Timely Court Ruling Keeps Dispensary Application Process on Track

The Honorable Richard Gama, Judge of the Maricopa Superior Court, has again acted again to ensure Arizona voters that the Arizona Medical Marijuana Act (AMMA) will be implemented.   In a February 2, 2012 post, we highlighted Judge Gama’s first in the state interpretation of the AMMA in the Compassion First v. Arizona case.

It was Judge Gama’s ruling, issued in January 2012, that cleared the way for the dispensary process to begin.  He ruled again in that case on May 8, 2012.  In that case, he characterized his earlier ruling in his own words.  In January, he did “precisely” what the would-be dispensary applicants who sued asked, and ordered the State “to promptly implement the AMMA.”

He simultaneously threw out regulations that required dispensary applicants to be an Arizona resident who has submitted a personal state income tax return for the previous three years, never filing for corporate or personal bankruptcy, and is current on child support, taxes and penalties, judgment debts to the government, and government subsidized student loans.  Judge Gama found that those regulations exceeded the limited authority given to ADHS by the AMMA to issue regulations to prevent theft and diversion.

In May, Judge Gama stopped the dispensary applicants who brought the case from coming back with a new challenge to another regulation requiring a medical director.  He did not reach the merits of the claim, ruling on grounds of interest only to litigation attorneys like me.  So there may be future challenges to the medical director requirement.

Arizona Department of Health Services (ADHS) Director Will Humble believes that the medical director requirement is a “key component to making sure that future dispensaries act in the best interest of patients and prevent recreational diversion.”

The timing of the ruling allowed ADHS to move forward with the medical director requirement for the first dispensary application period, which opened May 14 and will last for only two weeks. 

Seven applications were dropped off in the first two hours they were accepted, and there were 18 after two days, and 32 after three days.

The AMMA sets the number of dispensaries as a fraction of the number of pharmacies in the state, 1 dispensary for every 10 pharmacies, with the caveat that there can be at least one per county.  ADHS has decided to issue 126, one for every Community Health Analysis Area (CHAA), a geographic area defined by the agency for various disease monitoring programs.

Humble was candid that the intent of the system was to encourage dispensary applicants to “think rural.”  The rules allowed dispensaries to transfer marijuana on a wholesale market, with the hope that rural dispensaries would also take up cultivation, keeping the grow operations out of Arizona’s urban areas.

Another rule allows dispensary operators to move anywhere in the state after three years.  The hope clearly was that there would be applicants for each of the 126 CHAAs.  That also meant that fewer Qualified Patients (QP) could grow their own, as cultivation is allowed by the AMMA only for QPs who do not live within 25 miles of a dispensary.

So how’s that working out? So far, the applicants are clustered in Arizona’s urban areas.  The most so far are from the Flagstaff area, 12 in its 3 CHAAs, two of which have 5 and 6 applicants.  So far, there are only 4 from the greater Phoenix area, and two from Tucson.  There are many rural areas with zero so far.