriguez of Acre 41, a plaintiff in the lawsuit, says the rules could result in large, existing cannabis companies using “straw men” applicants to apply for the licenses.

“My real intent is to make sure these 26 licenses stay with real social equity licensees and reinvest in and revive these disproportionately affected neighborhoods,” Rodriguez told the Republic of Arizona on Thursday.

She added that large cannabis companies have already begun recruiting people who could qualify as competitors under the social equity program to form partnerships for the licenses, with the existing companies running the complicated process and application fee of $ 4,000.

“The (multi-state operators) have already scouted the streets with flyers and mailers, sending people door-to-door,” said Rodriguez. “You have definitely put money into a hands-on approach to recruiting social justice applicants.”

Once the social justice licenses are issued, corporate partners will try to take control of the license, Rodriquez says.

“These [investors] come in and sell them the dream, ”Rodriguez told the Phoenix New Times. “They want to buy them up for pennies and add them to the portfolios they’re building.”

“The final rules established by ADHD allow owners who qualify for the Social Justice program to enter into an agreement to sell or transfer their ownership interest in the licensed company at any time after the license is granted, which is consistent with the purpose of the program for social justice runs counter, “it says in the application.

Julie Gunnigle, attorney and policy director for the National Organization for the Reform of Marijuana Laws of Arizona, says activists expected large operators to battle for social justice licenses despite the program’s intentions.

“It’s just this gigantic industrial mistake that we all saw coming,” said Gunnigle.

“But what I didn’t expect,” Gunnigle continued, “was how bold these people would be.”

The lawsuit alleges other concerns plaintiffs have with the social justice program rules, including a requirement that only property, not operation, be required by a social justice applicant. Plaintiffs also argue that social justice businesses should be required to locate in areas affected by the cannabis ban and that applicants who lived in such areas as children but not recently lived should still be eligible for the program.

Jimmy Cool, the lead attorney on the case, said the social justice rules are not as intended in Proposition 207.

“What voters were trying to do was enrich communities affected by the drug war,” Cool said. “From the point of view of our customers, everyone is [the program] makes 26 people enrich. “