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. Recreational cannabis sales began in January 2021, and both programs generated $1.361 billion in cannabis sales in the first 12 months, including approximately $598 million for adult-use cannabis. In 2022, revenue was $1.388 billion, including $881 million from recreational cannabis sales. For the first half of 2023, total sales were $690 million, with recreational cannabis sales accounting for nearly 75% of total sales.

Arizona Cannabis Market

  1. 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:

Adult Use Cannabis Business License.

  1. A single retail location at which the licensee may sell marijuana and marijuana products to consumers, cultivate marijuana and manufacture marijuana products.
  2. 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.
  3. 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.

Medical Use Cannabis Business License. A “nonprofit medical marijuana dispensary” is “a not-for-profit entity that acquires, possesses, cultivates, manufactures, delivers, transfers, transports, supplies, sells or dispenses marijuana or related supplies and educational materials to cardholders. A nonprofit medical marijuana dispensary may receive payment for all expenses incurred in its operation.”

Dual Cannabis Business License. “An entity that holds both a nonprofit medical marijuana dispensary registration and a marijuana establishment license.”

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.

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.

The state prohibits recreational cannabis delivery, however, Sections 36-2850 and 36-2854 of the Arizona Revised Statutes permit adult-use cannabis delivery once ADHS promulgates the rules for regulating cannabis delivery.

Cannabis Delivery Service by State

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

'70% ready to go' business plan templates

We offer a wide range of '70% ready-to-go' cannabis business plan templates that will help you prepare a professional cannabis business plan document supported with expert financials and an investor pitch deck. All our templates are completely open and editable and you can use Word, Excel and PowerPoint to work with them.

  1. Prepare the necessary documentation.
  1. 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).

  1. 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 with the Arizona Department of Revenue (ADOR).

  1. 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.

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.