Two Arizona Medical Marijuana Dispensary Registration Certificates Will Soon Be Available

On December 24, 2025 the Arizona Department of Health Services (the "Department"), the State's agency regulating medical and adult use marijuana in Arizona, issued notice on its website that it had conducted its annual audit on the number of issued medical dispensary registration certificates ("DRCs") (numbering 136) to the number of open pharmacies (numbering 1,323), as required by ARS 36-2804. Using these numbers, the Department concluded that no new DRCs would be allocated under the one DRC to 10 pharmacies rule (the "1 to 10 Rule"). However, a DRC could be awarded for a dispensary located in each of Apache and La Paz Counties because neither County currently has a dispensary (Counties without a DRC are referred to as "Empty Counties").

What does this mean?

1. The DRCs that will soon be available for the Empty Counties will permit the licensee to sell and cultivate marijuana for medical use only. There will be no associated adult use license to accompany the medical license (ask me how to obtain an adult use license). Typically, adult use DRCs see larger revenues and more customers than medical-only operators.
2. The entity awarded the DRC must be operated on a nonprofit basis, which comes with special complications (ask me how Arizona has historically moved 'profits' out of the nonprofit).
3. Apache County claims 65,000 residents and La Paz has less than 20,000 residents, so DRC licensees in these Counties will be challenged simply due to the lack of patients as customers.
4. Given President Trump's recent Executive Order directing the federal government to continue its administrative review of rescheduling medicinal marijuana to a less-regulated Schedule III controlled substance, there are some trends showing a renewed and increased focus on medicinal use across the US, especially by younger generations who are less inclined to smoke weed or consume alcohol. These trends could equate to more medical marijuana patients and higher medical marijuana purchases.
5. These DRCs are generally not relocatable except within the city or town of their origination and the retail dispensary must be opened within 18 months of issuance of the DRC by the Department. These restrictions limit portability (and, thus, the value of the DRC) and may void the DRC if opening is delayed.

The Two Possible DRCs are Limited Licenses. Since the inception of the Arizona Medical Marijuana Act in 2010, and later, the Smart and Safe Arizona Act of 2020 (the adult use program), litigation brought by marijuana advocates against the Department has yielded important interpretations of those laws including the Department's recent notice described above. One such case is Left Thumb Labs, LLC v. State of Arizona, et al., No. 1 CA-CV22-0088 (filed 11-29-2022), affirming the Superior Court's ruling in No. CV2021-003384 (appealed on other grounds). In this case, Judge Cooper ruled on a set of facts stipulated to by the parties, holding that the Department must annually conduct an audit of the 1 to 10 Rule and report the results (we see those results in the Department's recent announcement). Additionally, Judge Cooper ruled that while the Department should attempt to award a DRC to Empty Counties, if there were no acceptable applicants for those DRCs the Department could award the remaining DRCs for locations outside the Empty Counties, such as Maricopa or Pima Counties – subject to compliance with the 1 to 10 Rule.

As reported by the Department on December 24, 2025, no additional DRCs can be awarded under the 1 to 10 Rule, but applications will be accepted for a DRC to be located in the two Empty Counties only.

What's next? The Department will announce an application period on its website.[JJ1] As of January 15, no information has been released as to when applications will be accepted. Information and forms for submitting an application will also be posted on the website 30 days before applications will be accepted. The application period will be 10 working days long. Applications are submitted via the Department's Licensing Portal. The application fee is $5,000 and may be non-refundable depending upon the application.

This is a developing program. We will continue monitoring it closely and share relevant updates.

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