Prospective marijuana dispensaries are required to register with the Arizona Department of Health Services (“ADHS”) for a certificate to serve as a dispensary; the registration requires documentation that the proposed dispensary location complies with local zoning laws. A.R.S. §§ 36-2803, -2804. In addition, ADHS regulations limit the number of authorized dispensaries in prescribed geographic areas. If more than one prospective dispensary applies in a single area, then ADHS conducts a lottery. Here, a prospective marijuana dispensary’s application for a certificate included a Conditional Use Permit (a “CUP”) to show compliance with local zoning laws. A competitor dispensary did not submit a CUP; instead, it submitted documentation from city attorney that the competitor would comply with local zoning laws. ADHS accepted both applications, conducted a lottery, and selected the competitor. Prospective dispensary sued, contending that ADHS had unlawfully accepted competitor’s application without a CUP. The superior court agreed with ADHS, and the prospective dispensary appealed.
The Court of Appeals affirmed. ADHS regulations require a prospective dispensary to submit “[d]ocumentation from the local jurisdiction” that the proposed dispensary would comply with zoning restrictions. A.A.C. R9-17-304(C)(6). After obtaining the certificate, the dispensary must obtain approval to operate by presenting a “certificate of occupancy, a special use permit, or a conditional use permit.” A.A.C. R9-17-305(A)(2). The Court of Appeals held that these requirements are distinct and therefore a dispensary must only provide a CUP when seeking approval to operate, not when initially applying for a certificate.
Judge Jones delivered the unanimous opinion of the court; Judge Thompson and Judge Gemmill joined.
Posted by: Emma J. Cone-Roddy