1. Understand regulatory and legal requirements. Do market research.

Arizona Cannabis Legalization

In December 2010, Arizona voters passed the Arizona Medical Marijuana Act (AMMA) and on November 3, 2020, voters approved a proposition that legalizes recreational cannabis.

Arizona Cannabis Market

The Bureau of Marijuana Licensing, part of the Arizona Department of Health Services (ADHS), Division of Licensing, is responsible for licensing and regulating medical marijuana qualified patients, caregivers, facility agents, lab agents, and dispensary agents, as well as medical marijuana dispensaries and adult-use marijuana establishments. Marijuana Testing Laboratories, both medical and adult-use, are licensed and regulated by the ADHS State Lab.

2. Decide the type of cannabis business. Choose a location. Check local zoning regulations.

Arizona Cannabis Licenses

The following Arizona cannabis business licenses are available to apply for:

Arizona Weed Delivery

Medical cannabis delivery is permitted and dispensaries can partake in delivery provided they follow the controlled substances prescription monitoring program and medical cannabis program laws established by the Department of Health Services.

As of November 1, 2024, vertically integrated cannabis companies in Arizona are allowed to deliver products to adult-use consumers.

Cannabis Delivery Service by State

3. Develop a solid cannabis business plan. Secure financing.

4. Prepare the necessary documentation.

An applicant must submit all required information to the Department on the forms and in the manner prescribed by the Department, which may include, but is not limited to the following:

• Articles of Incorporation.
• Copy of policies and procedures.
• A sworn statement signed and dated certifying that the facility location is in compliance with any local zoning restrictions.
• Documentation from the local jurisdiction where the facility’s proposed physical address is located. There are no local zoning restrictions for the facility’s location, or the facility’s location is in compliance with any local zoning restrictions.
• Documentation of: 1) Ownership of the physical address of the proposed facility, or 2) Permission from the owner of the physical address of the proposed facility for the entity applying for a facility registration certificate to operate a facility at the physical address.
• The facility’s by-laws.
• Site Plan.
• Floor Plan.
• A business plan demonstrating the on-going viability of the dispensary on a not-for-profit basis.

5. Obtain required state licenses. Pay fees.

In Arizona, any business that wishes to sell cannabis products must first hold a license issued by the Arizona Department of Health Services (ADHS).

6. Register your business as an employer and a tax payer.

Once the business has been issued a license from ADHS, the business can then apply for a transaction privilege tax (TPT) license and a Marijuana Excise Tax (MET) registration number with the Arizona Department of Revenue (ADOR).

7. Keep track of your ongoing compliance requirements.

Physical security measures, good production practices, packaging, labelling and transport requirements, reporting requirements and more. Since 2017, businesses are required to file all their TPT activity with ADOR through a centralized reporting and payment system.

Arizona Cannabis Taxes

Arizona imposes transaction privilege tax (TPT) on the sale of medical and adult use marijuana. Additionally, a 16% excise tax (MET) is also imposed on the sale of adult use marijuana.

Arizona complies with the Internal Revenue Code. The starting point for corporate income tax in Arizona is federal taxable income, and there is no provision that Section 280E does not apply, so cannabis businesses cannot deduct most business expenses other than cost of goods sold.

Cannabis Advertising Regulations in Arizona

(A) Only a marijuana establishment or nonprofit medical marijuana dispensary may advertise marijuana, products containing tetrahydrocannabinol or marijuana paraphernalia.

(B) In Arizona, ads on social media and the internet must be placed only where more than “71.6 percent of the audience viewing the advertising or marketing is reasonably expected to be 21 years of age or older.”

(C) Web sites, social media accounts and advertising shall contain the following warning: “Marijuana is only for adults who are 21 years of age or older. Keep out of reach of children.”

(D) Any advertising involving direct, individualized communication or dialogue shall use a method of age affirmation to verify that the recipient is 21 years of age or older before engaging in that communication or dialogue. The method of age affirmation may include user confirmation, birth date disclosure or other similar registration methods.

Main steps in short

• Understand regulatory and legal requirements. Do market research.
• Decide the type of cannabis business. Choose a location. Check local zoning regulations.
• Develop a solid business plan. Secure financing.
• Prepare the necessary documentation.
• Obtain required state licenses. Pay fees.
• Register your business as an employer and a tax payer.
• Keep track of your ongoing compliance requirements.