How Arizona Won the Weed Legalization Race

PHOENIX — When Arizonans voted to legalize recreational cannabis in November, it seemed plausible that sales would begin sometime in the spring.

But on Jan. 22, less than three months after the vote, the Arizona Department of Health Services started quickly approving applications, allowing dispensaries to sell cannabis to adults 21 and older immediately.

“It was kind of like ripping a Band-Aid off,” said Jennifer Matarese, the president of a management company that runs Local Joint in Phoenix. Like many other dispensaries in Arizona, Local Joint has been serving medical patients for years; the legalization of recreational cannabis has led to a rapid rise in demand.

Several other states — New Jersey, South Dakota and Montana — voted in favor of legalization in November, and on Thursday, New York State lawmakers reached a deal to advance recreational marijuana legislation this year. Sales remain a distant prospect, though; in South Dakota and Montana, recreational cannabis is unlikely to be on sale before 2022.

So how did Arizona do it so fast? People in the cannabis industry say it was all a matter of timing.

A Yearslong Battle to Legalize It

On a balmy Friday evening in March, Local Joint was bustling with customers. Every bench in its verdant outdoor area was full, and inside, patrons pored over glass cases of vape cartridges and edibles — what was left of them, at least.

“There’s a little bit of a shortage,” Ms. Matarese said, noting that Local Joint already had more recreational customers than medical card-holding ones. Around the Phoenix area that week, other vendors were facing low supply and high demand, too.

“We were turning away 100 customers in the first three weeks,” said Greta Brandt, president of the Flower Shop, which has several locations in Arizona and has been selling medical marijuana under the current name since 2020. Ms. Brandt said that sales at the Flower Shop tripled once it began selling to recreational customers.

Since Arizona legalized medical cannabis in 2010, more than 300,000 residents of the state have been approved as medical patients. Businesses have kept up: Total annual sales grew to more than $1 billion last year, and more than 20,000 people work in the state’s cannabis industry, according to Leafly, a trade publication.

But for years, there’s been resistance to expanding the legal market. In fact, just a few years ago, Arizona voted against legalizing recreational marijuana.

In 2016, a group of conservative donors banded together to oppose Proposition 205, which would do just that. They included the owner of Discount Tire, a national tire and wheel company headquartered in Scottsdale; the opioid manufacturer Insys Therapeutics, whose founder was sentenced to five and a half years in prison in 2020; and Sheldon Adelson, the billionaire casino and hotel developer who died in January.

Those in support of legalization included the Marijuana Policy Project, an organization that works to reform laws around marijuana, and Dr. Bronner’s, a soap company. Though both sides had millions of dollars in donations behind them, legalization lost by less than three percent of the vote.

“For a while, we just licked our wounds,” said Steve White, the chief executive of Harvest Health & Recreation Inc. They also fortified their war chests. “In 2016, we just weren’t capable of raising enough money ourselves,” Mr. White said.

For the 2020 campaign, called “Smart and Safe Arizona,” his company donated $1.8 million, joining Curaleaf and Copperstate Farms, two other cannabis companies, as major investors. Along with other donors, they hired Strategies 360, a public affairs firm in Seattle that ran a successful 2016 campaign to unseat Joe Arpaio, the anti-immigration crusader who once sent a team to Hawaii to collect Barack Obama’s birth certificate, from his 24-year tenure as the Sheriff of Maricopa County.

This time, the opposition to marijuana raised only a fraction of the funds it had in 2016. “They didn’t have those big-ticket donors that came around four years ago,” Ms. Brandt said. Plus, she said, “the election overshadowed any ballot initiative,” she said. “It flew under the radar, which was a great outcome for us.”

Politicians in Arizona were also concerned about job losses caused by the pandemic and an economic slump, legalization supporters said.

“The Republicans here all saw the amount of money coming in from other states, what they were making with their sales taxes and how much money cannabis is making,” Ms. Matarese said. “They really had no choice but to accept it, especially when the economy is on a downturn.”

The California Effect

Arizona is a popular next settling place for Californians.

“You see slogans like, ‘Don’t California My Arizona,’” said Jaimie McKenna, the marketing manager at Local Joint. “But it’s kind of heading in that direction regardless, because Californians are coming here anyway.”

According to the real estate services website Redfin, the number of people moving to Phoenix from Los Angeles increased by about 35 percent since 2019. One reason? The housing costs, on average, half as much.

“Arizona reminds me a lot of California,” said Adam Pressler-Smith, the vice president of operations at Connected Cannabis, who moved to the southwestern state three years ago. His company, founded in Sacramento, made its first out-of-state expansion last year — into Arizona, of course. He’s found that distribution is easier there because of the centralized nature of the market; most businesses are in the Phoenix area.

California is seen as a leader in the cannabis space. In the two-plus decades since it legalized medical marijuana, the number of Americans who support legalization has gone up from about one-third to two-thirds, and more than a dozen states have fully legalized marijuana. Nonetheless, arrests for possession of marijuana make up the majority of drug-related offenses in the United States. Advocacy groups have helped to push for decriminalization and legalization.

During the pandemic, Nadeem Al-Hasan and Thomas Rimbach, the founders of an edibles company called Baked Bros, delivered free lunches from Cheba Hut Toasted Subs, a cannabis-themed food chain, to hospitals and fire and police stations in Phoenix.

“I would not have expected five years ago, not even three years ago, to be able to walk into a police station as a cannabis company,” Mr. Al-Hasan said. “They were shaking our hands, they wanted to take pictures with us.”

Cannabis is a popular alternative treatment to opiates or nonsteroidal anti-inflammatory drugs for pain management. “There are a lot of officers there that have moms and dads that are in a lot of pain,” Mr. Rimbach said. “And they’ve found that the only way besides opiates is cannabis. It opens their minds a lot.”

Andrew Bowden, the chief executive of Item 9 Labs, said many people in his circles realized the value of cannabis last year, when some states categorized dispensaries as essential businesses. “That really changed people’s minds pretty quickly,” Mr. Bowden said.

Arizona — and Scottsdale in particular — has long been a haven for retirees, and older consumers have been part of the cannabis rush.

“As soon as the first transaction occurred in Scottsdale, there was a line around the building,” Mr. White, of Harvest Health & Recreation, said. On a Monday afternoon in March, the dispensary was bustling, with some customers ducking in and out through the express pickup line and others browsing the extensive selection. About one-quarter of Scottsdale’s population is over 65, and the clientele reflected that.

Mr. White’s own come-to-cannabis moment came “later in life,” he said. “I made all the traditional prohibitionist arguments until I undertook my own independent research.”

Now he runs a cannabis company with more than 1,000 employees and 37 retail locations — a sign, perhaps, that more minds, around the state and the country, stand to change on the subject of pot.

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