Originally Published: May 22, 2011 9:42 p.m.
PHOENIX - Tucson pharmacist Greg Rogan envisioned simply adding pot to his shop. Patients with chronic diseases such as cancer and AIDS could come in for medical marijuana and learn how to safely ingest it.
But Rogan canceled that plan soon after the Arizona Department of Health Services released official rules for the 125 medical marijuana dispensaries it intends to license statewide. Would-be pot shop owners are to apply next month.
"It's so prohibitive and financially demanding, I'm kind of surprised anyone is going for it," said Rogan, who owns a Tucson pharmacy, The Medicine Shoppe.
Arizona's rules are among the most stringent in the country regulating the production, sale and use of medical marijuana, which passed in Arizona in November with just 51 percent of the vote.
Fourteen other states and Washington, D.C., have approved medical marijuana.
Among other rules for those seeking dispensary licenses in Arizona: They must employ a licensed physician as a medical director and provide that person's license number to the department, obtain a letter from their local town or city saying that they're in compliance with zoning rules, and submit a business plan that shows they will operate as a nonprofit. They also have to prove they've lived in Arizona the past three years and haven't been convicted of a violent crime.
They must also know where their dispensary will be located and provide the physical address in their application, meaning those who don't own a space will either have to buy one or make a financial agreement with a property owner without knowing whether they'll be approved.
Not to mention the $5,000 application fee, only $1,000 of which is refundable if they're turned down.
And on top of all that?
Additional preference for the limited dispensary slots will be given to applicants who can prove they have $150,000 in the bank, aren't in default on loans from the government, don't owe child support and haven't declared bankruptcy.
Still, the relatively small number of licenses sets the stage for a tough competition among would-be owners. Some will likely be turned down even if they meet all the requirements. Compare the 125 slots to hundreds of dispensaries in California, where pot shops can open across the street from each other, and the 800 dispensaries in Colorado. In Denver, the proliferation has prompted rampant "Mile High City" puns.
The $150,000 contingent was the biggest sticking point for Rogan.
"To have $150,000 available to qualify to have a dispensary is a little absurd in my mind," he said. "I didn't have to have $150,000 for my pharmacy. I just need a pharmaceutical license and a business license."
Arizona's rules are "very strict," but appropriate, said Morgan Fox, a spokesman for the Washington, D.C.-based Marijuana Policy Project, which funds efforts to pass medical marijuana measures in states and advocates for legalized marijuana nationwide.
Fox said New Mexico's medical marijuana program is stricter than Arizona's, and pointed to California as having the most relaxed rules.
Meanwhile, federal authorities have conducted raids on pot shops in Montana and Washington as they try to get a handle on dispensaries proliferating with little regulation. In the Montana raids in March, agents with guns drawn burst into up to a dozen medical marijuana operations across the state.
Fox said states that have better regulation likely will avoid such federal raids.
Two medical marijuana providers in Montana are accusing the federal government of civil rights violations in what may be the first lawsuit of its kind. The providers claim the raids were unconstitutional, exceeded the government's authority and pre-empted the state's medical marijuana law.
Fox said Arizona should be able to avoid such problems with its heavy regulation.
Tom Salow, an Arizona Department of Health Services manager who was in charge of writing the rules for dispensaries, said the requirements aren't too tough, but that they're "necessary."
"Keep in mind when comparing this to other states, they did this differently. Some states it was a free-for-all," Salow said. Arizona's "is a comprehensive rule package that we think you have to abide by, and if you can't, then save your $5,000 application fee and don't apply."
David Grandon of Flagstaff will be among those applying to open a dispensary.
He, his wife and another couple want to open the Grassroots Wellness Center in a former coffee shop in east Flagstaff.
He's got a medical director lined up, paid a $3,500 security deposit to the property owner to hold the space, is able to prove he has $150,000 in the bank and is ready to pay the $5,000 application fee.
"My neck's out," he said. "Do I think it's fair? No. Do I think it's worth it? Yes. It's such an exciting industry."
He wants his dispensary to have a hip interior design and a pastry case with items that have been baked with marijuana. He wants a dietitian, a naturopathic doctor, massage therapists and possibly yoga instructors to work there.
Patients who want medical marijuana in Arizona must have cancer, HIV/AIDS, Hepatitis C and other specified chronic or debilitating diseases. Approved patients will be allowed to buy 2 1/2 ounces of marijuana every two weeks or grow a limited number of plants themselves if they live 25 miles from a dispensary.
The health department has approved 2,486 patients, or 93 percent of all applications thus far. Of those who applied, 1,849 asked to grow their own marijuana.
Approval for dispensary applicants will begin in August, and patients likely can begin buying medical marijuana at pot shops in late summer or early fall.