Arizona medical-marijuana dispensaries face property hurdles

Medical-marijuana-dispensary applicants are having trouble securing lease agreements for suitable dispensary sites, Phoenix-area commercial-real-estate brokers and observers say.

The challenge is twofold, they say: State-imposed restrictions limit the locations and types of real estate in which a dispensary can operate, and many commercial-property owners don't want marijuana-dispensary tenants.

Metro Phoenix commercial-realty brokers declined to discuss whether they represented any companies seeking a license to cultivate and dispense marijuana for medical purposes.

Still, a number of brokers said they have observed prospective medical-marijuana tenants having trouble finding suitable sites to grow and sell.

Phoenix broker Scott Ellsworth of NAI Horizon said one reason property owners might not want a marijuana dispensary or cultivation tenant is the legally shaky status of medical-marijuana laws.

Proposition 203, which Arizona voters passed in November, makes marijuana legal under state law for specific medical uses and with certain restrictions. But it does not change the federal law against marijuana use. Therefore, it's possible that a medical-marijuana tenant might not be around long enough to make it worth a landlord's time and trouble.

"Who's to say that in a year their license won't be taken away?" Ellsworth said.

Accepting a dispensary or cultivation site could anger or upset other tenants, discourage future tenants from moving in and put the property owner in a bad light, said Robin Vitols, a publicity expert whose clients include local real-estate firms. "I really think it's an image issue," Vitols said. "In the business world . . . you're measured by the company you keep."

Many cancer patients and others with severe chronic pain have said that marijuana has the unique ability to control pain without causing nausea, as other pain medications do.

Vitols pointed out that if dispensary owners can't find sites in safe, accessible areas, the elderly and sick patients with marijuana prescriptions could be forced to travel long distances or negotiate dangerous neighborhoods to receive the treatments a majority of Arizona voters believe they are entitled to have.

Valley Partnership, a local economic-development organization focused on real estate, has scheduled a two-hour forum April 29 to examine the real-estate challenges faced by aspiring dispensary owners.

Scheduled participants include Will Humble, director of the Arizona Department of Health Services; Rose Law Group attorney Jordan Rose; and Phoenix Planning Director Debra Stark.

Under the new law, qualifying patients with certain debilitating medical conditions can receive up to 2 1/2 ounces of marijuana every two weeks from dispensaries or cultivate up to 12 marijuana plants if they live 25 miles or more from a dispensary. There will be 120 to 126 dispensaries throughout the state, proportionate to the number of pharmacies.

Dispensary agents will be required to first apply for a registration certificate, which would include a background check and basic information such as location. The agent then will apply for an operating license, which requires more details, such as a site plan and a certificate of occupancy.

Applicants must include a business plan that shows projected expenditures before and after opening the dispensary and its projected revenue.

There will be one dispensary in each of the 126 Community Health Analysis Areas, a geographical breakdown of the state that the ADHS used to track public-health statistics.

The application process for aspiring dispensary operators begins June 1, and the ADHS said it will select licensees by Aug. 1.

by J. Craig Anderson The Arizona Republic Apr. 13, 2011 12:00 AM




Arizona medical-marijuana dispensaries face property hurdles