Four New Marijuana Measures – Legislative Update Week 3

This week, Arizona has seen the introduction of four new marijuana-related measures, with a grand total so far of ten. Sonny Borrelli, the Republican Majority Leader of the Arizona Senate representing district 30 (Kingman area), has proposed two bills. The first is SB1262, titled “Marijuana; Social Equity Licenses; Enforcement,” and the second is SB1186, titled “Regulation; Hemp-Derived Products.” SB1186, focusing on the regulation of hemp-derived products, has a counterpart in the House of Representatives, namely HB2679, sponsored by Republican Kevin Payne from district 27. Leo Biasiucci, the Republican House Majority Leader from district 30, has also put forth his measure, HB2664, dealing with “Cannabis Possession; School Zones; Definition.”

Social Equity

Senator Borrelli, introduced Senate Bill 1262, a comprehensive legislative proposal seeking to amend the Arizona Revised Statutes, notably focusing on the social equity ownership program for marijuana establishment licenses. The bill introduces a new section, 36-2866, which outlines key provisions for the transfer of licenses owned by entities where a principal officer or board member holds at least fifty-one percent under the social equity program. Specific circumstances allowing such transfers are carefully delineated, including predatory agreements, rule violations by minority interest holders, undisclosed excluded felony offenses, and the absence of a marijuana facility agent card during the application process.

SB 1262 mandates the approval of the Attorney General for any transfer under these conditions. The bill provides a mechanism for the original principal officer or board member to file a complaint with the Attorney General’s Office, triggering an investigation into alleged predatory agreements. Additionally, the bill grants authority to the Attorney General’s Office and the Department to enforce actions against marijuana facility agents involved in predatory agreements.

SB 1262 introduces definitions for “minimum fair market value” and “predatory agreement,” offering clarity on identifying such agreements. Predatory agreements are broadly defined as contractual arrangements forcing the original principal officer or board member to transfer ownership for an amount less than the minimum fair market value. The bill includes a severability clause, ensuring that if any part is deemed invalid, the remaining provisions will stay in effect. It specifies a three-fourths vote requirement from each legislative house for enactment, underscoring the bill’s significance.

However, the proposed changes might not uniformly benefit all individuals who entered predatory agreements, particularly those who have already sold their interests to large marijuana corporations or engaged in agreements involving capital calls, six-figure buyouts, and mandatory 20-year management commitments.

The intricate landscape of social equity within the cannabis industry has sparked controversy and legal challenges, as highlighted in a series of articles spanning from before 2021 to currently. Katya Schwenk’s piece on November 17, 2021, titled “Big Pot Tipping The Scales In The Wrong Direction Amid Social Equity Move, Spurs Lawsuit,” sheds light on concerns that major cannabis investors exploit the system to secure “social equity” dispensary licenses intended for communities disproportionately affected by marijuana laws. A subsequent article on February 23, 2022, by the same author, warns of the potential exploitation in Arizona, stating, “I want the state to know that the Wolf of Wall Street is in Maryvale, targeting low-income families.” The issue persists, as demonstrated by Natasha Yee’s report on October 6, 2023, which reveals that investors and weed corporations continue to acquire more social equity licenses as deadlines approach. The struggle for social equity is further underscored by Ray Stern’s article on January 22, 2024, titled “Arizona tried adding equity into marijuana licensing. Dispensary chains still took over,” indicating the ongoing challenges in achieving a fair and equitable distribution of licenses within the state’s marijuana industry.

Drug Free School Zones and Cannabis

Arizona State Representative Biasiucci recently presented House Bill 2664, titled “Cannabis Possession; School Zones; Definition,” aiming to bring substantial changes to Section 13-3411 of the Arizona Revised Statutes. The primary focus of the bill is on cannabis possession within drug-free school zones, and it introduces several crucial provisions that could have broad-ranging consequences.

The bill defines a “drug-free school zone” to include areas within three hundred feet of a school or its surrounding grounds, any public property within one thousand feet of a school or its associated grounds, a school bus stop, and any school bus or contracted bus utilized for transporting students to educational institutions.

House Bill 2664 establishes comprehensive measures within drug-free school zones, prohibiting the sale, transfer, possession, use, or manufacture of certain drugs, particularly marijuana and cannabis. A significant aspect of the bill is the introduction of an additional one-year increment to the presumptive, minimum, and maximum sentences for these offenses, alongside potential enhanced punishments. Individuals convicted under this section face limitations on sentence suspension, probation, pardon, or release until the court-imposed sentence is served or commuted. Furthermore, the bill mandates a minimum fine of $2,000 or three times the value of the involved drugs for those found guilty, with no option for fine suspension by a judge. It also requires school districts to prominently display signs identifying their premises as drug-free school zones. School personnel play a crucial role, obligated to promptly report violations to administrators, who then inform peace officers; failure to report is classified as a class 3 misdemeanor. Additionally, the bill ensures access to student records for peace officers upon request, granting immunity to those providing records unless malice is proven. Key terms such as “cannabis,” “drug-free school zone,” “marijuana,” “person,” and “school” are clearly defined within the context of this section.

Residents living in a drug-free school zone would be subject to identical heightened penalties for marijuana-related drug offenses, akin to the consequences faced by others committing such offenses within the designated zone. Notably, the legislation lacks provisions for exceptions, implying that all residents, irrespective of their connection to a school, would face increased sentences if found in violation of marijuana-related laws within the specified zone. The bill’s definition of “person” encompasses all individuals, regardless of age or school attendance, establishing consistent standards and penalties for all residents committing drug offenses within the defined zone. This proposed legislation underscores the ongoing efforts to address drug offenses within school zones while raising questions about its potential impact on residents and uniform application of penalties.

While the current bill lacks a voter protection clause, it does not necessarily imply a lack of voter protection, as legal experts in the rules committee may likely add it during the legislative process.Even if the bill successfully passes, the question of the governor’s approval arises, and its potential enactment might still face challenges. It is highly probable that the legislation could be contested in a lawsuit invoking the voter protection act, leading to additional financial expenditures.

Mirror Hemp Bills

Senate Bill 1186 and House Bill 2679 involves amendments to the Arizona Revised Statutes relating to industrial hemp. The bill defines terms such as “industrial hemp,” “hemp-derived products,” and “regulated hemp cannabinoids,” and sets the THC concentration limits for industrial hemp. The bill outlines the licensing process for growers, harvesters, transporters, processors, manufacturers, and retailers of industrial hemp and hemp-derived products. It also establishes rules for the labeling and sale of hemp-derived products, including a requirement that these products only be sold to individuals over the age of twenty-one and that they not resemble products marketed to children. The bill mandates that manufacturers include a website link on product packaging that leads to a full panel certificate of analysis and contact information. Additionally, it requires manufacturers to obtain a certificate of analysis for hemp-derived products, which includes testing for pesticides, microbials, residual solvents, heavy metals, and potency. The bill provides for the inspection and regulation of industrial hemp production and hemp-derived products, including the ability to take corrective actions for non-compliance. It also establishes an industrial hemp advisory council to assist with the administration and implementation of the article and to ensure compliance with federal law. Lastly, the bill provides an affirmative defense for the possession or cultivation of marijuana if the defendant is a licensee in compliance with the article, but it does not defend against charges of possession, sale, transportation, or distribution of marijuana that is not industrial hemp

This topic is extensive; stay tuned for a comprehensive article.

Summary

Standing Committee (Opportunity To Speak)

Tuesday 01-30-2024 Scheduled Senate Health & Human Services room SHR 1
1:30 P.M. or upon recess or adjournment of floor (Note Time Change)*
SB1076- Marijuana Funds; Uses; Enforcement

Cancelled
Monday 01-29-2024 Scheduled House Health & Human Services Monday room HHR 4
2:00 P.M. or upon recess or adjournment of Floor
HB2451- Marijuana; Advertising; Restrictions

Other Movement

Introduced (House)
HB2664 -Cannabis Possession; School Zones; Definition
HB2679 Regulation; Hemp-Derived Products.
Introduced (Senate)
SB1186 Regulation; Hemp-Derived Products.
SB1262- Marijuana; Social Equity Licenses; Enforcement
Assigned House Health and Human Services (HHS)
HB2452- Marijuana Funds; Uses; Enforcement
Assigned House Regulatory Affairs (RA)
HCR2035- Marijuana; Unincorporated Areas; Reservations; Prohibition
Assigned Senate Natural Resources, Energy and Water (NREW)
SB1186 Regulation; Hemp-Derived Products.
Second Read (House)
HB2301-Landlords; Tenant’s Marijuana Use
HB2451- Marijuana; Advertising;Restrictions.
HB2452- Marijuana Funds; Uses; Enforcement
Second Read (Senate)
SB1186 Regulation; Hemp-Derived Products.
No New Movement
HB2247- Marijuana Regulatory Board; Licensing Qualifications

Details

HB2175- Marijuana Monies; University Police

01/22/2024 withdrawn from Monday at 2pm in House Military Affairs and Public Safety (MAPS)
01/16/2024 House 2nd read
01/10/2024 Assigned House Military Affairs And Public Safety (MAPS)
01/10/2024 House 1st Read
01/09/2024 Introduced (House)

Adds university police departments under the Arizona Board of Regents as a recipient of excess funds in the Smart and Safe Arizona fund. Due to voter protection, this legislation requires the affirmative vote of at least 3/4 of the members of each house of the Legislature for passage.
01-19-2024 Proposed Amendment (Rep Wilmuth)
Adds Indian reservation police agencies, Indian reservation firefighting agencies, as a recipient of excess funds in the Smart and Safe Arizona fund.
Sections Affected: 36-2856 Amended
Prime Sponsor: Payne
Co-Sponsor:

FULL TEXT
HOUSE SUMMARY

HB2247- Marijuana Regulatory Board; Licensing Qualifications

No New Movement
01/16/2024 House 2nd read
01/10/2024 Assigned House Appropriations (APPROP)
01/10/2024 Assigned House Regulatory Affairs (RA)
01/10/2024 House 1st Read
01/09/2024 Introduced (House)

Requires that an applicant for a new nonprofit medical marijuana dispensary registration certificate, or establishment license be an Arizona state resident and must demonstrate residency by producing two of the following documents: Driver’s license or state issued ID, property tax bill, verified copy of state or federal income tax returns for the prior year with an Arizona address, or a utility bill and copy of payments made for the previous year. Establishes an Arizona Marijuana Regulatory Board of seven members including two members with public health experience, two members with laboratory testing expertise, two public members who do not have an ownership interest in any marijuana dispensary, establishment, independent third-party laboratory or testing facility, and one member that is a qualifying patient or family member of a qualifying patient. Requires that members of the board be appointed by the Governor and that no more than four be of the same political party or residents of the same county, who will serve a term of five years. Requires that each board member sign a confidentiality agreement, adhere to state conflict of interest laws, may not vote on matters where the Board member or family member have a pecuniary interest and may not miss more than four meetings within a six month period. Enables the Governor to remove a member for cause, allocates board members to receive $200 a day for each day spent in discharge of their duties and all appropriate expenses, and requires the board to administer the laws of the state pertaining to marijuana regulation. Enables the Board to have authorities and responsibilities pertaining to general provisions and administrative duties per state law. Requires the board to appoint a director who shall adopt rules an employ staff of the Board as needed, and whose compensation shall be set in accordance to the laws governing public officers and employees. Enables the Board to issue microbusiness licenses that allow the license holder to cultivate up to 150 marijuana plants, process marijuana and marijuana products and sell marijuana and marijuana products to persons who are at least 21 years of age. Terminates the Board on July 1, 2034 and stipulates that the initial terms of the Board are two terms ending on January 1, 2028, and three terms ending January 1, 2029. Provides for the transition from the Arizona Department of Health Services (DHS) to the Board on regulatory, obligations, administrative matters including rules, order, contracts, judicial and quasi-judicial actions, licensing and certifications, equipment, records, facilities and personnel matters. Requires the Board to take necessary actions relating to the public health and safety relating to marijuana in this state and that the legislative council staff shall prepare proposed legislation that adheres to state law. The effective date for this bill is January 1, 2026. Due to voter protection, certain sections of this legislation require the affirmative vote of at least 3/4 of the members of each house of the Legislature for passage.
Sections Affected: 36-2823 Added
36-2866 Added
41-3034.01 Added
Prime Sponsor: Payne
Co-Sponsor:

FULL TEXT

HB2301-Landlords; Tenant’s Marijuana Use

01/22/2024 Second Read (House)
01/17/2024 Assigned House Commerce (COM)
01/10/2024 Introduced (House)

A landlord may not terminate a tenant rental agreement because the tenant uses marijuana.
Sections Affected: 33-1317.01 Added
Prime Sponsor: Austin
Co-Sponsor: Aguilar
Crews
Gutierrez
Ortiz
Villegas

FULL TEXT

HB2451- Marijuana; Advertising; Restrictions

01-29-2024 Scheduled House Health & Human Services room HHR 4
2:00 P.M. or upon recess or adjournment of Floor

01/22/2024 Second Read (House)
01/17/2024 Assigned House Health and Human Services (HHS)
01/12/2024 Introduced (House)

Prohibits a marijuana establishment or nonprofit medical marijuana dispensary from advertising to individuals under 21 years of age, on public transportation or publicly funded organizations, or electronically, unless the advertiser has reliable evidence that over 71.5% of the audience is over the age of 21. Requires all advertising to contain a warning that marijuana is for adults and that persons using the product should ensure that they keep the product away from children. Prohibits advertising on a billboard within 1,000 feet, if in the line of sight, from a childcare center, church, public park, public playground or public or private school that provides instruction to students from preschool through grade 12. Provides that violations of this part of law give the advertiser 30 days to rectify the violation. Prohibits any advertisement for the potency of a product or tetrahydrocannabinol levels of marijuana or marijuana products. Prohibits any establishment that is not a marijuana establishment or nonprofit medical marijuana dispensary from advertising marijuana, products containing tetrahydrocannabinol or marijuana paraphernalia. Requires three-fourths of the legislature to take effect.
Sections Affected: 36-2859 Amended
Prime Sponsor: Montenegro

FULL TEXT

HB2452- Marijuana Funds; Uses; Enforcement

01/23/2024 Second Read (House)
01/22/2024 Assigned House Health and Human Services (HHS)
01/12/2024 Introduced (House)

Permits monies in the Medical Marijuana Fund or the Smart and Safe Arizona Fund to be used interchangeably to implement this bill. Adds grants for the Arizona Poison Control System for operations and to support health care providers and providing public health and safety education related to, the Attorney General to investigate and enforce actions pertaining to, and municipal police departments, county sheriff departments, and tribal police agencies to investigate and take action against, the illicit sale of marijuana and intoxicating cannabinoids to required expenditures by the State Treasurer from the Smart and Safe Arizona fund are spent. Authorizes the Attorney General to use monies from either fund to investigate and take enforcement action related to the illicit sale, marketing, and distribution of marijuana and illicit cannabinoids. Due to voter protection, certain sections of this legislation require the affirmative vote of at least 3/4 of the members of each house of the Legislature for passage.
Sections Affected: 36-2817 Amended
36-2856 Amended
Prime Sponsor: Montenegro

FULL TEXT

HB2664 -Cannabis Possession; School Zones; Definition

01/23/2024 – Introduced (House)
(Unofficial Summary) Arizona’s House Bill 2664, currently under consideration in the State Legislature, proposes substantial amendments to Section 13-3411 of the Arizona Revised Statutes, specifically targeting drug offenses within drug-free school zones. The bill introduces key provisions making it illegal to sell, transfer, possess, use, or manufacture certain drugs, including marijuana and cannabis, within these zones. Notably, it seeks to elevate the presumptive, minimum, and maximum sentences for such offenses by one year, along with additional enhanced punishments. Convicted individuals face restricted eligibility for sentence suspension, probation, pardon, or release until the court-imposed sentence is served or commuted, coupled with a mandatory fine of at least $2,000 or three times the drug value. Additionally, school districts are mandated to display signs marking their premises as drug-free zones, while school personnel are obligated to report violations promptly. The bill introduces definitions for key terms like “cannabis,” “drug-free school zone,” “marijuana,” “person,” and “school,” aiming to provide clarity in enforcing these measures.
Sections Affected: 13-3411 Amended
Prime Sponsor: Biasiucci

FULL TEXT

HB2679 Regulation; Hemp-Derived Products.

01/24/2024 Introduced (House)
(Unofficial Summary) Amends existing laws to regulate the production, processing, and sale of industrial hemp and hemp-derived products in Arizona. It defines key terms, sets THC concentration limits, and aligns state law with federal regulations. The bill establishes a licensing system for various roles in the hemp industry and sets out rules for labeling and selling hemp products, ensuring they are not marketed to children and are only sold to those over 21. It mandates that manufacturers provide a certificate of analysis for their products, which includes testing for contaminants and potency. The bill also creates an industrial hemp advisory council and provides an affirmative defense for certain marijuana-related charges for compliant licensees. Additionally, it allows for the inspection and regulation of hemp production and products, and outlines corrective actions for non-compliance
Sections Affected: 3-311 Amended
3-312 Amended
3-313. 3-314 Amended
3-316 Amended
3-317 Amended
3-318 Amended
3-320 Amended
Prime Sponsor: Payne

FULL TEXT

HCR2035- Marijuana; Unincorporated Areas; Reservations; Prohibition

01/25/2024 Assigned House Regulatory Affairs (RA)
01/12/2024 Introduced

(Unofficial summary) This passage outlines restrictions on issuing nonprofit medical marijuana dispensary registration certificates, certifying third-party laboratories, and granting marijuana establishment or testing facility licenses in unincorporated territory surrounded by an Indian reservation in Arizona. Additionally, it mentions the Secretary of State submitting a proposition related to this matter to voters at the next general election.
Sections Affected: (blank)
Prime Sponsor: Peshlakai
Co-Sponsor: Contreras L
Crews
Gutierrez
Hernandez L
Hernandez M
Ortiz
Quiñonez
Sandoval
Schwiebert
Seaman
Stahl Hamilton
Terech
Travers
Tsosie
Villegas
Hatathlie

FULL TEXT

SB1076- Marijuana Funds; Uses; Enforcement

01-30-2024 Scheduled Senate Health & Human Services room SHR 1
1:30 P.M. or upon recess or adjournment of floor (Note Time Change)*

01-17-2024 Second Read (Senate)
01/16/2024 Assigned Senate Health and Human Services (HHS)
01/11/2024 Introduced (House)

Permits monies in the Medical Marijuana Fund or the Smart and Safe Arizona Fund to be used interchangeably to implement this bill. Adds grants for the Arizona Poison Control System for operations and to support health care providers and providing public health and safety education related to, the Attorney General to investigate and enforce actions pertaining to, and municipal police departments, county sheriff departments, and tribal police agencies to investigate and take action against, the illicit sale of marijuana and intoxicating cannabinoids to required expenditures by the State Treasurer from the Smart and Safe Arizona fund are spent. Authorizes the Attorney General to use monies from either fund to investigate and take enforcement action related to the illicit sale, marketing, and distribution of marijuana and illicit cannabinoids. Due to voter protection, certain sections of this legislation require the affirmative vote of at least 3/4 of the members of each house of the Legislature for passage.Sections Affected: 36-2817 Amended
36-2856 Amended
Prime Sponsor: Shope

FULL TEXT

SB1186 Regulation; Hemp-Derived Products.

01/25/2024 Second Read (Senate)
01/24/2024 Assigned Senate Natural Resources, Energy and Water (NREW)
01/22/2024 Introduced (Senate)

(Unofficial Summary) Amends existing laws to regulate the production, processing, and sale of industrial hemp and hemp-derived products in Arizona. It defines key terms, sets THC concentration limits, and aligns state law with federal regulations. The bill establishes a licensing system for various roles in the hemp industry and sets out rules for labeling and selling hemp products, ensuring they are not marketed to children and are only sold to those over 21. It mandates that manufacturers provide a certificate of analysis for their products, which includes testing for contaminants and potency. The bill also creates an industrial hemp advisory council and provides an affirmative defense for certain marijuana-related charges for compliant licensees. Additionally, it allows for the inspection and regulation of hemp production and products, and outlines corrective actions for non-compliance
Sections Affected: 3-311 Amended
3-312 Amended
3-313. 3-314 Amended
3-316 Amended
3-317 Amended
3-318 Amended
3-320 Amended
Prime Sponsor: Borrelli

FULL TEXT

SB1262- Marijuana; Social Equity Licenses; Enforcement

01/24/2024 Introduced (Senate)
(Unofficial Summary) Proposes amendments to the Arizona Revised Statutes, introducing Section 36-2866, focusing on the social equity ownership program for marijuana establishment licenses. The bill sets conditions for the transfer of licenses held by entities with at least fifty-one percent ownership by a principal officer or board member under the social equity program. It addresses issues such as predatory agreements, rule violations by minority interest holders, undisclosed excluded felony offenses, and the absence of a marijuana facility agent card during the application process. Approval from the Attorney General is mandated for such transfers, with a provision for the original officer or board member to file complaints regarding predatory agreements. The bill grants authority to the Attorney General’s Office and the Department to enforce actions against those involved in predatory agreements and defines terms such as “minimum fair market value.” Additionally, a severability clause is included, ensuring the act’s effectiveness even if parts are deemed invalid, and it emphasizes a three-fourths vote requirement for legislative enactment.
Sections Affected: 36-2866 Added
Prime Sponsor: Borrelli
Co-Sponsor: Diaz
Gillette
Peña

FULL TEXT

All the information provided by Azleg.gov and Arziona Capital Reports on Thursday 5pm.
If any of the bills upset you or you wish to contribute to change, connect with Arizona NORML for additional ways to get involved.

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