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Nothing contained in this blog or on www.keytlaw.com is legal advice. This is just a website that provides information about the law designed to help people deal with their legal needs. Legal information provided on this website is not the same as legal advice, i.e., the application of the law to a person’s specific circumstances.

We try to make our legal information accurate and useful, but we recommend that you consult a lawyer if you want professional assurance that our information and your interpretation of it is appropriate to your particular situation and legal needs.

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Arizona Medical Marijuana FAQ

This site has an excellent patient and caregiver Frequently Asked Questions.  Check it out.

IRS is in the Early Stages of a War to Kill Medical Marijuana Dispensaries

Question:  Does a medical marijuana dispensary that is legal under state law have anything to fear from the Internal Revenue Service?

Answer:  Yes.  In 2007 the United States Tax Court issued its opinion in the case of Californians Helping to Alleviate Medical Problems, Inc. v. Commissioner of Internal Revenue.  The issue in this [...]

Must My Dispensary Obtain a Conditional Use Permit from the City before it can File an Application for an Arizona Medical Marijuana Dispensary License?

Question:  When my nonprofit entity files its application for a dispensary registration certificate, must it have a conditional use permit from the city in which the dispensary will be located?

Answer:  Maybe. Arizona Department of Health Services Rule R9-17-304 states:

To apply for a dispensary registration certificate, an entity shall submit to [...]

Clauses to Include in a Contract between a Medical Director & a Dispensary

Question:  Are there any special clauses my dispensary should include in its contract with its medical director?

Answer:  Yes.  The contract should be an independent contractor agreement, not an employment agreement.  The contract should contain the standard clauses found in a good lawyer drafted independent contractor agreement plus the following clauses unique to [...]

Why an Arizona Medical Marijuana Dispensary Should Form an Arizona Nonprofit Corporation

Question:  I know my Arizona medical marijuana dispensary must be operated on a not for profit basis, but does not have to be an Arizona nonprofit corporation.  Why would I want to form an Arizona nonprofit corporation that is also a tax-exempt organization under the Internal Revenue Code?

Answer:  Neither the Arizona medical [...]

Considerations on Signing a Personal Guaranty of an Arizona Medical Marijuana Dispensary Lease

Question:  My landlord wants the owners of my Arizona medical marijuana dispensary nonprofit entity to sign a Personal Guaranty.  What is it and should the owners sign the guaranty?

Answer:  A Personal Guaranty is a promise by the guarantor to pay the debt of a third party or to satisfy an obligation of [...]

Advice to Landlords With Premises Zoned for Medical Marijuana Dispensaries

Question:  I own real property that is zoned for an Arizona medical marijuana dispensary or cultivation site.  How can I increase the chances of obtaining a tenant that will actually obtain a dispensary registration certificate and become a long term paying tenant?

Answer:  Easy.  Lease your property to more than one prospective dispensary [...]

My Articles of Incorporation Contain Tax Exempt Language: Is that a Problem?

Question:  My attorney put language in the Articles of Incorporation for my Arizona medical marijuana nonprofit corporation that say it will be operated as a 501(c)(3) charitable organization and that no part of the earnings of the corporation can go to insiders.  Is that a problem?

Answer:  Yes.  Big time!  If you want [...]

Is It a Mistake to Form an Arizona Nonprofit Corporation to Operate an Arizona Medical Marijuana Dispensary?

Question:  My attorney formed an Arizona nonprofit corporation for me to own and operate an Arizona medical marijuana dispensary.  Was that a mistake?

Answer:  Yes because Arizona nonprofit corporations do not have owners/shareholders.  Why would you invest a lot of money in an entity that you cannot own and cannot leave to your heirs if [...]

Must All Dispensary Owners, Officers & Directors be U.S. Citizens?

Question:  Must all owners, officers and members of the board of directors of an Arizona medical marijuana dispensary be a citizen of the United States?

Answer:  Apparently “the principal officer” or one board member must be a U.S. citizen as of today, January 26, 2011. It appears that no other owner, officer or [...]

How Can a Non-Arizona Resident Who Wants to Own an Interest in an Arizona Medical Marijuana Dispensary Participate Before Becoming a Resident?

Question:  Arizona Department of Health Services’ first draft of the medical marijuana dispensary rules requires that all officers and directors of Arizona medical marijuana dispensaries be Arizona residents for at least three years.  I don’t satisfy the residency requirement so how can I be involved in a dispensary now and become an owner when I [...]

Should I Loan Seed Money to My Medical Marijuana Dispensary or Should I Give it to the Entity as a Capital Contribution?

Question:  I estimate that my Arizona medical marijuana dispensary will need $250,000 to open its retail store.  Should I loan the money to the nonprofit entity or should I pay it to the entity as a capital contribution?

Answer:  You should discuss this question with your accountant.  There are significant differences in the [...]

Is it Legal for a Promoter to Ask Me to Invest $25,000 in a Syndicate that Will Seek to Own an Arizona Medical Marijuana Dispensary

Question:  An Arizona business has a website on which it is offering to put together a group of people to own minority interests in an entity that will seek to obtain a license to operate a medical marijuana dispensary in Arizona.  In exchange for paying $25,000 I would become a part owner with several other [...]

What is a Medical Director & Why Does Every Arizona Medical Marijuana Dispensary Need One?

Question:  I am an Arizona physician who is considering offering my services to be the medical director of an Arizona medical marijuana dispensary.  Does every dispensary need a medical director?  What are the duties of the medical director under the Arizona Department of Health Services rules?

Answer:  The Arizona Department of Health Services rules [...]

Beware of the Single Owner Arizona Medical Marijuana Dispensary

Question:  Should I be the sole owner of my Arizona medical marijuana dispensary?

Answer:  Probably not.  Although the Arizona Department of Health Services rules allow an Arizona medical marijuana dispensary to be owned by a single person (a sole proprietor) or a company that has only one owner, I strongly recommend that no [...]

What Legal Contracts Does My Medical Marijuana Dispensary Need?

Question:  What are the various types of contracts needed by all Arizona medical marijuana dispensaries?

Answer:  The following is a list of the contracts that all Arizona medical marijuana dispensaries need.  Because of the unique nature of the business and the risk that an improper action by an employee, independent contract or dispensary [...]

How Does My Dispensary Tie Up Land for its Retail & Cultivation Sites?

Question: Must I know my Arizona medical marijuana dispensary and cultivation locations before I file my application with Arizona Department of Health Services to obtain a dispensary license?

Answer:  Yes.  Arizona Revised Statutes Section 36-2804 states:

“Not later than ninety days after receiving an application for a nonprofit medical marijuana dispensary, [...]

Can I Get a License to Grow Medical Marijuana in Arizona, but Sell Only to Dispensaries?

Question:  Can I create a business in Arizona that only grows marijuana and sells it to licensed medical marijuana dispensaries?

Answer as of 1/31/11:  Yes.  The January 31,2011, second draft of the rules eliminated the requirement that all dispensaries grow any portion of the marijuana.  A condition to growing, however, is that the grower must [...]

Will Some Banks Refuse to Give My Dispensary a Bank Account?

Question:  I’ve formed my nonprofit entity and want to open a bank account in the name of the entity.  Will my bank refuse to open an account because the business is growing and selling medical marijuana?

Answer:  Maybe.  If your entity has the word “marijuana” in its name, you may be dead in [...]

Bylaws – We Don’t Need No Stinking Bylaws or Do We?

Question:  What are Bylaws & Must My Dispensary Adopt Bylaws?

Answer:  Black’s law dictionary defines Bylaws as “a rule or administrative provision adopted by an organization for its internal governance and its external dealings.”  Bylaws have traditionally been a set of rules adopted by the Board of Directors of a corporation to govern [...]

Must an Arizona Medical Marijuana Dispensary be a Nonprofit Corporation?

Question:   Must an Arizona Medical Marijuana Dispensary be a Nonprofit Corporation?

Answer: Apparently not!  Although the text of Proposition 203 says that an Arizona medical marijuana dispensary must be a ““a not-for-profit entity that acquires, possesses, cultivates, manufactures, delivers, transfers, transports, supplies, sells or dispenses marijuana or related supplies and educational materials to [...]

Must My Nonprofit Arizona Medical Marijuana Dispensary Be a Federal Tax-exempt Organization?

Question:  Must My Nonprofit Arizona Medical Marijuana Dispensary Be a Federal Tax-exempt Organization?

Answer:  No and thankfully no!  Arizona Revised Statutes Section 36-2806.A states: “A registered nonprofit medical marijuana dispensary need not be recognized as tax-exempt by the Internal Revenue Service.”  If Proposition 203 required dispensaries to become tax-exempt organizations, the IRS would [...]