Marijuana license applicants argue system benefits big business

Downing argues that the root of the problem is that the state limits the number of licenses.
Published: Apr. 21, 2022 at 10:33 PM MST|Updated: Apr. 22, 2022 at 3:34 PM MST
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PHOENIX (3TV/CBS 5) – A group of people who applied for the most recent drawing for state marijuana licenses is raising concerns about the fairness of the process. The drawing took place on April 8. And it now appears that a majority of the newly-issued licenses are now owned or controlled by existing marijuana companies.

“It was heavily weighted toward the insiders. The true social equity applicants didn’t stand a chance,” said Celeste Rodriguez, the CEO of Acre 41, and applied for one of the new licenses.

The state has capped the total number of legal marijuana licenses at 169, and the result is that the licenses are worth millions of dollars.

“One of our licenses transfers hands right now, for the paper alone, for $15-million, easy. That’s just the paper,” said Demitri Downing, founder of the Marijuana Industry Trade Association.

Downing argues that the root of the problem is that the state limits the number of licenses.

The most recent drawing was for so-called “social equity” licenses. They were intended for people from the area disproportionately affected by the past criminalization of marijuana. The state used a computer to randomly choose 26 winners from the 1300 applications.

A spokesperson for the Arizona Department of Health Services responded to questions from AZ Family Investigates, writing that the drawing process “strictly followed the law.”

“As for the ability to transfer ownership, Rule 303(B)(4) states: ‘No individual listed according to (A)(1)(c) or (d) has entered into any pre-arranged, tentative, or final agreement or promise to sell or otherwise limit the ownership or interest of any individual listed according to (A)(1)(c) or (d) in the proposed marijuana establishment.’ The (A)(1)(c) or (d) persons are the Principal Officers, Board Members, and owners of 10% or more of the profits of the establishment. Those receiving licenses under the law’s social equity provisions have the same rights as those receiving licenses under the law’s other provisions when it comes to the ability to transfer ownership,” wrote the spokesperson.

“It’s the luck of the draw? Why should that be the luck of the draw?” asked an applicant named Nydia, who did not give us her last name. She says she believes the licenses should be merit-based, at the least. But she also agrees that opening the number of licenses would be fairer than the current system.