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The 411 on the Social Equity Rules

By: Proven Media ,  Dena Roche

What you need to know before applying for a social equity license

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Since Arizona legalized recreational marijuana with a social equity component, MITA has been instrumental in providing social equity educational programming and helping the cannabis community understand the social equity licensing rules.

Arizona will award 26 social equity cannabis licenses. With the licenses worth millions in future revenue there’s been fierce debate over the applicant criteria the Arizona Department of Health (ADHS) would institute. During several rounds of draft rules, community leaders continued to push for rules that remain true to the spirit of social equity that voters enacted into law.

At MITA’s June 4th meeting, Will Humble, Executive Director of Arizona Public Health Association, presented the final social equity rules issued by the state. Under The Smart and Safe Arizona Act, ADHS had wide latitude in developing these rules and they don’t need approval by the Governor’s Regulatory Review Council. 

The social equity rules enacted by ADHS lay out the following criteria for social equity applicants.

Ownership-At least one of the principal officers or board members of the applying entity must hold at least 51 percent ownership in the entity.

Educational Training-Each principal officer or board members that hold at least 51 percent ownership must complete an ADHS provided educational course. The class will cover state laws and regulations pertaining to running a marijuana business. 

Felony Exclusions-No principal officer or board member can have a prior felony conviction, with few exceptions.

Officer and Board Security-Applications must establish that officers and board members can’t be removed without written consent of the principal officer or board members or a court order to remove.

Application Limit-A principal officer or board member applying for a social equity licenses cannot hold that same position on more than one other marijuana establishment.

Community Benefit-All social equity applications must show how their organization will help communities that were disproportionately impacted by past marijuana laws through its specific hiring practices or through a monetary donation based on a percentage of gross profits to nonprofits not affiliated with the marijuana business that focus on social or health inequities in the community. 

Applicant Granting Criteria-All principal officer or board members of the applying group must meet three of the following four criteria.

  1. Have had a household income in at least three of the last five years less than 400% of the federal (HHS) poverty level.
  2. Have had a previous marijuana conviction and has petitioned for expungement or has a previous marijuana related conviction and does not have an excluded felony offense.
  3. Have a spouse, surviving spouse, parent, child, sibling or legal guardian who was marijuana related conviction.
  4. Has lived in a community disproportionately impacted by marijuana laws for at least three of the last five years. The criteria for these communities are still under development and will be detailed by Sept. 1, 2021. 

The details on the final rules are available on the ADHS site.

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