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Pima County liberalizes marijuana zoning code. Will it be enough?

The Pima County Board of Supervisors voted 3-2 to approve new zoning regulations that will allow more commercial and industrial areas be open to potential marijuana dispensaries and cultivation/production sites.

It also voted to retain — against Planning and Zoning staff advice — an additional public hearing aspect to the process known as a Type III conditional use permit, or CUP.

"Obviously we were a proponent of not having the hearing," said Chris Poirier, Pima County Development Services deputy director. "I believe they [the board of supervisors] still felt there was value for the neighborhood to weigh in on these individually... but the good news is, the code they approved yesterday is significantly more responsive and better than the current code was."

Some industry insiders and social equity licensees see the additional hearing process as unneeded, unnecessary and picking on “the little guy.”

“If you look at this from a public policy perspective, it's a very dangerous precedent for all businesses,” said Demitri Downing, founder of the Marijuana Trade Industry Association of Arizona, or MITA. “And they have picked on the weakest businesses out there, social equity business and license holders.”

What Changed

On top of expanding the size and dimensions for potential pot shops, according to Poirier, the new zoning changes will allow the county to become closer aligned with the City of Tucson and other jurisdictions when it comes the sort of areas dispensaries will now be allowed in, by code.

Before, dispensaries could only be located in what Poirier described as the highest density, busiest intersections in unincorporated Pima County — "where you might see a Home Depot," he said.

There are no dispensaries located within unincorporated Pima County currently.

With the approved changes, additional less-dense commercial and industrial areas will be available for potential dispensary licensees to take advantage of, Poirier confirmed.

"This sort of change will allow it for more of your traditional strip-commercial, which is much more profound throughout the urban parts of the county," he said. "There's a lot more eligible property now than there was before."

A development like this, freeing up more eligible real estate in urban parts of Pima County, is important for licensees who are looking to buy, or more likely lease, property for a brick-and-mortar retail location, said Dan Gauthier, Chief Legal Officer for Zoned Properties, a cannabis-centric real estate firm.

For companies like his, this sort of move by the county could spur the opportunity to buy and potentially lease space to new social equity licensees.

"This is a potential for them to go and start that process, or at least agree to be an advocate and potentially contribute funds to the social equity licensee to help get the entitlements needed."

On the production and cultivation end, the change in zoning opens even more county land to potential grow operations, Poirier said.

"The areas typically we associate with horse properties and agricultural uses — picture all of Avra Valley — all that now is on the table as well, via Type II conditional use permit, for cultivation only," he said.

Definitively different

Another profound change was a tweak of the county's definition of what sort of dispensaries are welcome. 

With the passage of Prop. 207 in 2020, voters approved recreational adult-use marijuana sales. Dispensaries that were already operating previously in the state's medical marijuana program were able to petition to become dual-use shops, able to serve both medical patients and recreational customers.

While Prop. 207 also established the creation of 26 social equity marijuana dispensary licenses, it limited those licenses to recreational sales only.

Many jurisdictions in Arizona, including Pima County, had written rules defining dispensaries as either exclusively medicinal or dual-purpose in nature, and not as exclusively recreational, therefore excluding the class of licenses held by social equity recipients.

The board's vote on Tuesday changed the county's definition to be more inclusive and allow for recreational-only social equity dispensaries.

To Bryan McLaren of Zoned Properties, the change in definition and the county's willingness to open more areas for retail, cultivation and production signal a positive step forward 

"Pima County's move to adopt updated zoning and permitting process for medical and now adult use marijuana in Arizona is just a big signal that another large county in Arizona, kind of following Maricopa County over the years, a big signal that another big county is coming on board," he said.

Conditionally the same

Most agree the changes made by the board to open more of the county up to possible marijuana retail and cultivation were needed. However it's what remains in the zoning code that's caused disagreement: The Type III conditional use permit.

But what is it?

According to Justin Brandt, attorney and partner with the Phoenix-based cannabis-centric firm Bianchi & Brandt, a CUP is a designation used in many jurisdictions to subject a proposal of some kind to a designated body such as a planning commission or board of adjustment.

"In other words, a conditional use permit allows property to be used in a manner that is expressly permitted in the jurisdiction’s zoning ordinance, subject to approval," he said.

In Pima County, a Type III conditional use permit entails two separate public hearings (one by the Planning and Zoning Commission and one by the Board of Supervisors), a $2,280 application fee, and a minimum of a four-month time frame.

And according to McLaren, that's not even really the half of it, financially or real estate-wise.

"You're looking at a minimum of $10,000 in land-use attorney work. That's if you do most of it yourself," he said. "So I think the real barrier is time and money for sure, but it's also education for a very complicated process."

For a social equity winner, who already had to be affected by the war on drugs through either arrest or conviction of themselves or their family and be within 400% of the federal poverty level, it could be viewed as a totally unfair hurdle, Gauthier pointed out.

"It'll have a distinct effect on social equity winners, because they have a limited time and most of them have limited funds," he said. "I don't necessarily think that it was done intentionally as a signal to not have social equity, but I think it has a ripple effect."

McLaren did note, just as District 5 Supervisor Adelita Grijalva did also, that most of the large jurisdictions within the state, like the city of Phoenix, Maricopa County and even dispensary-heavy Tempe, have some sort of conditional use permit or are in the process of adding an equivalent process.

The addition of the CUP four-month process, with no guarantee of approval at the end, will make it so new dispensaries head elsewhere, according to Downing, who also pushed back on the trend of jurisdictions with CUPs.

"They're condemning them to the remote, rural outskirt," he said. "It's absolutely insane. And the concept of pointing to other cities and other jurisdictions is also absurd because this is brand new."

There's power in the union

Downing also had problems with how the process played out and who was advocating for retaining the CUP.

According to a memo from Pima County Administrator Jan Lesher, during the May 25 meeting of the Pima County Planning and Zoning Commission, "A representative for the United Food and Commercial Workers advocated retaining a requirement for a conditional use permit, suggesting the public hearing portion is important for additional oversight of license holders," Lesher wrote.

The commission eventually recommended retaining the CUP against the wishes of their staff, something Poirier said is not common in his 20 years with the county.

"I wouldn't say it's the first time," Poirier said. "But we're just so focused on zoning and it's our job to advise our elected officials. We're gonna continue to advise what we think is the right decision to make."

Then, during the August 2 board of supervisor meeting, three people with ties to the UFCW spoke in support of the county retaining the CUP requirement.

One of those people who spoke in favor, Rana Lashgari, is an attorney representing the UFCW. She said the union is fighting for the greater Pima County community to have a larger say, with potentially more benefit.

"We believe that when dispensaries go through a process that includes a public hearing where there's an opportunity for public input, the results will be dispensaries that are better aligned with their community," she said.

To Downing, the UFCWs support of the measure is suspect. He noted their wasn't one unaffiliated community member that spoke in favor of the CUP.

He believes the union's motive is to force social equity licensees to unionize their shops before granting their political approval for them to open in Pima County.

That's something that should be addressed at the state-level, according to Downey.

"But they don't have any power at the state level... it sets a precedent that you're the planning and zoning process to unionize companies," he said. "It could send a ripple which is unbelievably dangerous."

And while Poirier would not speculate about why the UFCW would involve itself at the county zoning level, he did agree with Downing's sentiment that local-level zoning decisions are best left to debate on a projects use, and not who might or might not be behind a project.

"Vetting an applicant, we don't want to use the zoning process to do that," he said. "We don't want to use it to vet someone who wants to open a new McDonald's it it's about the use at the end of the day."

Lashgari insists it isn't the UFCWs aim to force new shops to unionize. Instead, she said the UFCW believes communities should know who these applicants are.

She pointed out that Copper State, one of the largest Arizona-based vertically integrated cannabis companies, paid $440,000 in social equity application fees to help secure nearly 110 applications at 49% ownership.

"We have concerns that the 26 people that won licenses — the companies that won them — aren't truly social equity," she said. "We're looking at this industry and we're looking at the additional licenses coming on board and we have concerns about how applicants will be treated and how those dispensaries will, under the guise of social equity, actually operate within the community."

But Downing said that isn't Pima County's, or the UFCWs call to make.

That was all settled by the voters in 2020 when they approved Prop. 207 and that the CUP is just a way for the UFCW, who he compared to having a similar sway on Democrats as the NRA has on Republicans, to assert its control, he said.

"What they've created is a behind-the-scenes, back room, kiss-the-ring, acknowledge the authority of the UFCW to control zoning over social equity," he said.

What happens now?

Just how many potential dispensaries or cultivation sites will the county be looking at with the changes? Estimates differ.

Poirier said he could see somewhere between three and four new businesses of some kind sprouting up.

"I think there would be a better chance to have landed more if there was not the Type III conditional use permit process requirement with it, but even with that, we still expect some," he said.

Brandt, whose firm is advising a number of social equity licensees, said he doesn't see the CUP process as a burden, per se, but more like the cost of doing business in most jurisdictions.

He did say there is some caution to approaching the process, however.

"The last thing you want is to be tied to an expensive piece of property and find out mid-stream that you can’t use it as intended," he said.

Gauthier was mostly positive about the changes. 

"I don't necessarily see the CUP process as a signal that the county doesn't want social equity," Gauthier said. "I see it as a signal that the county has an interest in continuing to require typical entitlements that we've seen statewide."

Still, McLaren said he could understand where recent social equity licensees might not like the addition of yet process that could end with rejection -- even though they technically "won" a license. 

"If I'm a social equity licensee, and I have to get my retail open, same thing we were talking about with Tucson, I can go any other number of localities that are not only also saying, 'We want you, but we want you so badly we're gonna wave all of these requirements to get you here.'"

That's not how Lashgari see's it playing out. With the inclusion of the CUP process, Pima County will have dispensaries that are more responsive to the needs of the surrounding neighborhoods and communities.

She said she doesn't believe the CUP will chase prospective retail or cultivation away.

"We just want dispensaries that have stronger relationships with their community and treat their employees well, that's what our entire goal is," she said.

Downing, however, sees the recent trend by counties and other jurisdictions moving towards retaining or adding CUP processes as an affront to the spirit of what voters approved in Prop. 207 and that the move by the Pima County Board of Supervisors is one they will come to regret.

"It's like asking no one who's been nowhere to guide the next person," he said. "


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