More medical marijuana dispensaries may soon crop up in Arizona

Arizona could see an increase in medical marijuana dispensaries after the Arizona Department of Health Services opens up applications this summer. It’s the first time the department will allow new dispensaries since it issued the first licenses in 2012.

And consumers may see more crop up in urban areas.

Tom Salow, the branch chief in licensing at the Department of Health Services, said the department will allocate the licenses based on the areas with the most patients. He said they will look at patient density within 10 miles of a proposed dispensary address.

In the first round of applications, the department licensed 100 dispensaries – but they were spread out based on geographic area.

Since then, the industry has flourished.

One of the first dispensaries was Encanto Green Cross Dispensary, which opened in July 2013. President Nick Kriaris said they see 400 to 600 patients each day, and they recently bought more land for marijuana production to keep up with the increasing demand.

“It’s for the patients, so it’ll be good,” he said. “Wherever the patients are needed is where they’re going to allow them.”

Voters approved the state’s medical marijuana system in 2010, but the state didn’t start licensing dispensaries until two years after that.

The number of qualifying patients in Arizona rose from nearly 36,00 active cardholders in 2012 to nearly 81,000 in 2015, according to the health department.

Sales are up as well. In January 2015, more than 2,250 pounds of marijuana were sold. A year later, nearly 4,000 pounds were sold during that same time span.

Kriaris said he is not worried about more dispensaries opening and potentially creating more competition for his business.

“I always look at bettering ourselves,” he said. “I always look at (how to) speed up the patient count or look at what we need to do here, so I don’t really look at or compare dispensaries. … I know there’s competition out there, but I look at it this way: We’re a pretty good company. We’re a pretty reputable company.”

As medical marijuana continues to grow, Scottsdale-based Zoned Properties Inc. plans to create a medical marijuana business park in Chino Valley.

“There is a tremendous opportunity to influence one of America’s next macro-industries,” Zoned Properties CEO Bryan McLaren said. “There will be many different sources of influence as the medical marijuana marketplace emerges. Zoned Properties has a strong focus on sustainable development, which examines the social, economic and environmental factors for our development projects and aims to maximize the value of each of those factors.”

McLaren said they are negotiating to secure a 60,000-square-foot building that would allow them to host two independent cultivation facilities.

“We say that we are building for an industry that does not yet exist because, frankly, it doesn’t,” McLaren said. “I do not believe that the medical marijuana industry will be what it is today in the next five years, or 10 years, or 50 years. The industry’s evolution still has major changes ahead.”

Two pro-legalization groups have launched efforts to legalize recreational marijuana in Arizona. They each need 150,642 signatures by July 7 to qualify for the ballot.

Encanto Green Cross is one of the most popular dispensaries in Phoenix with nearly 200,000 hits on its website, according to Entering its third year of business, Kriaris said they have an advantage on the impending newcomers in Arizona.

“Most people that get into this industry think they’re going to open up, and all of a sudden, they’re going to have a (bunch) of dollars,” he said. “It’s actually a harder industry than people think.”

Salow said the department will announce how many certificates are available this summer. During the allocation process, he said they will identify the most densely populated areas on their website.

As Arizona enters its sixth year of legalized medical marijuana, McLaren said the industry is still at a critical point.

“The evolution of the medical marijuana industry is still in its infancy stage,” he said. “The industry continues to weed out the criminal element and find its balance within each local community.

“On one hand, it has been a very difficult process for many of the operators in the industry given federal restrictions. On the other hand, the focus has been put on the local community with a customized approach given local cultures, which I think is a very favorable way to approach any industry.”