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Law Arizona

Arizona’s Tax Revenue From Marijuana Is Soaring High​

Dan Kingston 5 days ago Cannabis News


AZ Adult Cannabis Law

According to new data from the Arizona Department of Revenue (AZDOR), medical and recreational marijuana tax revenue from January through August of 2021 totaled $115,701,426.
For adult-use cannabis sales there is a transaction privilege tax (TPT) rate as well as a 16% excise tax.
“Through August the Department of Revenue has received $25,502,239 in Adult Use TPT, $53,377,725 in Excise Tax, and $36,821,462 in Medical TPT totaling $115,701,426 for calendar year 2021,” AZDOR stated.
Arizona became the 13th state to legalize recreational marijuana for adults 21 and older when the state’s voters passed Prop 207 (the Smart and Safe Arizona Act) on November 3, 2020 by 60% to 40%.
Marijuana use, possession, and cultivation officially became legal for adults 21 and older on November 30, 2020 when the Secretary of State certified the Proposition 207 ballots. And on January 22, 2021, state-licensed dispensaries began legally selling marijuana to adults 21 and older.
 

After recreational legalization, Arizona slowly begins to expunge marijuana offenses

Sixty-nine petitions for expungement had been filed within Pima County as of Tuesday. Advocates estimate hundreds of thousands of people could qualify statewide.

More than 10 years after Joel was first arrested for marijuana, he recounted the story of his high school transgression to a lawyer one more time.

"I was with my brother and my cousins," he told Sen Umeda, one of several attorneys volunteering at a legal clinic at the City of Tucson's Ward 6 office. "We were going to the nightclub, which was like 18 and older at the time. I just remember we were smoking in my car, and a cop rolled up on a bicycle, knocked on my window, and we were like, 'Oh heck! There's like a cop on a bicycle here.' That was the first time I got arrested for weed."

After about 20 minutes, Joel was on his way to potentially clearing that charge from his criminal record — wiping it away through a process called expungement made possible by Arizona voters last year when they passed Proposition 207.

The initiative legalized the recreational use of marijuana by adults age 21 and older.

And it allowed people previously arrested, charged or convicted, of low-level marijuana offenses to expunge those records.

We are not using Joel's last name for his privacy.

But he made the trip from Phoenix to Tucson for the clinic hosted by the Arizona chapter of NORML, the National Organization for the Reform of Marijuana Laws.

Julie Gunnigle, the director of politics with Arizona NORML and a former candidate for Maricopa County attorney, estimated there are about 250,000 to 500,000 people in the state who are eligible for expungements. That includes juvenile records and arrests, and offenses that were charged as higher class felonies.

She said if someone gives an exact number, they're lying.

Sometime the clinics are very popular, said Gunnigle, like one in Show Low earlier this summer. But other times, only a few people show up. She argued those slow clinics demonstrate that prosecuting agencies should be more proactive in finding cases to expunge.

"It has illustrated the folly of making expungement an opt-in process. This should have been universal and automatic," she said. "This should be work that our 15 county attorneys and our [attorney general] are doing entirely on their own.”

Sixty-nine petitions for expungement had been filed within Pima County, according to the county attorney's office as of Tuesday.

The office said of those, 42 have received partial expungements, such as clearing the marijuana possession charge but not a charge for paraphernalia. And one petition has been denied, but the attorney's office is asking for reconsideration.

Gunnigle said some people are struggling to believe expungement is real or they've become accustomed to life with their charges on their record.

But others want their record cleaned, she said. They want to regain access to public benefits, student loans, housing, voting rights and more.

"We are still not reaching the most marginalized in our society and the most criminalized by the war on cannabis," she said.

In Joel's case, he said he's stressed about the felony and fines that became a criminal restitution order. Now when he gets his state tax return or if he sells his vehicle, the state applies a cut to his restitution balance.

"If they do get expunged, it's going to be a new life for me. That won't be on my record anymore," said Joel.

The American Civil Liberties Union reports Black people in Arizona are three times more likely to be arrested for marijuana possession than white Arizonas.

Zsa Zsa Simone Brown is with Acre 41, an organization led by Black women trying to educate people about equity issues in a variety of industries, including marijuana.

"We're what, three times more likely to be arrested for cannabis? However, we have no ownership in the space, so we are trying to find some equity in that," she said.

Proposition 207 does have a social equity component to it, setting aside 26 licenses for "individuals from communities disproportionately impacted by the enforcement of previous marijuana laws."

To Simone Brown that's Black and brown communities who are disproportionately arrested for marijuana offenses. But the Arizona Department of Health Service has four broader qualifications for those licenses and three of them need to be met to qualify. They look at household income, if people live in those communities disproportionately affected by past marijuana laws, if they've been negatively impacted by those laws via a relative's conviction and if they themselves have been adversely affected by those laws — like people qualifying for expungements.

For those interested in expungement, Arizona NORML has an online petition portal on its website, and for those curious about the social equity licenses, ADHS will accept applications in December.
 

Arizona unveils applicant criteria for new recreational cannabis retail permits​


By MJBizDaily Staff
October 11, 2021
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Arizona regulators announced a list of 87 zip codes across the state where applicants for 26 social equity retail marijuana licenses must have recently resided.
The 2020 ballot measure passed by voters legalizing adult-use marijuana business requires the state health department to issue the 26 licenses to applicants “from communities disproportionately impacted by the enforcement of previous marijuana laws.”
Applicants must have lived in a zip code for at least three of the five past years, the Arizona Republic reported.
Other scoring criteria include past marijuana convictions of the applicant or family member as well as household income.
The list appears to focus on zip codes in proximity to Native American reservations, according to the Republic.

“This is the first time I’m aware of the state of Arizona has basically admitted there are some communities that have been unfairly targeted by law enforcement and prosecutors,” Will Humble, executive director of the Arizona Public Health Association, told the newspaper.
“They had to be forced by voters to admit it.”
The licenses are expected to be awarded in early 2022, after the screen process is complete, the Republic reported.
The additional 26 licenses will bring the total adult-use retail stores in Arizona to 169.
 

Arizona unveils applicant criteria for new recreational cannabis retail permits​


By MJBizDaily Staff
October 11, 2021
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Arizona regulators announced a list of 87 zip codes across the state where applicants for 26 social equity retail marijuana licenses must have recently resided.
The 2020 ballot measure passed by voters legalizing adult-use marijuana business requires the state health department to issue the 26 licenses to applicants “from communities disproportionately impacted by the enforcement of previous marijuana laws.”
Applicants must have lived in a zip code for at least three of the five past years, the Arizona Republic reported.
Other scoring criteria include past marijuana convictions of the applicant or family member as well as household income.
The list appears to focus on zip codes in proximity to Native American reservations, according to the Republic.

“This is the first time I’m aware of the state of Arizona has basically admitted there are some communities that have been unfairly targeted by law enforcement and prosecutors,” Will Humble, executive director of the Arizona Public Health Association, told the newspaper.
“They had to be forced by voters to admit it.”
The licenses are expected to be awarded in early 2022, after the screen process is complete, the Republic reported.
The additional 26 licenses will bring the total adult-use retail stores in Arizona to 169.
Now I'm super curious which part if any of my genetic makeup qualifies for social equity.
Like is a Sean King or Rachel Dolenzal A minority or how's about a Elizabeth warren is she a qualified applicant?
What % of minority dna makes one oppressed,what happens when Caucasians are the minority?
What about places where said Caucasians are the minority?
What is the cut off for that sweet,sweet privelage?
 

Arizona tightens social equity rules in advance of cannabis licensing​


By MJBizDaily Staff
October 18, 2021
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Arizona regulators finalized rules for the 26 social equity licenses to be issued as part of the state’s adult-use cannabis program, adding language that prevents an applicant from entering into a prior agreement to sell or transfer the license to a nonqualifying operator.
The Arizona Department of Health Services issued the final rules last week, with applications scheduled to be accepted during the first two weeks of December, the Arizona Daily Star in Tucson reported.
The licenses are to be selected by a random drawing in early 2022.
The adult-use measure passed by voters in November 2020 requires Arizona to issue licenses to applicants “from communities disproportionately impacted by the enforcement of previous marijuana laws.”
As previously reported, applicants must live in one of 87 zip codes for at least three of the five past years. Those are areas deemed to have been disproportionately impacted by the war on drugs.
Licensing also factors in household income criteria and whether the applicant or family member has marijuana convictions.
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Critics said the final draft is better because it will prevent applicants from making deals now to sell out to large operators once they win a license.
“But there’s still some things that are missing,” such as a point-based application system and more controls on transferring social equity licenses, Zsa Zsa Simone Brown, a potential applicant, told the Daily Star.
The social equity licensing could mark the end of available retail store permits at least in the short term, based on a store-to-pharmacy formula.
But Arizona could continue to see merger and acquisition activity.
Most notably, Florida-based Trulieve Cannabis recently acquired Arizona’s leading marijuana operator, Harvest Health & Recreation.
 

Eastern Arizona Town Faces Massive Lawsuit in Wake of Bad Pot Deal​

DAVID ABBOTT OCTOBER 7, 2021 8:36AM
Eastern Arizona Town Faces Massive Lawsuit in Wake of Bad Pot Deal

springervilleaz.gov


In November 2020, the Town Council of Springerville, an Arizona town located in Apache County near the New Mexico border, voted to rezone some property near its airport.

A pair of land parcels previously designated as light industrial were approved for industrial use, and a conditional use permit was issued for a “medical marijuana cultivation, manufacturing and infusion facility." The changes were intended to pave the way for a company called White Mountains Flower, LLC, to build a 50,000-square-foot greenhouse and an 8,000-square-foot building on 19.5 acres of land.

As it turns out, though, the town did not have the authority to authorize any kind of cannabis business on the property. The Springerville airport is "federally obligated," meaning the town has accepted federal funds for airport development and operations under the federal Airport Improvement Program. And because marijuana is still illegal under federal law, Springerville would be putting its airport federal funding at risk and opening itself up to criminal prosecution for inviting a pot company to do business there.

In April, after hearing from the Federal Aviation Administration, the town pulled out of its lease and development agreements with White Mountains Flower and ordered the company to cease and desist building on the property. WMF was subsequently evicted and left a substantial amount of work behind.

Now, it appears that WMF intends to sue Springerville over all the trouble it ran into when trying to build there.

WMF eventually moved on to Eden, Ariz., northeast of Safford, “in an effort to mitigate its damages,” according to a notice of claim filed in late August by Larry Wulkan of Zwillinger Wulkan, a Phoenix-based law group. (A notice of claim is a letter that must be sent to a municipality before suing them and is often a precursor to a lawsuit.) The company is seeking $6 million in damages incurred and future income lost.

The claim alleges that Springerville did not actually own the land and that when Springerville learned about problems with land ownership, it “took no action” to fix the problems.

“The Town has also breached the covenant of good faith and fair dealing, which is implied in every contract,” the claim states. “It has failed to honor the agreements entered into and which provided White Mountains Flower the rights it bargained for which were conveyed by the Town in the Development Agreement.”

WMF claims it spent no less than $3.5 million in building materials and labor, and the final calculation is likely to exceed $4 million.

Additionally, the company claims that “net annual” rent for the Springerville property would have been $9,600 for 25 years, while in Eden its net annual rent is $500,000. Quite a difference there.

“The 25-year differential will cost White Mountains Flowers $12.5 million,” the claim states.

Neither Town of Springerville officials nor the WMF's attorney would comment for this story. News of the suit was first reported by the White Mountain Independent.
 

Arizona suit aims to keep social equity permits away from large marijuana firms​


By MJBizDaily Staff
November 18, 2021

A lawsuit filed against the state of Arizona by a cohort of social equity advocates alleges that regulators haven’t done enough to ensure that 26 cannabis business permits will wind up with entrepreneurs who were actually harmed by the war on drugs and that the licenses might instead become controlled by marijuana multistate operators.
The suit, filed by the Greater Phoenix Urban League and social equity company Acre 41, claims that the final state regulations adopted by the Arizona health department don’t go far enough to protect the intent of the social equity provisions in state law.
According to a news release issued by the plaintiffs, “as it stands now, the regulations proposed by the state do not prohibit venture capital firms and large, mostly white-owned, multi-state marijuana companies from snatching up all social equity licenses from the 26 successful applicants – effectively defeating the purpose of the voter-approved social equity program.”
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The Phoenix New Times reported that many existing marijuana companies are aggressively trying to recruit qualified social equity candidates to partner with in order to obtain some of the 26 available licenses.
The 26 permits will likely prove extremely financially valuable considering they will bring the total number of retail licenses to 169 in the limited market.
 

Arizona’s cannabis market is booming, but social equity concerns linger​


By Jeff Smith, Legal & Regulatory Reporter
Chart showing sales growth and projections for Arizona medical and recreational marijuana.
Cannabis sales in Arizona are thriving nearly a year after the state’s adult-use program launched, but some industry officials fear smaller operators, including social equity license holders, risk getting swallowed by big companies.
Medical and recreational sales combined topped $1.1 billion in the first 10 months of this year alone, and the MJBizFactbook projects adult use will drive combined annual revenue to $3 billion by 2025.
Industry officials said the boom reflects the novelty of adult-use cannabis, a broader range of products and coronavirus-related federal stimulus checks distributed in 2020 and earlier this year.
The entrance of multistate operators over the past couple of years has ushered in a new level of sophistication and additional product choices for consumers, experts agreed.
The state is preparing to issue 26 social equity licenses to minority and economically disadvantaged entrepreneurs.
But some industry officials worry those operators will find it hard to compete or might ultimately be gobbled up by larger operators, including MSOs.
“Certainly, there is pressure on the smaller regionals to grow, grow, grow,” Arizona cannabis attorney Janet Jackim said.
“That’s the cycle of the new industry – get more locations, push out more products,” she added. “They have to have acquisitive growth.”
Consolidation represents ‘natural evolution’
Another cannabis attorney, Laura Bianchi, noted that “consolidation is the natural evolution of any industry.”
In Arizona, the consolidation trend is pronounced because of the state’s limited-license, vertically integrated structure.
The numbers break down this way:
  • 130 medical marijuana licenses converted into dual MMJ and adult-use permits.
  • 13 rural licenses issued in April to fill coverage gaps.
  • 26 recreational-only social equity licenses that will be issued around the spring of 2022 through a lottery – unless it’s stopped by legal challenges.
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The rural licenses already have been flipping.
Jackim said one rural license recently sold for more than $8 million – just a paper license without any real estate or facilities.
“They (the buyers) know they’ll get their investment back quickly,” Jackim said.
She said many operators are finding they can make good money in Arizona from specialty marijuana products such as concentrates and edibles that offer a high profit margin.
As for the social equity licenses, the application process ends Dec. 14, and experts believe as many as 2,000 applications could qualify for the lottery based on how many potential applicants took a required state training program.
The recreational-only equity licenses are so valuable – they would fetch $10 million-plus on the market – that they’ve caused an eruption of alleged backroom deals and two lawsuits.
Individuals who qualify under the provisions laid out by the state’s social equity program must own at least 51% of the business and meet three of four criteria based on income, past marijuana convictions and residency in a community deemed as disadvantaged.
Social equity partners heavily courted
But the combination of those requirements and the fact these are the last adult-use licenses to be issued have caused large operators to aggressively recruit social equity partners.
The Phoenix New Times reported recently that those recruitment efforts have included sending flyers to individuals living in the areas targeted as disadvantaged, and offering financial inducements to partner up.
“It’s very, very disheartening to see how this program is going,” said Celestia Rodriguez, co-founder of Acre 41, a social equity applicant that has filed a lawsuit to stop the process.
The lawsuit claims the program doesn’t go far enough to ensure that the licenses will be controlled by social equity businesses.
A hearing on the case is scheduled for January, but legal experts say it’s likely the court will give the state latitude and decline to intervene.
Rodriguez said she’s seen agreements where social equity-qualified individuals are offered $1,000 just to partner on an application.
“MSOs are stuffing the ballot,” she said. “I wouldn’t be upset if they were partnering and treating them (individuals) as true social equity partners, but that’s not the case.”
As the rules now stand, the social equity licenses can immediately be resold outright, she said.
Several experts interviewed agreed, while Jackim said she reads the rule as requiring the 51% to be sold to another social equity individual.
“I can bet my last dollar that they (the larger operators) most definitely will get control of the licenses,” Rodriguez said.
Two companies aggressively recruiting social equity partners declined to talk with New Times, while an official from Elevated Arizona told the publication the company wanted to work with people to provide capital and experience and wasn’t “trying to buy anybody out.”
Big cannabis concerns foreshadowed
Not that these trends weren’t predicted.
Turn back the clock 18 months, and MSOs were moving aggressively into Arizona’s medical cannabis market in anticipation of recreational marijuana. An adult-use industry was approved by Arizona voters in November 2020 and launched soon after in January 2021.
Experts worried then that the industry-backed recreational marijuana initiative – the Smart and Safe Arizona Act – would favor existing MMJ license holders because it would allow them to secure the most adult-use permits.
Today, Florida-based MSO Trulieve Cannabis is in the top spot in the state after acquiring leading operator Harvest Health & Recreation.
Trulieve has 16 stores in operation in Arizona and 320,000 square feet of cultivation and processing space, three additional licenses and an option to acquire a 20th license.
Massachusetts-based Curaleaf Holdings has nine stores in operation in Arizona, while Chicago-based Verano Holdings has six after a wave of acquisitions earlier this year.
There are a number of Arizona-based operators as well, but they have fewer licenses.
Greta Brandt, for example, is president of Phoenix-based The Flower Shop, which has three locations in the Phoenix metro area.
She has seen the spurt of mergers and acquisition activity, most recently after voters approved adult use last year.
Brandt acknowledges the pressure to grow bigger to compete.
The 26 equity license holders will take some market share, she noted.
Adult-use sales have started to plateau after a giddy start, and a product glut is a possibility because of all the cultivation projects in the pipeline in Arizona.
She said companies that have only two, three or four licenses “will be seeking to acquire more licenses to remain competitive against the larger MSOs.”
That includes The Flower Shop: “We’re always looking,” Brandt said.
She said The Flower Shop is working with partners to apply for a social equity license, but she disagrees with the practices some are engaged in.
Brandt predicts that 80% of the social equity licenses will change hands, “which defeats the purpose of the social equity licenses.”
As for her company, she said, it’s predominantly female-run with a focus on hiring minorities and veterans. “That’s where I can give back,” she noted.
Bianchi, founding partner of Scottsdale-based Bianchi & Brandt, said she understands concerns that Arizona might become dominated by big cannabis, but she cited The Flower Shop, one of the law firm’s clients, as an example of a strong smaller operator that has grown organically.
Expansion options for local companies
For those local operators, Bianchi said, expansion options include:
  • Building out more advanced cultivation and processing facilities.
  • Acquiring one of the rural licenses or social equity licenses.
  • Branching out to new markets elsewhere in the country.
Brandt, for example, also has a medical cannabis operation in Utah.
But, in terms of M&A, Bianchi said, there also needs to be the recognition that “you’re buying high,” that prices have skyrocketed.
As for social equity, she said she believes the state is “really trying to do the best it can” and a “lot of people out there want to be good partners and meet the goals of the program.”
Bianchi said partnerships can be beneficial in helping social equity applicants have access to capital, expertise and the tools they need to succeed.
Demitri Downing, founder of the Arizona Marijuana Industry Trade Association, said the legal challenges to Arizona’s social equity process should be “getting people to look at the big picture.”
He believes the state’s limited licensing scheme is an “unnecessary obstacle to social equity,” and “we should be worried about big cannabis evolving from within.”
“I think we’ve got it all wrong,” Downing said. “We should be moving away from the paradigm of limited licensing” to a free market similar to the MMJ industry in Oklahoma.
He said tax revenues then could be used to create social equity funds at the local level. “Let them (local officials) determine who deserves social equity.”
For example, in Arizona, some of those who benefit should be tribal members who were convicted of running illicit marijuana operations, said Downing, a former tribal prosecutor.
“Those are the entrepreneurs who should be awarded.”
Jeff Smith can be reached at jeff.smith@mjbizdaily.com.
 

Arizona gets 1,500-plus applications for cannabis social equity licenses​


By MJBizDaily Staff
December 17, 2021

Arizona marijuana regulators received more than 1,500 applications from cannabis entrepreneurs hoping to win one of the 26 highly coveted social equity permits that will be up for grabs via lottery early next year.
According to the Associated Press, the Arizona Department of Health will review all applications to make sure they’re eligible as social equity candidates, but an exact date for the lottery has yet to be determined.
Under the 2020 ballot measure that legalized adult-use marijuana, the social equity permits are to be allocated to “people from communities disproportionately impacted by the enforcement of previous marijuana laws.”
The window for applications closed Dec. 14, and the licenses are considered highly valuable given that Arizona caps the number of marijuana permits at the state level.
In addition to the social equity licenses, there are only 143 other permits available, and many have already sold for millions of dollars to large companies.
Social equity advocates are concerned that the 26 permits also will wind up in the hands of white-owned companies.
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A lawsuit filed in November by the Greater Phoenix Urban League and other stakeholders wants regulators to guarantee that the licenses will be given to recipients who were harmed by the war on drugs and not to representatives of large multistate operators. A hearing is scheduled for January in the case.
Large operators reportedly have sought to recruit social equity partners to skirt the restrictions.
According to the Phoenix New Times, the recruitment efforts have included sending flyers to individuals living in the areas targeted as disadvantaged and offering financial inducements to partner up.
 
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social equity permits are to be allocated to “people from communities disproportionately im
By “communities” they mean black Americans.

Used to be called affirmative action until that phrase fell far out of favor.

Me, anything based on race is “racist”. by definition of the word....in English....and not whatever the latest political spin is.
 
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Social Inequity could include income and education.
Could, yes....but that is not what these provisions in state regulations address to best of my knowledge.
 
Could, yes....but that is not what these provisions in state regulations address to best of my knowledge.
Pretty sure it includes all people of color, Blacks, Hispanic, Asian, anyone who can show they were affected by a prior arrest for weed .
This article explains what's happening in Arizona

Arizona's 'social equity' program for marijuana licensing draws some concerns​

From the Arizona Daily Star reporter Edward Celaya's Top 5 stories of 2021 series​

Marijuana

Arizona will be awarding 26 licenses to operate marijuana dispensaries through a "social equity" program.
Erin Hooley / Chicago Tribune


The rules governing eligibility for Arizona’s program awarding marijuana dispensary licenses to individuals from communities hit hardest by the war on drugs are almost finalized.
But critics argue the rules do not go far enough to help those the program is intended for — lower income residents from underserved communities who have, or have a family member, with minor marijuana convictions.
Passed as part of Proposition 207, which made adult-use recreational marijuana legal in the state, the “social equity ownership” program sets aside 26 licenses for “people from communities disproportionately impacted by the enforcement of previous marijuana laws.”

“It was also supposed to remove what lots of people viewed to be a perverse situation where a person selling cannabis with a license could become a billionaire and a person selling cannabis without one could go to prison for decades,” said Julie Gunnigle, board member for the Arizona chapter of NORML, which advocates for reforming marijuana laws.

However, it does not mention specific communities.
While the program could be a game changer to Black, Hispanic, veterans and other individuals in underserved communities, it could also fetch license winners a cool payday — since the licenses can be sold — and ultimately leave out the people it was supposed to help in the first place.


The biggest problem​

The inclusion of social equity licenses was part of a package of rules included in the recreational marijuana proposition ostensibly to level the playing field by allowing those who may have been impacted by the enforcement of drug laws to obtain a license, Gunnigle said.
However, according to Gunnigle, there is a fatal flaw at the heart of the program: the lack of constraints on the transferability of the licenses as soon as they are awarded under the social equity program.


That, and money.

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She estimates a newly won license could fetch anywhere between $10 million and $20 million for the holder on the open market. That leaves the possibility where an individual is awarded a social equity license and turns around and sells it to someone who otherwise would not qualify.
“When you create a program like this, where licenses are freely transferable on Day 1 and are transferable to other people other than social equity applicants and doesn’t have any strings attached … you’ve created a system that’s just right for exploitation,” said Gunnigle.
Zsa Zsa Simone Brown, a Black woman, veteran and owner of a cannabis lifestyle and wellness brand, agreed with Gunnigle’s assessment.

“If that’s what it says, and we’re gonna allow a management services organization or someone who already has a dispensary to buy that, then it’s no longer a social equity license,” said Brown, who is a potential applicant seeking one of the licenses.

Brown would like language added that says a social equity license winner may sell his or her license but only to another qualified applicant, and not an already established business or corporation.
Brown’s biggest fear is instead of a dispensary ending up in the hands of someone living in and from a community affected by the war on drugs or considered impoverished, it could end up in the new hip and trendy section of a city.

“You’re not going to get anything different if you keep rocking with the same set,” she said.

Broad rules, qualifications​

Although not fully codified yet, the Arizona Department of Health Services, the agency tasked with overseeing marijuana distribution, issued a draft proposal in May laying out what qualifications and requirements applicants in the program must meet.
On top of a $5,000 nonrefundable application fee and having to have lived in the state at least three of the last five years, applicants must meet four of the following five stipulations:

A household income of less than 400% of the federal poverty level in at least three of the last five years. The current federal poverty level is $26,500 for a family of four, meaning an applicant’s household income has to be less than $106,000.
The person has to have been convicted of charges related to marijuana or marijuana paraphernalia and does not have an excluded felony offense, or had a conviction and has petitioned for expungement of charges relating to the possession of less than 2½ ounces of marijuana.
The person has to have a spouse, surviving spouse, parent, child, sibling or legal guardian convicted of a violation of state or federal laws related to marijuana or marijuana paraphernalia.
Complete a state-approved training course on running a dispensary.
One rule has language that is still to be finalized by Sept. 1, according to the health department website:
An applicant has to have lived at least three of the last five years in a “community that has been disproportionately affected by the enforcement of Arizona’s previous marijuana laws.”
According to Steve Elliott, communications director for the state health department, the 26 social equity ownership licenses, which can be applied for during a brief window between Dec. 1 through Dec. 14 this year, will be distributed by way of random drawing sometime in late December.

Because the department expects so many applications to be submitted for the 26 licenses, the exact method of selecting the winners has yet to settled, Elliott said.
The rules, on their face, seem benign, and almost rise to the level of what the spirit of Prop. 207 meant to solve — leveling the playing field, but Brown said she does not see specific enough language within the rules to assure her the “social equity” part of the program is fulfilled.
“They have not mentioned that people of color and veterans and Hispanics had been the people who have been disproportionately attacked and have suffered throughout the war on drugs,” she said.
Brown points to that broad language, the $5,000 nonrefundable application fee and some of the residential qualifications as hurdles that are seemingly made to keep her, and others like her, from realizing their true financial and business potential by allowing almost anyone to qualify and apply.
“I know some young men in my area who happened to be white men who would qualify for one of those easily based on this,” she said. “They may have had a cannabis conviction or the area that they chose to live in … the different criteria just make it still so vague.
“I just feel like this is another opportunity for the state to collect millions of dollars in applications for a handful of licenses,” Brown said. “And they’re going to go to the people who already had them.”
 
Pretty sure it includes all people of color, Blacks, Hispanic, Asian, anyone who can show they were affected by a prior arrest for weed .
This article explains what's happening in Arizona

Arizona's 'social equity' program for marijuana licensing draws some concerns​

From the Arizona Daily Star reporter Edward Celaya's Top 5 stories of 2021 series​

Marijuana

Arizona will be awarding 26 licenses to operate marijuana dispensaries through a "social equity" program.
Erin Hooley / Chicago Tribune


The rules governing eligibility for Arizona’s program awarding marijuana dispensary licenses to individuals from communities hit hardest by the war on drugs are almost finalized.
But critics argue the rules do not go far enough to help those the program is intended for — lower income residents from underserved communities who have, or have a family member, with minor marijuana convictions.
Passed as part of Proposition 207, which made adult-use recreational marijuana legal in the state, the “social equity ownership” program sets aside 26 licenses for “people from communities disproportionately impacted by the enforcement of previous marijuana laws.”

“It was also supposed to remove what lots of people viewed to be a perverse situation where a person selling cannabis with a license could become a billionaire and a person selling cannabis without one could go to prison for decades,” said Julie Gunnigle, board member for the Arizona chapter of NORML, which advocates for reforming marijuana laws.

However, it does not mention specific communities.
While the program could be a game changer to Black, Hispanic, veterans and other individuals in underserved communities, it could also fetch license winners a cool payday — since the licenses can be sold — and ultimately leave out the people it was supposed to help in the first place.


The biggest problem​

The inclusion of social equity licenses was part of a package of rules included in the recreational marijuana proposition ostensibly to level the playing field by allowing those who may have been impacted by the enforcement of drug laws to obtain a license, Gunnigle said.
However, according to Gunnigle, there is a fatal flaw at the heart of the program: the lack of constraints on the transferability of the licenses as soon as they are awarded under the social equity program.


That, and money.

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She estimates a newly won license could fetch anywhere between $10 million and $20 million for the holder on the open market. That leaves the possibility where an individual is awarded a social equity license and turns around and sells it to someone who otherwise would not qualify.
“When you create a program like this, where licenses are freely transferable on Day 1 and are transferable to other people other than social equity applicants and doesn’t have any strings attached … you’ve created a system that’s just right for exploitation,” said Gunnigle.
Zsa Zsa Simone Brown, a Black woman, veteran and owner of a cannabis lifestyle and wellness brand, agreed with Gunnigle’s assessment.

“If that’s what it says, and we’re gonna allow a management services organization or someone who already has a dispensary to buy that, then it’s no longer a social equity license,” said Brown, who is a potential applicant seeking one of the licenses.

Brown would like language added that says a social equity license winner may sell his or her license but only to another qualified applicant, and not an already established business or corporation.
Brown’s biggest fear is instead of a dispensary ending up in the hands of someone living in and from a community affected by the war on drugs or considered impoverished, it could end up in the new hip and trendy section of a city.

“You’re not going to get anything different if you keep rocking with the same set,” she said.

Broad rules, qualifications​

Although not fully codified yet, the Arizona Department of Health Services, the agency tasked with overseeing marijuana distribution, issued a draft proposal in May laying out what qualifications and requirements applicants in the program must meet.
On top of a $5,000 nonrefundable application fee and having to have lived in the state at least three of the last five years, applicants must meet four of the following five stipulations:

A household income of less than 400% of the federal poverty level in at least three of the last five years. The current federal poverty level is $26,500 for a family of four, meaning an applicant’s household income has to be less than $106,000.
The person has to have been convicted of charges related to marijuana or marijuana paraphernalia and does not have an excluded felony offense, or had a conviction and has petitioned for expungement of charges relating to the possession of less than 2½ ounces of marijuana.
The person has to have a spouse, surviving spouse, parent, child, sibling or legal guardian convicted of a violation of state or federal laws related to marijuana or marijuana paraphernalia.
Complete a state-approved training course on running a dispensary.
One rule has language that is still to be finalized by Sept. 1, according to the health department website:
An applicant has to have lived at least three of the last five years in a “community that has been disproportionately affected by the enforcement of Arizona’s previous marijuana laws.”
According to Steve Elliott, communications director for the state health department, the 26 social equity ownership licenses, which can be applied for during a brief window between Dec. 1 through Dec. 14 this year, will be distributed by way of random drawing sometime in late December.

Because the department expects so many applications to be submitted for the 26 licenses, the exact method of selecting the winners has yet to settled, Elliott said.
The rules, on their face, seem benign, and almost rise to the level of what the spirit of Prop. 207 meant to solve — leveling the playing field, but Brown said she does not see specific enough language within the rules to assure her the “social equity” part of the program is fulfilled.
“They have not mentioned that people of color and veterans and Hispanics had been the people who have been disproportionately attacked and have suffered throughout the war on drugs,” she said.
Brown points to that broad language, the $5,000 nonrefundable application fee and some of the residential qualifications as hurdles that are seemingly made to keep her, and others like her, from realizing their true financial and business potential by allowing almost anyone to qualify and apply.
“I know some young men in my area who happened to be white men who would qualify for one of those easily based on this,” she said. “They may have had a cannabis conviction or the area that they chose to live in … the different criteria just make it still so vague.
“I just feel like this is another opportunity for the state to collect millions of dollars in applications for a handful of licenses,” Brown said. “And they’re going to go to the people who already had them.”
Now you do understand that "people of color" is the entire world's population other than "white" people (me, I'm kind of pinkish beige) of European origination (incl white Russians, I suppose).

Africa, Asia (like, all of it), the Pacific Rim, South America, Latin America, India....anybody I forget...oh, yeah, Native Americans, Inuit...who else?

"White" is about 15% of the world's population so I do reject "people of color" as some sort of minority when in fact they are not.

In my state of Maryland, whose license evaluation and awarding I very closely followed, it was about ensuring that license were set aside for black Americans...specifically, by the Maryland Black Congressional Caucus who don't give a flying fuck at a donut about Latino or Asian people "of color"

Ok, done with this as its crossing Mom's line or damn close to it.

Cheers
 

Cannabis MSO Curaleaf acquires 10th Arizona license for $13 million​

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MJBizDaily Staff
December 23, 2021 - Updated December 23, 2021
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Cannabis giant Curaleaf Holdings said it entered a definitive agreement to acquire an Arizona retailer for $13 million, its 10th in the booming adult-use market.
The Massachusetts-based multistate operator said it expects to close the deal with Natural Remedy Patient Center in Safford in January and relocate the outlet to a new, 9,000-square-foot flagship retail store in Scottsdale in mid-2022.
Under the terms of the agreement, Curaleaf will pay $12 million in cash and $1 million in stock based on the market price before closing.
The only larger operator in Arizona is Florida-based Trulieve Cannabis, which acquired Harvest Health & Recreation earlier this year.
Trulieve has 16 stores in operation in Arizona, three additional licenses and an option for a 20th license in the vertically integrated state.
Curaleaf previously announced that it would acquire Tryke Cos., which has two Arizona retail outlets, in a deal that is expected to close in the second half of 2022. That will boost Curaleaf’s retail footprint in Arizona to 12 stores.
Once the Natural Remedy transaction closes, Curaleaf said, it will have 118 retail outlets across the country.
Curaleaf operates in 23 states, has 25 cultivation sites and employs more than 5,200.
 

Cannabis MSO Curaleaf acquires 10th Arizona license for $13 million​

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MJBizDaily Staff
December 23, 2021 - Updated December 23, 2021
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Cannabis giant Curaleaf Holdings said it entered a definitive agreement to acquire an Arizona retailer for $13 million, its 10th in the booming adult-use market.
The Massachusetts-based multistate operator said it expects to close the deal with Natural Remedy Patient Center in Safford in January and relocate the outlet to a new, 9,000-square-foot flagship retail store in Scottsdale in mid-2022.
Under the terms of the agreement, Curaleaf will pay $12 million in cash and $1 million in stock based on the market price before closing.
The only larger operator in Arizona is Florida-based Trulieve Cannabis, which acquired Harvest Health & Recreation earlier this year.
Trulieve has 16 stores in operation in Arizona, three additional licenses and an option for a 20th license in the vertically integrated state.
Curaleaf previously announced that it would acquire Tryke Cos., which has two Arizona retail outlets, in a deal that is expected to close in the second half of 2022. That will boost Curaleaf’s retail footprint in Arizona to 12 stores.
Once the Natural Remedy transaction closes, Curaleaf said, it will have 118 retail outlets across the country.
Curaleaf operates in 23 states, has 25 cultivation sites and employs more than 5,200.
Thanks for the post but I have to say I'm dismayed by all of the corporate consolidation going on there as well as my state of Maryland and everywhere else.

Soon, it will be like McDonald's vs Burger King of dispensaries.
 

Marijuana industry sees the rare leveraged buyout in Curaleaf deal​


By MJBizDaily Staff
December 29, 2021 - Updated December 30, 2021

Image depicting M&A


Bring on cannabis leveraged buyouts?
Multistate operator Curaleaf Holdings (CSE: CURA; OTCQB: CURLF) on Dec. 28 announced the acquisition of Bloom Dispensaries, a private, integrated Arizona marijuana operator, in a deal valued at $211 million.
Here are the basics:
  • Bloom has four retail dispensaries, in Phoenix, Tucson, Peoria and Sedona, and two adjacent cultivation and processing facilities totaling approximately 63,500 square feet.
  • The total consideration of $211 million will be paid using $51 million in cash and $160 million in notes, which are recourse only to the assets and equity of Bloom without any guarantee from Massachusetts-based Curaleaf.
  • The notes are structured in three series, with $50 million, $50 million and $60 million due on the transaction’s first, second and third anniversaries, respectively.
  • The purchase price represents 3.2X Bloom’s estimated 2021 revenue and roughly 8.0X estimate EBITDA. (Bloom has 40%+ EBITDA margins, according to a news release.)
Table looking at Bloom's valuation summary
What’s so interesting about this deal? Leverage!
This acquisition should be viewed as a leveraged buyout (LBO), one of the first in the cannabis industry.
The $160 million debt represents roughly 6X Bloom’s EBITDA (depending on how much over 40% margins the company has), an almost-unheard-of amount of leverage on a cannabis company. Debt around 3.3X EBIDTA is more typical.
It is interesting to think about other ways Bloom’s owners could have proceeded.
For example, could they have just gone out and borrowed $160 million (since they are lending it to Curaleaf, anyway) and just paid themselves the cash?
That would be called a leveraged recap, and if it were possible, it would have one interesting feature: Bloom would still own 100% of the company (although, in theory, the equity would be worth $160 million less).
Below is an indicative sketch of what that might look like. Note: we have no special knowledge of Bloom, so this is just a sketch, not an actual projection.
Table offering sketch of Bloom finances

We have employed what we think are relatively aggressive assumptions:
  • Revenue growth at a 50% rate for the next three years.
  • Margins remain at 40%+.
  • Taxes are calculated as though all expenses are deductible (no 280E!).
  • No capital spending.
The results show that the company would repay only about $100 million in the first three years and would require another year or two to repay the debt, but at the end of the period, the shareholders would have pocketed the $160 million and still own the company.
It is unlikely the company could do the transaction as outlined.
It probably doesn’t have sufficient hard assets to collateralize a loan of that size, and the sketch above shows that the repayment period would have to be stretched.
But, certainly, a somewhat smaller recap would be possible.
Bottom line: Curaleaf is likely to have to kick in more cash instead of just funding the note repayments from Bloom’s cash flow.
The Bloom-Curaleaf deal highlights several significant trends:
  • Valuations continue to drift downward.
  • Debt is getting cheaper and more readily available.
These factors will inevitably lead to more leverage being employed, and we believe more companies will begin to consider leveraged recaps as an alternative to selling at low multiples.
As more major MSOs such as Curaleaf can incur nondilutive debt at sub-8% levels, look for more LBOs in the cannabis space.
 
Phoenix New Times

Phoenix's independent source of
local news and culture




MARIJUANA

Who is the average medical marijuana patient in Arizona? You'd be surprised.​

ELIAS WEISS DECEMBER 30, 2021 12:39PM
Who is the average medical marijuana patient in Arizona? You'd be surprised.

New Times photo-illustration
Men with salt-and-pepper hair may not be the most likely weed billboard model but the chances of them popping some THC-laced gummy bears to keep the chronic pain at bay is likely as the average medical marijuana patient in Arizona.

That's not to say GenZ, Millennials, and Baby Boomers aren't hitting up dispensaries with a medical weed card in tow. There are 72,588 individuals between 18 and 30 years old who are active medical marijuana patients across the state, Arizona Department of Health Services data shows. There are 56,389 people who are at least 61 years old with medical cards in the state.

But the average medical marijuana patient is a 44-year-old man who lives in Maricopa County out of 276,370 patients in Arizona.

Baby boomer Scott Ellenwood stumbled into medical marijuana several years ago.

“Cannabis saved my life,” said Ellenwood, fighting back some tears.

He was in his 50s and contemplating suicide while suffering from Post-Traumatic Stress Disorder or PTSD. But then he tried weed – and it worked. PTSD is one of about a dozen conditions that enables someone to obtain a medical card for pot.

Now 59, Ellenwood lives in Lake Havasu City but has strong ties to Glendale. Marijuana was still taboo when he was a teenager in the 1980s when Ronald Reagan became president.

“I believed Nancy Reagan when she told me to ‘just say no (to drugs),’” Ellenwood said. “Then my wife got sick.”


His wife, Barbara, contracted gestational diabetes shortly after the two married in 1986. It was a constant battle until she died suddenly of a heart attack at 51 several years ago. The only thing that really helped her in life, Ellenwood said, was weed.
A crowd gathered when Curaleaf Midtown began selling recreational marijuana in early 2021. - JACOB TYLER DUNN
A crowd gathered when Curaleaf Midtown began selling recreational marijuana in early 2021.
Jacob Tyler Dunn
“Her depression lessened and she started having fun again,” he said. “I was the next one to get a cannabis license.”
Health officials approved 60,000 new medical marijuana applications in 2021, records show. Two-thirds of those were in Maricopa County.

And while the Arizona health department lists cancer, Hepatitis C, AIDS, Glaucoma, and Crohn’s Disease as qualifying conditions, 95 percent of cardholders in Arizona report having “chronic pain.”

About 26 percent of cardholders in Arizona are between the ages of 18 and 30. Twenty-two percent are in their 30s, 16 percent in their 40s, and so on. The number of cardholders goes down with age.

At least until you hit age 60. Then it starts going back up. Ellenwood will turn 60 in May.

“For us older people, you’re always going to be looked down upon or judged any time you do anything out of the ordinary,” he said. “We were told for so many decades that this plant was the worst thing possible, that it’s in line with heroin. We’re growing up, or at least I hope so.”
click to enlargeSome packaged flower from the Mesa location of Territory Dispensary. - JACOB TYLER DUNN
Some packaged "flower" from the Mesa location of Territory Dispensary.
Jacob Tyler Dunn
Medical cardholders in Arizona may consume two and a half ounces of marijuana every two weeks. That’s more than enough to make a difference, advocates of the drug say.

An ounce of cannabis flower typically makes about 60 joints, but it could be enough for 100, depending on potency.

“This is becoming recognized as a serious treatment,” Ellenwood said.

Medical marijuana users like Ellenwood pay a 5.6 percent sales tax to the state, plus another percent or so for county and city tax.

For recreational use, there is a transaction privilege tax rate and an excise tax of 16 percent on retail sales.

In 2021, the state collected $53.6 million from Ellenwood and other medical cardholders. From recreational users, it collected a whopping $121.4 million, according to the Arizona Department of Revenue.

Ellenwood doesn’t like the disparate tax differential between medical and recreational users.

“I think that everyone should have full access to everything at the medical tax level because it’s as much or more of a medicine as, say, vitamin C,” he said. “For medical: almost no tax, if any. That would be fair to everyone.”

Arizona dispensaries sold 140,000 pounds of marijuana and edibles to medical cardholders in 2021, according to the health department.
Ellenwood, who’s lived here since 2004, thinks Arizona is headed in the right direction.

He's sick of the stigmas that surround marijuana use – which is most prevalent in his own age demographic, data shows.

“I think it’s one of the safest medicines out there,” Ellenwood said. “It changed Barbara's life and it saved mine.”
 

BUSINESS

Arizona Hits Recreational Marijuana Sales Record, With New Program Catching Up To Medical​

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Published
7 days ago
on
January 12, 2022
By
Marijuana Moment
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https://www.marijuanamoment.net/ari...ord-with-new-program-catching-up-to-medical/#


Medical cannabis sales eclipsed recreational from February through October—adult-use sales began on January 22—but in November, those numbers were almost identical.
By David Abbott, Arizona Mirror
Arizona cannabis sales continued on an upward trajectory in 2021, with the Arizona Department of Revenue reporting more than $1.23 billion in combined cannabis sales through the first 11 months of the year.
In November, adult-use recreational cannabis sales hit a new peak and crossed $60 million for the first time. Medical sales have fluctuated throughout the year, topping out at about $73 million in March and April.
Medical sales eclipsed recreational from February through October—adult-use sales began on January 22—but in November, those numbers were almost identical, with the medical program bringing in an estimated $60,365,545, while recreational sales reached $60,299,191.
In October, estimated cannabis sales for both programs were within $7 million of each other, the first time recreational sales came within $10 million of medical sales. But the adult-use market is in its infancy and is expected to match the medical program’s economic heft within a few years.
Cannabis sales also provided a solid tax contribution in 2021.
TAXABLE Sales (Estimated) to date
PERIOD COVEREDADULT USE‐420MEDICAL‐ 203EXCISE TAX
Jan‐21$7,370,460$42,140,608$11,391,371
Feb‐21$32,697,512$55,320,625$39,246,992
Mar‐21$51,628,266$72,934,129$55,808,898
Apr‐21$54,037,990$72,944,477$58,954,469
May‐21$52,843,171$70,158,567$59,372,157
Jun‐21$50,943,017$64,854,708$56,749,799
Jul‐21$54,324,542$70,880,576$58,740,337
Aug-21$51,877,656$65,492,643$57,675,654
Sep-21$52,450,298$62,704,561$57,663,164
Oct-21$59,508,253$65,415,461$62,446,719
Nov-21$60,299,191$60,365,545$63,187,702
Dec-21$20,922$591,294$0
$528,001,278$703,803,194$581,237,261
The state collects 16 percent excise tax on recreational sales in addition to the standard sales tax; medical patients pay a 6 percent excise tax. Local jurisdictions charge an additional 2 percent or so for all marijuana sales.
Taxes collected in November for recreational cannabis sales were $5,055,950, with medical slightly less at $5,026,317. The excise tax reached $10,110,032 for a total of $20,192,299 in tax revenue from November marijuana sales.
Proposition 207, which voters approved in 2020 to legalize adult use of cannabis, included specific uses for taxes collected on the recreational side. One-third is dedicated to community college and provisional community college districts; 31 percent to public safety—police, fire departments, fire districts, first responders—25 percent to the Arizona Highway User Revenue Fund and 10 percent to the justice reinvestment fund, dedicated to providing public health services, counseling, job training and other social services for communities that have been adversely affected and disproportionately impacted by marijuana arrests and criminalization.
The state collected a total of $196,447,570 in tax revenue the first 11 months of 2021 from cannabis sales, with $44,533,436 from recreational, $58,916,172 from medical and $92,997,962 from the excise tax.
 

Judge Rules in Favor of Mother for Cannabis Use While Pregnant

A mother who used cannabis while pregnant to treat medical conditions was finally affirmed by a local Arizona court.

An Arizona mother recently won a Court of Appeals case that determined she was not guilty of child neglect because she consumed medical cannabis to treat extreme morning sickness, and her child tested positive for cannabis shortly after being born.

The Arizona Court of Appeals judges ruled that it is not neglect if a mother gives birth to a child that has cannabis in its system, as long as she has permission from a doctor to use it as a medical treatment under the Arizona Medical Marijuana Act (AMMA).

The case, Lindsay Ridgell v. Arizona Department of Child Safety, involved mother and medical cannabis card holder Lindsay Ridgell, whose child was born in May 2019. Due to the presence of cannabis in her child’s system, the hospital notified the Department of Child Safety and she was placed on the Central Registry. Her child wasn’t taken from her, but her name would remain on the Central Registry for 25 years, which could possibly interfere with getting a job. According to Yahoo! News, there are over 81,000 names on the Central Registry, as of 2018 (the most recent data currently available).

Three judges, Judge Randall M. Howe, Brian Y. Furuya and Michael J. Brown, ruled on March 31. “The Director [of the Department of Child Serves] erred in placing Ridgell on the Central Registry. A person may be placed on the Central Registry if her newborn infant has been exposed to certain drugs, including marijuana, but only if that exposure did not result from medical treatment administered by a health professional,” Judge Howe wrote in his opinion.

“The evidence shows that Ridgell was certified under AMMA to use marijuana medically to treat chronic nausea. The doctor who certified Ridgell’s eligibility for using medical marijuana knew that she was pregnant. Because the use of marijuana under AMMA ‘must be considered the equivalent of the use of any other medication under the direction of a physician,’ A.R.S. § 36-2813(C), the exposure of Ridgell’s infant to marijuana resulted from medical treatment and did not constitute neglect under A.R.S. § 8-201(25)(c).”

Ridgell’s legal representation, Julie Gunnigle, worked pro bono on her case. “It basically says Lindsay was right all along,” Gunnigle said.


After numerous years have passed, Ridgell told the Phoenix New Times that she was relieved that the judges ruled in support of her case. “I feel so happy. A weight has lifted from my shoulders and I feel free,” Ridgell said. “This means a lot to myself and my family. I can finally go back into social work and hopefully earn a higher wage than I have been the past couple years, as well as find more fulfillment in work. I miss helping people, especially kids.”

Ridgell received a medical cannabis card 10 years ago to help treat irritable bowel syndrome. In 2018, when she confirmed she was pregnant, she was diagnosed with hyperemesis gravidarum, otherwise known as extreme morning sickness. The condition led her to return to the emergency room numerous times in order to seek treatment.

The court’s “facts and procedural history” notes that her child stopped breathing and needed to be resuscitated after birth. After nurses witnessed the baby’s “jitteriness,” he was transferred to the Phoenix Children’s Hospital for further evaluation. “The hospital performed a drug test, which was positive for marijuana, Buspar, caffeine, and Benadryl, and [they] diagnosed him with intrauterine addictive drug exposure,” the case record states.

Ridgell’s case garnered support from the National Advocates for Pregnant Women, the Academy of Perinatal Harm Reduction, and comedian Amy Schumer among many other doctors and advocates. Schumer in particular also suffered from hyperemesis gravidarum, the symptoms of which are seen in an HBO Max series called Expecting Amy.
 

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