On April 8, the Arizona Department of Health Services will issue the 26 final cannabis dispensary licenses, the agency announced on Thursday. Because the number of dispensary licenses in the state is capped at 169, these licenses are each estimated to be worth between $8 million to $15 million.
Some 1,500 applicants are vying for the last 26 licenses in the state’s social equity license lottery. It was designed to give communities harmed by the war on drugs access to the now-lucrative cannabis industry. The licenses, per statute, are meant to be owned by people disproportionately harmed by harsh drug laws.
But the social equity program has been the subject of criticism since its inception, mainly from those who believe it is too easily gamed by already established dispensaries and powerful cannabis companies.
A February investigation by Phoenix New Times found that the majority of applications were backed by multi-state cannabis companies or major investors. Some used shell companies to obscure their identities.
According to contracts New Times obtained, some investors found loopholes in the state’s rules that gave them nearly complete control over the license, even if it was technically still owned by an applicant who qualified for the social equity program.
The state required each applying company to be owned by an individual “disproportionately impacted” by the war on drugs. This was defined by a series of requirements that included income level, ZIP code, and a prior cannabis charge. There was a $4,000 application fee for each applicant.
Many applicants partnered with investors or cannabis companies to do so.
Now, the state will choose 26 of those applicants on April 8 in a random drawing, which will be live-streamed.
Since the application window closed, the state has been reviewing the applications to ensure they comply with the state’s rules.
Demitri Downing, a former lobbyist and founder of the Marijuana Industry Trade Association, said that he was waiting for the state to release a list of applicants that made it through the review process. He said he expects that some percentage of the applications were ultimately disqualified.
“That’s the next big thing, when they give us that final list,” he told New Times. He said the state may be waiting to release the final number because some disqualified applicants are appealing, and still pushing to be included in the lottery.
Arizona Department of Health Services Spokesman Tom Herrmann said the agency will post the short list of final qualified applicants the morning of the drawing. Herrmann did not say what percentage of applications the state had disqualified.
According to its announcement, ADHS has contracted with the Tempe accounting firm Henry+Horne to run the lottery, using independent software.