John SchroyerUnhappy with how his state’s cannabis social equity program has played out to date – with a reported 25 of 26 business licenses now controlled by large companies instead of mom-and-pop entrepreneurs – an Arizona lawmaker introduced a bill that would establish a new way to overturn alleged “predatory” deals that forced many of the original social equity winners out of the trade.
House Bill 1262, authored by GOP state Sen. Sonny Borrelli, would create a new legal pathway for social equity licensees to report so-called predatory financial agreements, and let the state attorney general’s office investigate and prosecute some of the companies that now control many of the permits, according to the Arizona Center for Investigative Reporting.
Those big companies in question include some of the largest marijuana businesses in Arizona, such as:
- Copperstate Farms
- Mint Cannabis
- Mohave Cannabis
- JARS Cannabis
- Story Cannabis
Several of those companies secured social equity permits only after litigation or formal arbitration with former social equity partners who had the qualifying past marijuana convictions to begin with.
Tales of such predatory agreements in social equity programs have abounded for years, and began circulating in Arizona almost immediately after the state awarded its first 26 permits in 2022. But the new bill is perhaps the first instance of policymakers attempting to thwart the usurpation of social equity after permits have already been awarded.
Under the terms of the bill, a “predatory agreement” would be defined as “any agreement signed before or within 12 months after a social equity license was issued that required the original principal officer or board member … to sell, transfer or give control of the officer’s or member’s ownership interest for less than minimum fair market value.”
“Bottom line is, we have convicted felons who muscled out someone that was supposed to have a social equity license,” Borrelli told AZCIR.
Borrelli also said during a recent Senate hearing that most of the companies that currently control the social equity permits “do not belong in these special groups to get this license.”
Still, AZCIR noted that Borrelli’s bill faces an uphill climb, as it would amend a voter-approved amendment to the state constitution, which requires a three-quarter majority in both legislative chambers, a very tough threshold to reach for any bill.
The measure has, however, already made it through one Senate committee with unanimous bipartisan support, AZCIR acknowledged.
