Last updated February 10, 2022
As the country’s fastest growing cannabis packaging and technology organization, DIZPOT’s time honored core values have always been focused on supporting diversity and inclusion in the workplace.
From the hiring of our staff throughout the country, to the sponsorship of organizations we support, we always are looking for new ways to collaborate and provide ongoing opportunities for those from underserved or disadvantaged communities.
With new social equity license owners poised to enter the Arizona market, DIZPOT offers consultations to help new business owners understand the essentials of compliant and compelling packaging design as they navigate the highly competitive Arizona cannabis marketplace.
Along with professional packaging and branding expertise, the DIZPOT team donates their time and knowledge to resources and programs to help potential social equity license holders and cannabis brand operators create successful businesses.
One of the noteworthy programs for potential cannabis license holders is the “Social Equity Deep Dive Virtual Series,” hosted by the Marijuana Industry Trade Association of Arizona. This cannabis education course features distinguished experts in the Arizona cannabis community who share indispensable advice for social equity applicants on different topics.
DIZPOT’s co-founders, CEO, John Hartsell and COO, Jeff Scrabeck are featured speakers for the “Packaging & the Importance of a Cannabis Packaging Specialist ” webinar. During this in-depth discussion, Hartsell and Scrabeck share their practical insight into custom packaging, branding for cannabis products, child-proof packaging, and more.
Hartsell and Scrabeck have also met with Arizona Department of Health Services (ADHS) officials, along with Mayor Corey Woods of Tempe, Ariz., to offer support, education and assistance.
As Arizona moves forward with social equity license holders, DIZPOT explains the history of Prop 207 and why this program is so important.
Where the Social Equity Program Stemmed From
In a major move to legalize adult-use cannabis in Arizona, the Prop 207 initiative was created and passed in November 2020. This proposition legalized cannabis for adults 21 and over, and also added 26 “social equity” licenses that would be awarded to “people from communities disproportionately impacted by the enforcement of previous marijuana laws.”* Some say the challenge with this inclusion was that no one at the state level or in the cannabis industry knew what this meant exactly. Accordingly, many leaders in the cannabis industry asked the Arizona Department of Health Services (ADHS) to include them in the rule-making process to ensure the purpose of the proposition was carried out, and to provide insight to the intricacies that these experts see on a daily basis in the industry.
Proposition 207 Challenges
As the rule-making process panned out, some felt the program was not going to help those the program was meant for, which was lower income residents from underserved communities who have, or have a family member, with minor marijuana convictions. The challenge was, these communities were not defined in the ballot, and were left for ADHS to define. There was also concern that instead of utilizing the license for the purposes of providing a business option for people in underserved communities, the license could in turn be sold for an advantageous amount of money to a non-social equity owner, defeating the purpose of the initiative. On the open market, Arizona licenses are being sold on average between $10 million to $20 million apiece.
Adding Clarity to the Arizona Social Equity Program
On Friday, October 8, 2021, ADHS released the geographic requirements for those planning to apply for a “social equity” license. Out of approximately 500 zip codes in Arizona, 87 were chosen as areas previously impacted by marijuana laws. According to Tom Herrmann, an ADHS spokesperson, the zip codes were chosen based on “a variety of data sources, including research and analyses of criminal justice and socioeconomic data.”
In order to apply for the social equity licenses, applicants must have lived in one of the 87 zip codes for at least three of the past five years, from 2016 through 2020. By adding this clarity, it opened the state to potential lawsuits and admission that some communities had been targeted for marijuana crimes.
Previous to this added context, there were three other criteria for individuals to be eligible. They included:
- An annual household income of less than 400% of the “poverty level” for three of the five years, from 2016 through 2020.
- Has been convicted of a criminal offense related to marijuana or marijuana paraphernalia or has had a qualifying marijuana-related conviction expunged under A.R.S. 36-2862.
- Is the spouse, sibling, parent, or legal guardian of an individual who has been convicted of a marijuana or marijuana paraphernalia related criminal offense.
**Graphic credit: azcentral.com
Social Equity Lawsuit in Arizona
On 2/2/2022 Maricopa County Superior Court Judge Randall Warner said “the rules satisfy the broad requirements of the statute that mandates them” and has dismissed the lawsuit.
Soon after additional information was provided for who would be eligible to apply for the 26 Arizona social equity licenses, a group of advocates filed a lawsuit against the State of Arizona, the ADHS, Doug Ducey in his official capacity as Governor of the state of Arizona, and Donald Herrington, in his official capacity as Director of ADHS. The lawsuit was filed by Greater Phoenix Urban League, a nonprofit helping minority communities, of which DIZPOT is a member. The second plaintiff in the lawsuit was Acre 41, a group of women entrepreneurs who planned to apply for a marijuana dispensary license through the program.
This lawsuit states that “the final regulations promulgated by ADHS fail in some ways to fully implement the mandates of Proposition 207 and A.R.S. 36-2854 (A)(9) (“the Social Equity Program”) and, in other ways, exceed the rule making authority conferred on ADHS be the enabling statute.”
The lawsuit alleges the defendants are not ensuring the social equity licenses will go to those actually harmed by marijuana convictions and the license would likely be sold and transferred to a non-social equity candidate, which would defeat the purpose of the program.
The lawsuit was filed in hopes to delay the application process until the requirements could be better defined to reflect what the program was originally intended for.
Moving Forward with the Arizona Social Equity Program
Despite the ongoing lawsuit, on Dec 1, 2021, the state of Arizona began to accept applications for the 26 social equity marijuana licenses after a Maricopa County Superior Court Judge decided to not stop ADHS from taking applications.
According to TucsonWeekly.com** the court did schedule a hearing for the lawsuit on January 28, 2022. It is said that ADHS will most likely not move forward with the lottery until after this date.
The application period will end on December 14, 2021. Individuals that apply in the Dec. 1 – Dec. 14, 2021, timeline are required to have started mandatory business training provided by ADHS. This training includes topics such as predatory deals, licensing and applications, and fundraising 101. According to ADHS, 2,706 Individuals completed the training by Nov. 24, 2021.
In summary, the DIZPOT team will continue to work toward helping to create a fair industry for cannabis license operators from all walks of life.
** Map from azcentral.com “Applying for a ‘social equity’ license to run a pot shop? You need to have lived in these areas” article.