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Green rush to win coveted marijuana store licenses in Arizona

Marijuana Legalization
Posted at 6:17 PM, Apr 19, 2021
and last updated 2021-04-20 01:04:27-04

For the third time since marijuana was legalized for medical use in Arizona, officials held a lottery to hand out new licenses intended for rural counties that currently lack medical or recreational sale dispensaries.

Demitri Downing, president of the Marijuana Industry Trade Association said the competition for these licenses was stiff.

With only 13 licenses up for grabs, 377 people applied, and of those, Downing said 22 applications were rejected due to errors.

"Each paid $25,000 to be a part of this draw," said Downing.

That was the application fee for one license. Many had multiple applications in, just to win one spot.

Pam Donner was one of them. Donner owned and had leased out the JARS dispensary in Phoenix. She had put in ten applications to open up a storefront in Gila County.

For her, it was an opportunity to grow a booming business and serve an area where potential customers had to drive for miles to get to the closest dispensary.

The licenses were so coveted, Downing said hours after winning them, some lottery winners would be putting them up for sale or lease for a hefty price, in what had become a secondary market for marijuana storefront licenses.

"Many people are predicting somewhere between $7-$12 million, depending on the size of the small town that the license is in," said Downing.

In urban areas with a larger population, Downing said licenses could be sold for as much as $17-$20 million. The limited number of dispensaries in an area, allowable by state law made them profitable ventures.

"A small town like Benson or Quartzite, Patagonia, there's other little, small towns like Payson, you're still talking about $300-$800,000 in monthly gross revenue in retail alone," said Downing.

Most of the rural counties had only one or two dispensary licenses up for grabs, with 50-60 applicants vying for those spots.

"Marijuana is I think the largest growth industry in the United States," said Downing.

While some believed the lottery was a fair and transparent way to hand out the licenses, some critics believed the whole process was flawed. The $25,000 application fee made it so only those with big bank accounts could apply. The fee was non-refundable and there was no guarantee spending that money on an application would guarantee you a marijuana storefront.

"Certainly, the cannabis industry is shaking out so that you have to have money to play," said Downing. He added that the state legislature had the power to change that with a 75% majority. They could increase the number of licenses that were issued and change the amount of capital needed to get into the game.

Prop 207 did call for 26 'social equity' licenses to be set aside for those from disadvantaged communities, who had been impacted by the harsh drug laws before criminal justice reform started taking shape.

Many counties have now dismissed charges against those with possession of pot for personal consumption.

View the list of winners for the marijuana store licenses below: