For cannabis enthusiasts, there’s never been a better time to live in Arizona. But what about those who are interested in the business of marijuana?

We’ve put together a comprehensive guide that explores how to start a dispensary in Arizona, covering all the key topics you need to know if you’re a cannabusiness owner in the making.

Arizona Cannabis Laws

You’re probably already well aware that both medical and recreational cannabis is legal in AZ, but here are the specifics of Arizona’s cannabis laws and regulations.

Recreational cannabis laws in AZ

Adult-use recreational cannabisis legal under the Smart and Safe Arizona Act. It is regulated by the Arizona Department of Health Services (ADHS).

According to the SSAA, the AZ laws for recreational cannabis include:

• Adults 21 years of age and older can possess up to 1 ounce of marijuana, of which no more than 5 grams can be cannabis extracts (concentrates).
• A recreational dispensary customer can purchase up to 1 ounce per transaction (a maximum of 5 grams of concentrates).
• Cannabis use in public places (restaurants, bars, parks, sidewalks, and more) is illegal.
• There is a 16% excise tax placed on the sale of recreational cannabis.

Medical marijuana laws in AZ

Medical marijuana has been legal in Arizona since 2010 under the Arizona Medical Marijuana Act (AMMA). Like recreational-adult-use cannabis, medical marijuana is regulated by the ADHS.

Under the AMMA, AZ laws for medical marijuana state:

• Arizonans with qualifying conditions can receive a medical marijuana card so long as they have a recommendation from a state-licensed doctor. An Arizona medical marijuana card allows the cardholder to purchase, possess, and use marijuana.
• An AZ MMJ patient can possess up to 2.5 ounces of cannabis at any given time. They are permitted to purchase up to 2.5 ounces from a state-licensed dispensary every two weeks.
• There are no limits on potency for products purchased by medical marijuana patients.
• MMJ patients from other states are allowed to possess and use cannabis (with a valid MMJ card from their state). However, they are not permitted to purchase cannabis in AZ.
• Medical marijuana only incurs the standard state and local taxes; there is no excise tax on MMJ in AZ.

Dispensary laws in AZ

According to the AMMA, Arizona will allow one medical marijuana dispensary license for every ten pharmacy permits in the state (126 MMJ dispensaries total). The 126 licenses were distributed randomly using a lottery-style system, beginning on June 1, 2011.

Recreational dispensary licenses were first offered to qualified early applicants, with remaining/additional licenses available via random selection. There are approximately 145 AZ recreational dispensary licenses in the state.

Medical marijuana dispensaries can obtain a recreational dispensary license, allowing the location to operate both entities in a single dispensary.

Can I open a recreational dispensary in Arizona right now?

Unfortunately, you cannot currently open a recreational dispensary in AZ. All available licenses have been claimed.

In April 2022, ADHS allocated a handful of licenses through their Social Equity Campaign. The campaign provided an additional 26 dispensary licenses to individuals that qualified under the campaign’s guidelines.

Can I open a medical dispensary in Arizona right now?

No. At this time, Arizona is not accepting any additional applications for medical marijuana dispensaries.

Who received licenses from the new recreational cannabis law passed in 2020?

When AZ recreational dispensary licenses were distributed, the large majority were given to existing medical marijuana dispensaries. There were also 13 licenses provided to dispensaries that were set to open in underserved areas (where less than two MMJ dispensaries were available).

The dispensary license application process was open from January 19 – March 9, 2021, with the randomized drawing completed on April 19, 2021.

Are there nearby states that have more opportunities for opening cannabis dispensaries at the moment?

Yes. In California and Colorado, there are options for individuals that are interested in opening a dispensary.

Arizona Cannabis Market

Because of caps on licenses and competition from multi-state operators (MSOs), the cannabis market in Arizona is incredibly difficult to break into. However, with a strong revenue base and plenty of potential for growth, the market holds an impressive amount of promise.

There are 169 total dispensary licenses in AZ, with the breakdown as follows:

• 130 dual licenses provided to existing MMJ dispensaries
• 13 rural dispensary licenses
• 26 recreational dispensary licenses were issued as part of the social equity program

As of October 2021, combined recreational and medical marijuana sales in Arizona exceeded $1.1 billion. MJBizDaily projects that the recreational cannabis market could expand to $2.7 billion by 2025, astronomically growing within just a few years since its legalization.

How to Open a Dispensary in Arizona

Establish Your Business

First, set your business up as a legal entity. Medical marijuana dispensaries must incorporate as a non-profit, while recreational dispensaries can opt to register as a non-profit or for-profit business. Be sure to register with state and federal tax authorities properly.

Create a Business Plan

For any business, having a plan is essential – but to open a dispensary it’s even more important. You’ll need to be prepared with a solid plan in order to secure funding and apply for your AZ dispensary license, with details that include:

• Policies and procedures that will be used for recordkeeping, inventory control, security, and patient education
• Projected expenditures
• Projected revenue
• Job descriptions
• Site/floor plans

Get Funding

Due to federal law, mainstream banks and investment funds cannot and will not provide funding for dispensaries. However, there are plenty of firms that actually specialize in helping dispensaries secure funding. Another option is to get contributions from family or friends.

Get Your Dispensary Licenses

Although there are currently no available licenses, one option is to purchase an existing license and then adapt the business to suit your branding. If additional licenses become available, you’ll need to act quickly to submit yours.

Set Up Shop, Market, and Launch

Once all the details are in order, it’s time to set up your dispensary. This is a massive project that involves an array of details, one of which is your marketing strategy. You need to have a plan to get the word out about your dispensary, so you’ll have customers ready to shop once you’re open.

How Much Does It Cost to Open a Dispensary in Arizona?

In Arizona, you’ll need to plan for a $25,000 application fee for a recreational dispensary license and a $5,000 annual fee for license renewal. State law also requires you to register each of your employees at a cost of $500 per employee.

For a medical marijuana dispensary license in AZ, the cost is $5,000.

Starting a Cannabis Delivery Service in Arizona

Currently, cannabis delivery is only allowed for medical marijuana dispensaries in AZ. In order to deliver cannabis to MMJ patients, you’ll need to:

• Conduct the delivery in an unmarked vehicle, with no products visible
• Make sure delivery staff will need to maintain a means of communication with the dispensary
• Have a detailed document in the vehicle that outlines the products, delivery recipients, and delivery locations

For recreational cannabis delivery, the industry will not receive the “green light” until January 1, 2023. On or after that date, the Arizona Department of Health Services has the option to develop and adopt regulations for AZ cannabis delivery for recreational marijuana. ADHS has until January 1, 2025, to establish recreational marijuana delivery regulations.

How to Market a Cannabis Dispensary in AZ

In Arizona and the U.S., cannabis marketing is heavily regulated. And yet, having an effective marijuana advertising strategy is crucial to your success in a fast-growing but competitive industry. From figuring out how to create a dispensary website to mastering social media marketing, there are many regulations and opportunities for dispensary advertising.

For more information about how to open a dispensary in Arizona and what you can do to market your cannabis business, connect with the Marijuana Marketing Xperts team today.