Tucson council votes to hold new pot shops to more stringent zoning requirement

Tucson's City Council voted 6-1 to approve a new zoning requirement for social equity marijuana licenses, known as a special exception, that would require licensees to go through additional neighborhood level scrutiny and vetting as well as final approval from mayor and council.

"I remain convinced that Option A (the special exception) is the best way to go for the city of Tucson and for neighbors," said Mayor Regina Romero, who voted in favor of the change.

What is a 'Special Exception'?

According to City of Tucson documents, the special exception process includes the following: 

• A neighborhood meeting notifying all properties within 400 feet of the project and all neighborhood associations within 1 mile of the project, prior to the submittal of the application.
• An application submittal detailing how the proposal meets all the applicable zoning requirements.
• A city staff review of the proposal with recommendation to the Zoning Examiner. 
• A mailed notice of Zoning Examiner public hearing sent to all properties within 400 feet of the project and all neighborhood associations within 1 mile of the project.
• Notice of the public hearing posted on-site and in local paper.
• A public hearing before the Zoning Examiner for a recommendation to the mayor and council.
• A public meeting before the mayor and council for the project’s review and decision.

Romero said the the special exception process, which was recommended by city staff, allows the city and nearby neighborhoods to retain control of where potential new marijuana dispensaries can open. 

The council also considered an Option B, recommended to them by the city's Planning Commission, that would have allowed potential new dispensaries "by right," the same process established dispensaries were subject to before, skipping the added neighborhood meetings and direct council approval required by a special exception.

Demitri Downing, president of the Marijuana Trade Industry Association of Arizona and proponent of Option B, railed against the council's decision, comparing the change to redlining policies that were used in past generations to exclude or push out minority home owners.

He questioned why and how the council was choosing to exert it's influence now and not earlier at the state level when the rules making process for social equity licenses was being laid out.

"If there was concern, then it needs to be clearly laid out what the concerns are of the government and what the government's trying to achieve through the process," he said.

How to achieve 'social equity'?

As an additional part of her reasoning for voting for the change, Romero contended the special exception process gives the city a chance to better vet who exactly licensees and their investors are, something she and others said the state failed to do when issuing the 26 social equity licenses.

"The state did a horrible job with social equity licenses, horrible job," she said. "But we shouldn't stand just seeing what's happening in the state. We have the ability... to regulate what can be developed."

Some advocates for the special exception had voiced concerns about the social equity license process, which concluded in April this year when the Arizona Department of Health Services awarded the licenses via lottery.

The largest concern? The licenses wouldn't go to "true" social equity candidates. 

"They (City of Tucson) can take it case-by-case and actually make sure that they do a thorough background check on who the other 49% (of ownership) will be, see what the actual percentages are of the partnership that are coming in," said Celeste Rodriguez.

Rodriguez, a representative for Acre41, a collection of black female entrepreneurs focused on expanding access to Arizona’s burgeoning marijuana industry, was referring to the state's social equity application process that allowed for potential investors to back individual applicants who met certain guidelines.

She said she thinks the social equity license process was unfairly taken advantage of by big-money investors and already-established dispensary chains. 

That's not who social equity licenses were intended for.

"The dispensaries are wanting the privilege that they're not entitled to," she said. "The intent for these social equity licenses was never to out 26 licenses into MSOs (multi-state operators) hands to be part of their portfolio to expand off for when it goes federal legal."

Instead, Rodriguez and other advocates would like to see any potential applicants go through the special exception process so any ties or agreements with established cannabis companies can be revealed.

She said she also thinks their needs to be an added requirement that new shops be required to give back to the communities they're eventually located in.

That way the true spirit of social equity can better be realized in Tucson and hopefully throughout the state, according to Rodriguez.

"These 26 licenses were aimed for the intent to revitalize neighborhoods that have been affected and give a fair chance to people that have been affected," she said.

However, according to Jon Udell, director of the Arizona branch for the National Organization for the Reform of Marijuana Laws, requiring a special exception could have negative consequences, for local cannabis consumers and patients and potentially for jurisdictions both in- and out-of-state.

First, he pointed to the fact social equity licenses have a sort of expiration date.

If there isn't an operational storefront tied to the license by October 2023, the license is forfeited back to the state. Currently their are no plans to re-issue those licenses in case of forfeiture.

"If you're a business person, you're gonna be looking at this saying 'I can go to Tucson and go through all these extra hearings and hire all these extra people, or I can go to Phoenix or Tempe or wherever else and not spend all that money and time and have all that risk,'" he said.

Second, Udell pointed to other similarly sized mid-size cannabis markets, like Denver and Portland, that have both significantly more pot shops per capita than Tucson and noticeably cheaper prices.

"The price of cannabis in cities with more dispensaries is far lower than the price of cannabis in cities with few dispensaries because you have businesses that are forced to compete for customers," he said.

Third, as pointed out by Udell's colleague, Sarah Tyree, Arizona NORMLs political director, although the state feel short in creating a stronger social equity program, there are social equity licensees who are not currently backed by any sort of outside interest who could lose out on a once in a lifetime opportunity.

"NORML understands that there are a few folks who received those social equity licenses that we're really trying to keep an eye out for and we're trying to support those folks," she said.

Another additional consequence for consumers, patients and social equity licensees is what other cities, counties or municipalities might read into Tucson's decision.

"If you're someone that's trying to advocate for all cities to adopt the special exceptions process, it's nice when you can go into those meetings and tell them, you won't be the first person to do this," he said.

UFCW weighs in

In further justifying her support for the special exception process, Mayor Romero cited the support "of our union brothers and sisters."

Rana Lashgari, an attorney representing the United Farm and Commercial Workers Union -- which had been involved in lobbying for Option A -- issued a statement praising mayor and council for their decision.

"We were proud to be part of a coalition of community equity groups, marijuana industry advocates and neighborhood leaders supporting this improved process in Tucson," Lashgari said.

Others viewed the UFCWs participation in the proceedings more cynically.

Downing took the UFCWs involvement as a sign the mayor and council were beholden to the special interests.

"It's brilliant move by the union," he said. "What they're doing is finding politically friendly cities and jurisdictions and using zoning as a vehicle to achieve their means, which is unionizing these shops."

Ward 6 councilmember Steve Kozachik pushed back on that characterization, noting that he wasn't sure the city could mandate a new marijuana dispensary be unionized in order to be granted approval through the special exception process was even legal.

"I'm not sure how that would work, if we have the authority under our zoning rules to even require that kind of thing. I'm not sure it's germane," he said.

Lashgari insisted that the UFCW participated in the stakeholder process in order to give the Tucson community another voice and that it was already active at organizing at the dispensary level elsewhere.

"We are already working with employees in the cannabis industry across the state who want to unionize," she said. "That said, if our member’s rights are being violated, or if they are being exposed to unsafe or unfair working conditions, then we will absolutely use any process available to fight for them."

Still, Downing insisted that if the UFCW, current dispensary owners and other stakeholders really wanted to make real change, they would do so at the state or federal level.

"In this case, the unions don't understand what... is going on. God bless their interest. They have a right to unionize things. I don't care, but do it the right way. Do it at the state level or the federal level, and do it with maybe all industries or one industry as a whole."

Local industry split

Among the speakers during the call to the audience were a few representatives for local dispensaries. The first to speak was Moe Asnani, the founder and director of D2 and Downtown Dispensary.

Asnani took up support for the special exception, arguing, like others, that the process would give neighborhood associations and concerned parties the ability to reveal who exactly was part of the ownership of a potential dispensary.

"We know for a fact that the 49% owners in the social equity ownership program were not vetted," he said, before alleging some may have used shell companies set up in other states to obscure their identities. "I'm not sure, if when these (social equity dispensaries) open, that will constitute interstate commerce of a schedule one substance."

Another representative from Green Med Wellness Center also spoke in favor of the exception, going so far as to propose the city ask any prospective new dispensary operators who might be allowed through the special exception process to create a scholarship fund to help disadvantaged communities, citing language in Prop. 207, the proposition that legalized adult-use recreational cannabis.

However, it was not a united front among local dispensary operators. Michael Crawford, co-owner of the Prime Leaf pair of dispensaries, spoke out in favor of the "by right" process.

"What I'm about to recommend to you is against my own financial self-interest," Crawford said. "I believe that the Planning Commission got it right. The Planning Commission... felt it didn't make sense to impose additional regulation on this industry."

He continued, calling the special exception process a "solution in search of a problem," and said that the added zoning requirement didn't really address the issue of social equity anyway. Crawford also worried that a special exception could be looked at as a way of treating new prospective dispensary owners differently by the city.

"State law requires everyone to be treated equally, so if you impose something on a social equity license that's not imposed on a dual-license (already established shops), you're going to end up in litigation."