Arizona Social Equity Program Criticized for Not Going far Enough

Arizona’s social equity cannabis rules, according to critics, do not go far enough when it comes to serving those most impacted by the War on Drugs, the Arizona Daily Star reports. The social equity ownership program was part of Arizona’s adult-use cannabis law and sets aside 26 cannabis licenses for those disproportionately affected by the War on Drugs.

“It was also supposed to remove what lots of people viewed to be a perverse situation where a person selling cannabis with a license could become a billionaire and a person selling cannabis without one could go to prison for decades.” — Arizona NORML board member Julie Gunnigle via the Daily Star

Gunnigle says the program does not put any constraints on license transferability and fears licenses may be eventually sold to people the program was not intended to serve. She says a newly issued license could be worth up to $10 to $20 million, setting up an incentive to acquire a social equity license, only to turn around and sell it.

“When you create a program like this, where licenses are freely transferable on Day 1 and are transferable to other people other than social equity applicants and doesn’t have any strings attached … you’ve created a system that’s just right for exploitation,” she said.

An owner of a cannabis lifestyle brand and potential social equity candidate herself, Zsa Zsa Simone Brown wants language added to the law that would only allow social equity licenses to be sold to others who qualify for the program. Similar to Gunnigle, she fears a management company or other well-funded entity could acquire a social equity license and turn around and sell it to wealthy investors.

“If that’s what it says, and we’re going to allow a management services organization or someone who already has a dispensary to buy that, then it’s no longer a social equity license,” Brown said in an interview with the Daily Star

The Arizona Department of Health Services released draft social equity rules in May. In addition to a $5,000 non-refundable application fee and having to live in Arizona for three of the past five years, the applicants must meet four of the following requirements:

• Make less than 400 percent ($106,000) of the federal poverty level for three of the past five years,
• Be convicted of a cannabis crime, but not have an excluded felony, or been convicted of or asked for the expungement of the possession of fewer than 2.5 ounces of cannabis,
• Be a spouse, surviving spouse, parent, child, or guardian of someone convicted of a cannabis crime,
• Complete a course on how to run a dispensary,
• Live in an area disproportionately impacted by the War on Drugs for three of the past five years

According to the report, the social equity application window will be open this year from December 1 through December 14. Department of Health Communications Director Steve Eliot noted in the report that the licenses will be handed out via a random drawing but says the exact method of selecting winners is not known at this time.

Brown feels the rules may be too broad and as a result not fulfill their intended purpose.

“They have not mentioned that people of color and veterans and Hispanics had been the people who have been disproportionately attacked and have suffered throughout the war on drugs,” she said. “I just feel like this is another opportunity for the state to collect millions of dollars in applications for a handful of licenses. And they’re going to go to the people who already had them.”