Tuesday lottery to decide who gets first AZ licenses to sell marijuana - East Valley Tribune: Health

Tuesday lottery to decide who gets first AZ licenses to sell marijuana

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Posted: Monday, August 6, 2012 6:15 am | Updated: 8:50 am, Tue Aug 14, 2012.

State officials will award the first-ever licenses to legally sell marijuana this coming week under what one prosecutor said is a cloud of having them shut down the moment they open their doors.

The big day comes Tuesday when state health officials will pull out a device resembling the machine used to pick lottery numbers.

In fact, that's really what it is: a lottery to determine which of the 486 applicants are going to walk away with a certificate that awards them permission -- pending final inspection -- to be one of the 126 sites where marijuana can be sold. In areas where there are multiple applicants for the same neighborhood, the business whose pre-numbered ping pong ball that the machine spits out is the winner.

And the competition is even tighter than that.

State Health Director Will Humble said no one applied for a license to sell marijuana in 27 of the state's 126 "community health analysis areas.'' Most of those are Indian reservations, though there was no interest in setting up shop to sell marijuana in Green Valley or San Luis.

And 24 areas had only one applicant, meaning that organization already is a winner.

So that leaves 462 applicants vying for the 75 remaining areas.

Humble figures that the first dispensaries could be operating in two weeks. But he said these are likely to be by applicants in areas where there was no competition, giving them a head start on their paperwork and planning their security and inventory control systems that the state has to approve before they can open their doors.

But the big question is how long those doors will remain open, and whether the winners will ever be able to recoup their investment, ranging from the start-up costs and lease payments on buildings to the $5,000 non-refundable application fee.

"I have been told that the newly appointed U.S. Attorney for the District of Arizona, John Leonardo, fully intends to prevent any dispensaries from operating in Arizona by seizing each and every one as it opens and commits violations of the (federal) Controlled Substances Act,'' claimed Yavapai County Attorney Sheila Polk in a letter to Gov. Jan Brewer.

She pointed out that, Arizona's 2010 voter-approved medical marijuana law notwithstanding, the drug remains illegal here for all under federal law. And a dispensary license not only grants the right to sell but also to grow the drug.

Polk, writing on behalf of 13 of the state's 15 county attorneys, chided Brewer's health department for licensing both cardholders and dispensaries in spite of that conflict.

"We believe it is bad public policy for one arm of the government to facilitate marijuana cultivation and use while another arm of the government is moving to close it down,'' she wrote.

The letter drew a sharp retort from Bill Solomon of the U.S. Attorney's Office, calling her representation on his agency's position on medical marijuana dispensaries "inaccurate.''

"The Department of Justice is focusing its limited resources on significant drug traffickers, not seriously ill individuals and their caregivers who are in compliance with applicable state medical marijuana statutes,'' Solomon said.

Polk, however, told Capitol Media Services she's not convinced.

She said that Ann Scheel, who was acting U.S. Attorney before Leonardo's appointment, sent a letter to Brewer saying that her office intends to "vigorously enforce the Controlled Substances Act'' and that compliance with state medical marijuana laws is not a defense.

Solomon, however, said that does not mean users are in danger.

"We don't intend to focus our resources on cancer patients or other seriously ill individuals,'' he said.

Polk, however, said that's not her only source.

"I had spoken to a former DEA agent who tells me that the U.S. Attorney's Office does intend to seize and close down the dispensaries,'' she said. And she said federal prosecutors in California have gone after several retail sellers there.

Pressed specifically on what it might mean if prosecutors go after dispensaries which are selling the drugs, Solomon said he could not provide a definitive answer. "What I can tell you is we will continue to focus on large-scale drug traffickers,'' he said.

Whether raids are coming or not, Polk said state employees should not administer the program in the face of contrary federal law.

"It makes no sense for one arm of the government to be licensing dispensaries and another arm of the government to be shutting them down,'' she said.

Humble, however, continues down the road to Tuesday's drawing undeterred. Nor is he concerned that his agency might be taking application money from and licensing dispensaries that could be immediately shuttered by federal agents.

"This is a free-market society,'' he said. "People make decisions about what businesses they're going to jump into based on their own analysis of their own risks and benefits.''

Humble said no one has kept the conflict between state and federal law a secret.

But all the talk of shutting down dispensaries also depends on the feds finding them first.

The 2010 voter-approved law specifically exempts from public records laws not only the names of those who will get a license but the addresses where they are located. Humble said he is obligated, though, to provide a list to anyone with a medical marijuana card.

"Now, cardholders can take that email and give it on their own Facebook account,'' he continued, as they are not subject to the confidentiality requirements. And Humble said he expects at least some dispensary operators to come forward publicly, if for no other reason than to advertise for customers.

And if federal agents want the list? Humble said they probably ought to have a court order to get him to surrender it.

In the meantime, Humble is preparing for Tuesday's drawing. But that does not mean anyone will be opening up shop on Wednesday.

"It's really just an allocation,'' he said of the process. Winners then have to complete paperwork to be certified as a marijuana dealer.

"That still doesn't allow them to sell,'' Humble explained. He said health officials have to do a final inspection of everything from the business plans to the security of the facility.

There also needs to be an inventory control system in place to keep some of the product from going out the back door for illegal sales.

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