How to Obtain Your Arizona Cannabis Dispensary License

Proposition 207, also called the Smart and Safe Act is a law that legalizes the use of recreational marijuana for adults in Arizona. Adults aged 21 and up are legally allowed to possess up to an ounce of marijuana with no more than 5 grams of marijuana concentrate. Furthermore, the law allows up to six marijuana plants to be cultivated at home, while households with more than two adult members can grow up to twelve plants. This law opens several opportunities for entrepreneurs who wanted to take a plunge in the marijuana industry.

Before you decide to open a marijuana dispensary in Arizona, you’ll need an Arizona Cannabis Dispensary License.

Below we’ll explain the requirements ahead and the steps involved.

Opening a Dispensary in Arizona

  1. Set Up Your Business

Before you move forward with the process of obtaining an Arizona Cannabis Dispensary License, first, set up your business as a legal entity in Arizona. If your business is a medical marijuana dispensary, you can establish it as a non-profit. For recreational dispensaries, the business can either be set up as non-profit or for-profit.

Non-profits are usually more heavily regulated and would require more oversight and overhead. But the good thing about establishing a non-profit business is that you can take advantage of a lower state tax rate of only 6%, compared to 16% for for-profit businesses.

You can incorporate as an individual, corporation, partnership, LLC, association, or joint venture. Make sure you register with the state of Arizona and the federal tax authorities.

  1. Start Planning

As with any business, you must have a plan before opening a marijuana dispensary in Arizona. There are several requirements that you need to comply so you need to have concrete plans on how to accomplish these. You can hire a consultant to assist you with this.

The following requirements are needed for your state licensing application:

  • Your company’s by-laws
  • Procedures and policies in the record-keeping of patients’ information, inventory control, patient education, security, and support.
  • Your company’s business plan must include the following – projected expenses, revenue projections, job descriptions, and site floor plans.
  1. Acquire Funding

It’s the unfortunate truth that the Federal Law prohibits several mainstream banks as well as investment firms from providing funding to cannabis dispensaries. However, you will find several investment firms that specialize in raising funds for cannabis firms so you can reach out to them. Another option is to get funding from friends and family. Acquiring an Arizona Cannabis Dispensary License isn’t cheap, and the entire application process alone costs thousands of dollars.

  1. Look for a Suitable Location

You need to have a location or rent a qualified space before you apply for a business license to operate a marijuana dispensary in Arizona. During your application, you will be required to show proof that your dispensary has complied with the local laws on zoning and other state restrictions. For instance, your business location must not be anywhere near schools and daycare centers.

  1. Acquire your Licenses


Arizona will be accepting applications for operating a recreational marijuana dispensary from January 19, 2021, until March 19, 2021. Priority will be given to those with existing marijuana dispensaries and have switched to recreational, as well as those who plan on having a dual medical and recreational model.

To apply for a license, you need to submit the following:

  • Information regarding your top investors and directors.
  • Documents that list down the planning of your business.
  • Proof that you own the property of your intended dispensary.

It will cost around  $5,000 to register a new dispensary. Aside from the business license, you must also register for employees. You are required to submit their information and that they must agree to background checks.

  1. Open Your Shop

Once you have your licenses, you need to start opening your shop. Make sure that you already have all employees and that your shop’s interior has already been set up. Of course, you should have all the products that you need to sell. Keep your business protected by setting up a security system.

It’s a good idea to hire experts to make your business more appealing to consumers. This includes hiring professional interior designers, IT experts, general contractors, etc. Once your shop has already been set up, you are now all set to operate your business.


Opening a marijuana dispensary in Arizona is not that complicated as it seems, for as long as you come prepared and you have all the requirements needed. It’s also important to know that setting up this kind of business is expensive. Therefore, you need to be financially prepared. Nevertheless, the cannabis market in Arizona has a strong existing revenue base and has plenty of growth potential. The Marijuana Business Daily estimates that the annual revenues of medical marijuana in Arizona are at $750 million per year, and is deemed the largest medical marijuana program in the country having a retail sale growth rate of 34% in 2019. Thus, opening a marijuana dispensary in Arizona is certainly a good idea.

Learn more about any of the Arizona Cannabis License Laws below:

Frequently Asked Questions