Amy B Wang

The Republic | azcentral.com

Many owners had to overcome zoning requirements%2C fees%2C public perception and competition from illegal dispensaries

Initial fears that licensed dispensaries would bring sharp upticks in illegal activity seem not to have materialized%2C police said

Most of Phoenix%27s state-licensed dispensaries give off a modern%2C urban-industrial feel

Standing behind a long counter in a white lab coat, Lauren Anton is ready for the day, greeting customers as they were buzzed through a door. The sleek lighting, orange-and-chrome color scheme and zebra-print floors suggested a trendy coffee shop or frozen-yogurt bar.

Instead, Anton was busy running her family's business: TruMed, a medical-marijuana dispensary.

TruMed is one of the 10 state-licensed medical-marijuana dispensaries that have cropped up in Phoenix, nearly four years after Arizona voters passed the Medical Marijuana Act.

Many owners say it was a complicated process: They had to overcome strict zoning requirements, hefty legal and registration fees, an oft-wary public perception of medical marijuana and, now, competition from illegal dispensaries.

"It's a difficult industry," said Anton, who faced questions from relatives and friends when she started the process of opening TruMed three years ago, along with her father, brother and friend. Still, as a former oncology nurse who said she saw firsthand the benefits of medical marijuana, Anton and her family proceeded.

Most of Phoenix's state-licensed dispensaries give off a modern, urban-industrial feel. Orange seems to be the accent color of choice. Other similarities include heightened security — bank teller-like windows where patients pick up their marijuana and private guards — and strict hours. Per city regulations, all Phoenix dispensaries must open after 8 a.m. and close by 7 p.m.

At TruMed, the receptionist sits behind bulletproof glass, monitoring 16 video-camera feeds on a flat-screen TV. There is a security guard on site seven days a week.

Though they pre-emptively put heavy security in place, they have had no problems with crime since opening in August, said Bill Anton, Lauren's father and a co-owner of TruMed. He pointed out the customers who had visited in the last half-hour: Two people were in wheelchairs. A few others were middle-age men and women made small talk with the staff, then left after picking up their orders.

"I think the main reason is the people are not the crazy, low-life potheads many people envisioned," Bill Anton said. "We're not getting riffraff ... who just want to get high around here. They have legitimate reasons. They're responsible. They're upscale, professional people."

Voters in 2010 passed the Arizona Medical Marijuana Act to allow people with certain debilitating medical conditions, including chronic pain, cancer and muscle spasms, to use medical marijuana. Since then, the state has approved about 50,000 Arizonans to participate in the program. The overwhelming majority cite severe and chronic pain as a debilitating medical condition.

The state limited one dispensary for each of its 126 "community health analysis areas," regions state health officials had previously used to monitor cancer reports.

Phoenix is home to 15 such areas, and four more straddle the city's boundaries. Within those areas are the 10 state-licensed medical-marijuana dispensaries in Phoenix proper.

From the start, cities and counties across the state imposed strict zoning requirements. By law, medical-marijuana dispensaries in Phoenix must be at least 1,320 feet away from all schools, churches and parks, requirements that quickly whittled down the number of eligible buildings in any health area.

"The biggest challenge early on was certainly the real-estate issue," said Kurt Merschman, an attorney who represents several Valley dispensaries. "You had, first of all, specific zoning in the city of Phoenix where you could and could not locate these dispensaries. And then you oftentimes had neighbors and citizens that probably were irrationally afraid of the use."

Last year, the owners of Urban Greenhouse staked out three suites in a central Phoenix shopping center. Each one had a minor flaw: The south suite fell too close to Brophy College Preparatory by about 10 feet and would have required a variance to open in a school zone. The central and north suites were just far enough away from area schools, but would have required a variance to open in a residential zone.

Still, the suites seemed the best options, and co-owners Brett Carr, William Gibbs and Jeff Cooper went about trying to reassure the neighbors about a potential dispensary opening near them. They set up an open house for all three suites, complete with (marijuana-free) snacks, binders of detailed renderings and a security guard.

Despite their efforts, the city denied their requests for variances because of resident opposition. After scrambling to find a new location, they opened Urban Greenhouse at 27th Avenue and Indian School Road.

Their story is similar for many dispensary owners. Even after overcoming the real-estate hurdle, many owners find the high-overhead medical-marijuana business does not bring in as much green as they had anticipated.

Dispensary owners must pay a $500 annual agent-card fee to the state for each employee. In addition, the actual product is not grown at any dispensaries because Phoenix requires the cultivation take place in an industrial or agricultural zone.

This means owners usually must pay to maintain two separate sites.

"The regulation has been burdensome, and the cost of getting their cultivations open have been more than people anticipated," Merschmann said. "It is a competitive business and there is a limited number of customers in the state, and so all of the dispensaries are fighting for those patients. It's just like any other retail environment where you're competitive on services, on price and location, location, location."

But by far the biggest challenge, owners say, is the continued presence of "compassion clubs," facilities that dispense medical marijuana without a state license.

"The one thing that's the big hurdle for these guys right now is the continued presence of these illegal pot shops," said Andrew Myers, executive director of the Arizona Dispensaries Association, an advocacy group for dispensary owners.

To add to the confusion, some illegal dispensaries have signs that tell customers they must have a state-licensed medical-marijuana patient card. Both legal and illegal dispensaries appear on websites like Leafly.com and Weedmaps.com, which function as Yelp-like review boards for marijuana dispensaries.

"It's confusing by design," Myers said.

To make it more complicated, state law prohibits the Arizona Department of Health Services from releasing any information — names, addresses, operating hours — about dispensaries, even if they are licensed. Though the state law names only the health department, many cities have interpreted it to apply to them as well.

In June, Phoenix police shut down Green Thumb Academy, at Seventh Street and Virginia Avenue, one of the dozens of dispensaries operating in the city without a license. Myers said the association is working with police and Phoenix officials to close more of the unlicensed dispensaries.

"They're keeping prices artificially high at the (legal) dispensaries," said Myers, adding that he estimated the city is losing out on $1 million annually on tax revenue in letting unlicensed dispensaries continue to operate. "We're trying to get it from a code-enforcement standpoint."

Initial fears that the state-licensed dispensaries would bring with them sharp upticks in illegal activity seem not to have materialized, according to the Phoenix Police Department.

"As far as robberies, no one's aware of any of those being issues at any of the legal dispensaries," police spokesman Steve Martos said. "The ones that are doing it legally, they have actually invested a lot money in their facilities but also their security and everything else. They really don't want to lose their money.

"If something goes wrong, they're likely to lose a lot of their investment. ... The illegal ones, they're likely the ones creating more of a situation for us."

State-licensed medical-marijuana dispensaries in Phoenix