Posted by: Patricia Salkin | December 31, 2018

AZ Appeals Court Upholds Denial of Application for a Medical Marijuana Dispensary Registration Certificate

This post was authored by Matthew Loeser, Esq.

In 2012, the Arizona Department of Health Services accepted dispensary registration applications and issued dispensary certificates. Waltz Healing Center, Inc. applied for a certificate at that time, but did not receive one. In July 2016, the Department determined it could issue 31 more certificates and opened another application process. The Department again denied Waltz Healing Center, Inc.’s application for a medical marijuana dispensary registration certificate, finding Waltz failed to comply with a legal requirement to show that the dispensary’s proposed location was in compliance with local zoning restrictions. Waltz appealed to the superior court, arguing it satisfied the requirement by submitting a four-year-old letter from the City of Tempe. The superior court affirmed the denial of the application.

On appeal, that court found the letter from the City of Tempe stated that its “determination” of zoning compliance would expire if Waltz did not submit a dispensary application to the Department within 60 days after the date of the letter, or upon expiration of the Department’s application process. The Department did not dispute that Waltz applied for a dispensary certificate in 2012; however, it argued the letter’s determination expired due to the termination of the 2012 application process: which ended on August 7, 2012. The court determined the “application process” then ongoing was the process for which Waltz originally had obtained the letter, which was for the Department’s allocation of dispensary registration certificates in 2012. Accordingly, the determination in the letter from the City of Tempe had expired of its own terms.

Waltz next contended it lacked adequate notice of the Department’s determination that the 2012 letter would not comply with the local-zoning requirement. Specifically, Waltz argued the Department’s formal request for information, did not explicitly reject the letter or state that it had expired. The court rejected this arguement, as the letter from the City had already expired. Furthermore, due to the passage of time, this letter did not satisfy the requirement to provide assurances that a dispensary location would comply with then-current zoning restrictions. The court found these defects should have been obvious to Waltz, and if Waltz did not understand why the Department was questioning its letter, it should have inquired. Since it failed to do so, Waltz could not complain of lack of notice. Thus, the court affirmed the superior court’s judgment upholding the Department’s decision.

Waltz Healing Center, Inc. v Arizona Dept. of Health Services, 2018 WL 6318865 (AZ App. 12/4/2018)

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