Bill Text: AZ SB1121 | 2021 | Fifty-fifth Legislature 1st Regular | Engrossed

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Bill Title: Marijuana; security

Spectrum: Partisan Bill (Republican 1-0)

Status: (Vetoed) 2021-05-28 - Governor Vetoed [SB1121 Detail]

Download: Arizona-2021-SB1121-Engrossed.html

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House Engrossed Senate Bill

 

technical correction; intensive probation; modification

(now: marijuana; security)

 

 

 

 

State of Arizona

Senate

Fifty-fifth Legislature

First Regular Session

2021

 

 

 

SENATE BILL 1121

 

 

 

AN ACT

 

amending sections 36-2850 and 36-2854, Arizona Revised Statutes; amending title 36, chapter 28.2, Arizona Revised Statutes, by adding section 36-2854.01; amending section 36-2858, Arizona Revised Statutes; relating to marijuana.

 

 

(TEXT OF BILL BEGINS ON NEXT PAGE)

 

Be it enacted by the Legislature of the State of Arizona:

Section 1. Subject to the requirements of article IV, part 1, section 1, Constitution of Arizona, section 36-2850, Arizona Revised Statutes, is amended to read:

START_STATUTE36-2850. Definitions

In this chapter, unless the context requires otherwise:

1. "Advertise," "advertisement" and "advertising" mean any public communication in any medium that offers or solicits a commercial transaction involving the sale, purchase or delivery of marijuana or marijuana products.

2. "Child-resistant" means designed or constructed to be significantly difficult for children under five years of age to open, and not difficult for normal adults to use properly.

3. "Consume," "consuming" and "consumption" mean the act of ingesting, inhaling or otherwise introducing marijuana into the human body.

4. "Consumer" means an individual who is at least twenty-one years of age and who purchases marijuana or marijuana products.

5. "Cultivate" and "cultivation" mean to propagate, breed, grow, prepare and package marijuana.

6. "Deliver" and "delivery" mean the transportation, transfer or provision of marijuana or marijuana products to a consumer at a location other than the designated retail location of a marijuana establishment.

7. "Department" means the department of health services or its successor agency.

8. "Designated caregiver, " "excluded felony offense," "independent third-party laboratory," "nonprofit medical marijuana dispensary," "nonprofit medical marijuana dispensary agent," and "qualifying patient" have has the same meanings meaning prescribed in section 36-2801.

9. "Dual licensee" means an entity that holds both a nonprofit medical marijuana dispensary registration and a marijuana establishment license.

10. "Early applicant" means either of the following:

(a) An entity seeking to operate a marijuana establishment in a county with fewer than two registered nonprofit medical marijuana dispensaries.

(b) A nonprofit medical marijuana dispensary that is registered and in good standing with the department.

11. "Employee," "employer," "health care facility," and "places of employment" have the same meanings prescribed in the smoke-free Arizona act, section 36-601.01.

12. "Excluded felony offense" has the same meaning prescribed in section 36-2801.

12. 13. "Good standing" means that a nonprofit medical marijuana dispensary is not the subject of a pending notice of intent to revoke issued by the department.

14. "Independent third-party laboratory" has the same meaning prescribed in section 36-2801.

13. 15. "Industrial hemp" has the same meaning prescribed in section 3-311.

16. "Licensee" means a person that obtains a license pursuant to section 36-2854.

14. 17. "Locality" means a city, town or county.

15. 18. "Manufacture" and "manufacturing" mean to compound, blend, extract, infuse or otherwise make or prepare a marijuana product.

16. 19. "Marijuana":

(a) Means all parts of the plant of the genus cannabis, whether growing or not, as well as the seeds from the plant, the resin extracted from any part of the plant, and every compound, manufacture, salt, derivative, mixture or preparation of the plant or its seeds or resin.

(b) Includes cannabis as defined in 13-3401.

(c) Does not include industrial hemp, the fiber produced from the stalks of the plant of the genus cannabis, oil or cake made from the seeds of the plant, sterilized seeds of the plant that are incapable of germination, or the weight of any other ingredient combined with marijuana to prepare topical or oral administrations, food, drink or other products.

17. 20. "Marijuana concentrate":

(a) Means resin extracted from any part of a plant of the genus cannabis and every compound, manufacture, salt, derivative, mixture or preparation of that resin or tetrahydrocannabinol.

(b) Does not include industrial hemp or the weight of any other ingredient combined with cannabis to prepare topical or oral administrations, food, drink or other products.

18. 21. "Marijuana establishment" means an entity that is licensed by the department to operate all of the following:

(a) A single retail location at which the licensee may sell marijuana and marijuana products to consumers, cultivate marijuana and manufacture marijuana products.

(b) A single off-site cultivation location at which the licensee may cultivate marijuana, process marijuana and manufacture marijuana products, but from which marijuana and marijuana products may not be transferred or sold to consumers.

(c) A single off-site location at which the licensee may manufacture marijuana products and package and store marijuana and marijuana products, but from which marijuana and marijuana products may not be transferred or sold to consumers.

19. 22. "Marijuana facility agent" means a principal officer, board member or employee of a marijuana establishment or marijuana testing facility who is at least twenty-one years of age and who has not been convicted of an excluded felony offense.

20. 23. "Marijuana products" means marijuana concentrate and products that are composed of marijuana and other ingredients and that are intended for use or consumption, including edible products, ointments and tinctures.

21. 24. "Marijuana testing facility" means the department or another entity that is licensed by the department to analyze the potency of marijuana and test marijuana for harmful contaminants.

25. "Nonprofit medical marijuana dispensary" has the same meaning prescribed in section 36-2801.

26. "Nonprofit medical marijuana dispensary agent" has the same meaning prescribed in section 36-2801.

22. 27. "Open space" means a public park, public sidewalk, public walkway or public pedestrian thoroughfare.

23. 28. "Process" and "processing" mean to harvest, dry, cure, trim or separate parts of the marijuana plant.

24. 29. "Public place" has the same meaning prescribed in the smoke-free Arizona act, section 36-601.01.

30. "Qualifying patient" has the same meaning prescribed in section 36-2801.

25. 31. "Smoke" means to inhale, exhale, burn, carry or possess any lighted marijuana or lighted marijuana products, whether natural or synthetic. END_STATUTE

Sec. 2. Subject to the requirements of article IV, part 1, section 1, Constitution of Arizona, section 36-2854, Arizona Revised Statutes, is amended to read:

START_STATUTE36-2854. Rules; licensing; early applicants; fees; civil penalty; legal counsel

A. The department shall adopt rules to implement and enforce this chapter and regulate marijuana, marijuana products, marijuana establishments and marijuana testing facilities. Those rules shall include requirements for:

1. Licensing marijuana establishments and marijuana testing facilities, including conducting investigations and background checks to determine eligibility for licensing for marijuana establishment and marijuana testing facility applicants, except that:

(a) An application for a marijuana establishment license or marijuana testing facility license may not require the disclosure of the identity of any person who is entitled to a share of less than ten percent of the profits of an applicant that is a publicly traded corporation.

(b) The department may not issue more than one marijuana establishment license for every ten pharmacies that have registered under section 32-1929, that have obtained a pharmacy permit from the Arizona board of pharmacy and that operate within this state.

(c) Notwithstanding subdivision (b) of this paragraph, the department may issue a marijuana establishment license to not more than two marijuana establishments per county that contains no registered nonprofit medical marijuana dispensaries, or one marijuana establishment license per county that contains one registered nonprofit medical marijuana dispensary.  Any license issued pursuant to this subdivision shall be for a fixed county and may not be relocated outside of that county.

(d) The department shall accept applications for marijuana establishment licenses from early applicants beginning January 19, 2021 through March 9, 2021. Not later than sixty days after receiving an application pursuant to this subdivision, the department shall issue a marijuana establishment license to each qualified early applicant.  If the department has not adopted final rules pursuant to this section at the time marijuana establishment licenses are issued pursuant to this subdivision, licensees shall comply with the rules adopted by the department to implement chapter 28.1 of this title except those that are inconsistent with this chapter.

(e) After issuing marijuana establishment licenses to qualified early applicants, the department shall issue marijuana establishment licenses available under subdivisions (b) and (c) of this paragraph by random selection and according to rules adopted pursuant to this section. At least sixty days prior to before any random selection, the department shall prominently publicize the random selection on its website and through other means of general distribution intended to reach as many interested parties as possible and shall provide notice through an email notification system to which interested parties can subscribe.

(f) Notwithstanding subdivisions (b) and (c) of this paragraph, and no not later than six months after the department adopts final rules to implement a social equity ownership program pursuant to paragraph 9 of this subsection, the department shall issue twenty-six additional marijuana establishment licenses to entities that are qualified pursuant to the social equity ownership program. 

(g) Licenses issued by the department to marijuana establishments and marijuana testing facilities shall be valid for a period of two years.

(h) Beginning the effective date of this amendment to this section, the department may not issue a marijuana establishment or marijuana testing facility license to an applicant who has an ownership interest in an out-of-state marijuana establishment or marijuana testing facility, or the other state's equivalent, that has had its license revoked by the other state.

2. Licensing fees and renewal fees for marijuana establishments and marijuana testing facilities in amounts that are reasonable and related to the actual cost of processing applications for licenses and renewals and that do not exceed five times the fees prescribed by the department to register or renew a nonprofit medical marijuana dispensary.

3. The security of marijuana establishments and marijuana testing facilities.

4. Marijuana establishments to safely cultivate, process and manufacture marijuana and marijuana products. NOT LATER THAN DECEMBER 31, 2023, The department shall require licensees to procure, develop, acquire and maintain a system to track marijuana and marijuana products at all points of cultivation, manufacturing and sale.  The system developed and maintained pursuant to this paragraph shall:

(a) Ensure an accurate accounting and reporting of the production, processing and sale of marijuana and marijuana products.

(b) Ensure compliance with rules adopted by the department.

(c) Be capable of tracking, at a minimum:

(i) The propagation of immature marijuana plants and the production of marijuana by a marijuana establishment.

(ii) The processing of marijuana and marijuana products by a marijuana establishment.

(iii) The sale and purchase of marijuana and marijuana products between licensees.

(iv) The transfer of marijuana and marijuana products between premises for which licenses have been issued.

(v) The disposal of marijuana waste.

(vi) the identity of the person making the entry in the system and the time, date and location of each entry into the system, including any corrections or changes to that information.

(vii) Any other information that the department determines is reasonably necessary to accomplish the duties, functions and powers of the department.

(d) Contain a transactional stamp to ensure accuracy, provide for chain of custody of the information and foreclose tampering of the data, human error or intentional misreporting.

5. Tracking, testing, labeling consistent with section 36-2854.01 and packaging marijuana and marijuana products, including requirements that marijuana and marijuana products be:

(a) Sold to consumers in clearly and conspicuously labeled containers that contain accurate warnings regarding the use of marijuana or marijuana products.

(b) Placed in child-resistant packaging on exit from a marijuana establishment.

6. Forms of government-issued identification that are acceptable by a marijuana establishment verifying a consumer's age and procedures related to verifying a consumer's age consistent with section 4-241.  Until the department adopts final rules related to verifying a consumer's age, marijuana establishments shall comply with the proof of legal age requirements prescribed in section 4-241.

7. The potency of edible marijuana products that may be sold to consumers by marijuana establishments at reasonable levels upon consideration of industry standards, except that the rules:

(a) Shall limit the strength of edible marijuana products to no not more than ten milligrams of tetrahydrocannabinol per serving or one hundred milligrams of tetrahydrocannabinol per package.

(b) Shall require that if a marijuana product contains more than one serving, it must be delineated or scored into standard serving sizes and homogenized to ensure uniform disbursement throughout the marijuana product.

8. Ensuring the health, safety and training of employees of marijuana establishments and marijuana testing facilities.

9. The creation and implementation of a social equity ownership program to promote the ownership and operation of marijuana establishments and marijuana testing facilities by individuals from communities disproportionately impacted by the enforcement of previous marijuana laws.

10. Requiring marijuana establishments to display in a conspicuous location a sign that warns pregnant women about the potential dangers to fetuses caused by smoking or ingesting marijuana while pregnant or to infants while breastfeeding and the risk of being reported to the department of child safety during pregnancy or at the birth of the child by persons who are required to report. The rules shall include the specific warning language that must be included on the sign. The cost and display of the sign required by rule shall be borne by the marijuana establishment.

B. The department may:

1. Subject to title 41, chapter 6, article 10, deny any application submitted or deny, suspend or revoke, in whole or in part, any registration or license issued under this chapter if the registered or licensed party or an officer, agent or employee of the registered or licensed party does any of the following:

(a) Violates this chapter or any rule adopted pursuant to this chapter.

(b) Has been, is or may continue to be in substantial violation of the requirements for licensing or registration and, as a result, the health or safety of the general public is in immediate danger.

2. Subject to title 41, chapter 6, article 10, and unless another penalty is provided elsewhere in this chapter, assess a civil penalty against a person that violates this chapter or any rule adopted pursuant to this chapter in an amount not to exceed $1,000 for each violation.  Each day a violation occurs constitutes a separate violation.  The maximum amount of any assessment is $25,000 for any thirty-day period. In determining the amount of a civil penalty assessed against a person, the department shall consider all of the factors set forth in section 36-2816, subsection H.  All civil penalties collected by the department pursuant to this paragraph shall be deposited in the smart and safe Arizona fund established by section 36-2856.

3. At any time during regular hours of operation, visit and inspect a marijuana establishment, marijuana testing facility or dual licensee to determine if it complies with this chapter and rules adopted pursuant to this chapter.  The department shall make at least one unannounced visit annually to each facility licensed pursuant to this chapter.

4. Adopt any other rules that are not expressly stated in this section and that are necessary to ensure the safe and responsible cultivation, sale, processing, manufacture, testing and transport of marijuana and marijuana products.

C. Until the department adopts rules permitting and regulating delivery by marijuana establishments pursuant to subsection D of this section, delivery is unlawful under this chapter.

D. On or after January 1, 2023, the department may, and no not later than January 1, 2025 the department shall, adopt rules to permit and regulate delivery by marijuana establishments.  The rules shall:

1. Require that delivery and the marijuana and marijuana products to be delivered originate from a designated retail location of a marijuana establishment and only after an order is made with the marijuana establishment by a consumer.

2. Prohibit delivery to any property owned or leased by the United States, this state, a political subdivision of this state or the Arizona board of regents.

3. Limit the amount of marijuana and marijuana products based on retail price that may be in a delivery vehicle during a single trip from the designated retail location of a marijuana establishment.

4. Prohibit extra or unallocated marijuana or marijuana products in delivery vehicles.

5. Require that deliveries be made only by marijuana facility agents in unmarked vehicles that are equipped with a global positioning system or similar location tracking system and video surveillance and recording equipment, and that contain a locked compartment in which marijuana and marijuana products must be stored.

6. Require delivery logs necessary to ensure compliance with this subsection and rules adopted pursuant to this subsection.

7. Require inspections to ensure compliance with this subsection and rules adopted pursuant to this subsection.

8. Include any other provisions necessary to ensure safe and restricted delivery.

9. Require dual licensees to comply with the rules adopted pursuant to this subsection.

E. Except as provided in subsection D of this section, the department may not permit delivery of marijuana or marijuana products under this chapter by any individual or entity.  In addition to any other penalty imposed by law, an individual or entity that delivers marijuana or marijuana products in a manner that is not authorized by this chapter shall pay a civil penalty of $20,000 per violation to the smart and safe Arizona fund established by section 36-2856.  This subsection may be enforced by the attorney general.

F. All rules adopted by the department pursuant to this section shall be consistent with the purpose of this chapter.

G. The department may not adopt any rule that:

1. Prohibits the operation of marijuana establishments, either expressly or through requirements that make the operation of a marijuana establishment unduly burdensome.

2. Prohibits or interferes with the ability of a dual licensee to operate a marijuana establishment and a nonprofit medical marijuana dispensary at shared locations.

H. Notwithstanding section 41-192, the department may employ legal counsel and make an expenditure or incur an indebtedness for legal services for the purposes of:

1. Defending this chapter or rules adopted pursuant to this chapter.

2. Defending chapter 28.1 of this title or rules adopted pursuant to chapter 28.1 of this title.

I. The department shall deposit all license fees, application fees and renewal fees paid to the department pursuant to this chapter in the smart and safe Arizona fund established by section 36-2856.

J. On request, the department shall share with the department of revenue information regarding a marijuana establishment, marijuana testing facility or dual licensee, including its name, physical address, cultivation site and transaction privilege tax license number.

K. Notwithstanding any other law, the department may:

1. License an independent third-party laboratory to also operate as a marijuana testing facility.

2. Operate a marijuana testing facility.

L. The department shall maintain and publish a current list of all marijuana establishments and marijuana testing facilities by name and license number.

M. Notwithstanding any other law, the issuance of an occupational, professional or other regulatory license or certification to a person by a jurisdiction or regulatory authority outside this state does not entitle that person to be issued a marijuana establishment license, a marijuana testing facility license, or any other license, registration or certification under this chapter. END_STATUTE

Sec. 3. Subject to the requirements of article IV, part 1, section 1, Constitution of Arizona, title 36, chapter 28.2, Arizona Revised Statutes, is amended by adding section 36-2854.01, to read:

START_STATUTE36-2854.01. Marijuana products; labeling; packaging

Not later than December 31, 2023, Any marijuana product packaging labeled for sale shall include a consumer scannable tetrahydrocannabinol quick response code or similar technology linking to a web page that displays all of the following for the specific marijuana product:

1. The date of harvest of the marijuana.

2. The tetrahydrocannabinol strain of the marijuana.

3. The tetrahydrocannabinol extraction method used to extract the tetrahydrocannabinol from the marijuana.

4. A laboratory report of impurities containing at least heavy metals and agrochemicals.

5. The date of manufacture of the marijuana product.

6. The distribution chain, including at least a point of intended sale.

7. A warning that states, "Using marijuana during pregnancy could cause birth defects or other health issues to your unborn child."END_STATUTE

Sec. 4. Subject to the requirements of article IV, part 1, section 1, Constitution of Arizona, section 36-2858, Arizona Revised Statutes, is amended to read:

START_STATUTE36-2858. Lawful operation of marijuana establishments and marijuana testing facilities

A. Except as specifically and expressly provided in section 36-2857 and notwithstanding any other law, it is lawful and is not an offense under the laws of this state or any locality, may not constitute the basis for detention, search or arrest, and may not constitute the sole basis for seizure or forfeiture of assets or the basis for imposing penalties under the laws of this state or any locality for:

1. A marijuana establishment, or an agent acting on behalf of a marijuana establishment, to:

(a) Possess marijuana or marijuana products.

(b) Purchase, sell or transport marijuana and marijuana products to or from a marijuana establishment.

(c) Sell marijuana and marijuana products to consumers, except that a marijuana establishment may not sell more than one ounce of marijuana to a consumer in a single transaction, not more than five grams of which may be in the form of marijuana concentrate.

(d) Cultivate, produce, test or process marijuana or manufacture marijuana or marijuana products by any means, including chemical extraction or chemical synthesis.

2. An agent acting on behalf of a marijuana establishment to sell or otherwise transfer marijuana to an individual under twenty-one years of age, if the agent reasonably verified that the individual appeared to be twenty-one years of age or older by means of a government-issued photographic identification in compliance with rules adopted pursuant to section 36-2854, subsection A, paragraph 6.

3. A marijuana testing facility, or an agent acting on behalf of a marijuana testing facility, to obtain, possess, process, repackage, transfer, transport or test marijuana and marijuana products.

4. A nonprofit medical marijuana dispensary or a marijuana establishment, or an agent acting on behalf of a nonprofit medical marijuana dispensary or a marijuana establishment, to sell or otherwise transfer marijuana or marijuana products to a nonprofit medical marijuana dispensary, a marijuana establishment or an agent acting on behalf of a nonprofit medical marijuana dispensary or a marijuana establishment.

5. Any individual, corporation or other entity to sell, lease or otherwise allow property or goods that are owned, managed or controlled by the individual, corporation or other entity to be used for any activity authorized by this chapter, or to provide services to a marijuana establishment, or marijuana testing facility or agent acting on behalf of a marijuana establishment or marijuana testing facility in connection with any activity authorized by this chapter.

B. This section does not preclude the department from imposing penalties against a marijuana establishment or marijuana testing facility for failing to comply with this chapter or rules adopted pursuant to this chapter.

C. A marijuana establishment may be owned or operated by a publicly traded company.

D. Notwithstanding any other law, a dual licensee:

1. May hold a marijuana establishment license and operate a marijuana establishment pursuant to this chapter.

2. May operate on a for-profit basis if the dual licensee promptly notifies the department and department of revenue and takes any actions necessary to enable its for-profit operation, including converting its corporate form and amending its organizational and operating documents.

3. Must continue to hold both its marijuana establishment license and nonprofit medical marijuana dispensary registration, regardless of any change in ownership of the dual licensee, unless it terminates its status as a dual licensee and forfeits either its marijuana establishment license or nonprofit medical marijuana dispensary registration by notifying the department of such a termination and forfeiture.

4. May Is not be required to:

(a) Employ or contract with a medical director.

(b) Obtain nonprofit medical marijuana dispensary agent or marijuana facility agent registrations for outside vendors that do not have regular, unsupervised access to the interior of the dual licensee licensee's premises.

(c) Have a single secure entrance as required by section 36-2806, subsection C, but may be required to implement appropriate security measures to deter and prevent the theft of marijuana and to reasonably regulate customer access to the premises.

(d) Comply with any other provision of chapter 28.1 of this title or any rule adopted pursuant to chapter 28.1 of this title that makes its operation as a dual licensee unduly burdensome.

E. Notwithstanding any other law, a dual licensee that elects to operate on a for-profit basis pursuant to subsection D, paragraph 2 of this section:

1. Is subject to the taxes imposed pursuant to title 43.

2. Is not required to submit its annual financial statements or an audit report to the department for purposes of renewing its nonprofit medical marijuana dispensary registration.

F. Notwithstanding any other law, a dual licensee must conduct both of the following operations at a shared location:

1. Sell marijuana and marijuana products to consumers pursuant to this chapter.

2. Dispense marijuana to registered qualifying patients and registered designated caregivers pursuant to chapter 28.1 of this title.

G. Notwithstanding chapter 28.1 of this title or any rule adopted pursuant to chapter 28.1 of this title, a dual licensee may engage in any act, practice, conduct or transaction allowed for a marijuana establishment by this chapter.

H. Notwithstanding any other law:

1. An individual may be an applicant, principal officer or board member of more than one marijuana establishment or more than one dual licensee regardless of the establishment's location.

2. Two or more marijuana establishments or dual licensees may designate a single off-site location as prescribed in section 36-2850, paragraph 18 21, subdivision (c) to be jointly used by those dual licensees or marijuana establishments.

I. Marijuana establishments, marijuana testing facilities and dual licensees that are subject to applicable federal or state antidiscrimination laws may not pay their employees differently based solely on a protected class status such as sex, race, color, religion, national origin, age or disability. This subsection does not expand or modify the jurisdictional reach, provisions or requirements of any applicable anti-discrimination antidiscrimination law. END_STATUTE

Sec. 5. Department of health services; rulemaking exemption

Subject to the requirements of article IV, part 1, section 1, Constitution of Arizona, for the purposes of this act, the department of health services is exempt from the rulemaking requirements of title 41, chapters 6 and 6.1, Arizona Revised Statutes, for six months after the effective date of this act, except that the department shall provide the public at least thirty days to comment on the proposed rules.

Sec. 6. Requirements for enactment; three-fourths vote

Pursuant to article IV, part 1, section 1, Constitution of Arizona, this act is effective only on the affirmative vote of at least three-fourths of the members of each house of the legislature.