MEDICAL MARIJUANA LAW WILL BE COSTLY IF APPROVED, HEALTH OFFICIALS SAY

State Health Department Fears Cost, Regulatory Challenges Over Proposition 203

If voters approve the medical-marijuana ballot proposition Nov. 2,
health officials say the cash-strapped state will have to spend up to
$1 million and work under a tight deadline to implement the law.

The Arizona Department of Health Services, which opposes the
proposition but would be charged with regulating medical marijuana,
says Proposition 203 would create huge obstacles for the department.
It already is coping with budget and staff cuts and would need to
work fast to set up a monitoring system to prevent marijuana from
being handed out without department oversight.

The department would have 120 days to set up procedures for
dispensing marijuana and to develop an electronic database to track
records. If the department missed its deadline, every
medical-marijuana application with a doctor's recommendation would
have to be accepted.

But advocates of the Arizona Medical Marijuana Act say they would
provide resources to help the department establish a system, and the
department could make up its initial costs through fees and donations
within the first year.

If voters approve the measure, licensed physicians could recommend
medical marijuana to patients with debilitating medical conditions,
including cancer, glaucoma, HIV/AIDS, hepatitis C and Alzheimer's disease.

Patients would register for identification cards with the health
department. They could receive up to 2 1/2 ounces of marijuana every
two weeks from dispensaries or cultivate up to 12 marijuana plants if
they live 25 miles or farther from a dispensary.

There would be 124 dispensaries operated by non-profits to start,
proportionate to the number of pharmacies in the state.

Department's Role

The proposition is lengthy and contains specific guidelines about the
health department's role. But it also gives the department, which
opposes the proposition on medical and health-safety grounds, room to
create some of its own administrative procedures.

The health department would establish standards for dispensaries such
as application requirements and application and re-newal costs. The
department would determine safety standards for dispensaries, such as
the security systems they would have to install, the rules under
which the department could revoke licenses and how to inspect dispensaries.

For patients, the department would figure out requirements for
medical-marijuana card applications, how to verify designated
caregivers who could buy the marijuana on behalf of a patient and how
to develop a system for creating new photo IDs.

The department must set up a password-protected computer system to
store information for patients, dispensaries and law enforcement.

There is some dispute over how much legal authority the department
would have to define and regulate the law.

Andrew Myers, campaign manager for Arizona Medical Marijuana Policy
Project, said pro-Prop. 203 professionals are drafting
recommendations to help the department tightly regulate the law.

But Carolyn Short, chairwoman of opposition campaign Keep Arizona
Drug Free, questions whether the department indeed would have the
authority to regulate the voter-approved law and worries that if the
department tried to regulate the law, the state could face lawsuits.

According to the Arizona Legislative Council, a research wing of the
Legislature, the health department has the standard authority that
rulemaking bodies do when adopting laws: As long as the department
does not contradict the provisions spelled out in the ballot
proposal, it could fill in any gaps in the measure.

Mike Braun, the council's executive director, said the department
would hold a public-comment period to gauge how much regulation the
public would accept.

Regardless, Will Humble, the health department's director, said he
wants to create a tightly regulated system. He said he wants to "skin
a little bit close to the edge to get enough checks and balances but
not enough so that you get a lawsuit."

Lack of Time, Resources

The department has four months from the day the law goes into effect
to complete all its tasks. If the tasks are not finished, the
department would have to accept all medical-marijuana applications as
valid marijuana cards, as long as the patient has a doctor's written
recommendation.

Health-department officials say the 120-day deadline, which includes
weekends and holidays, isn't enough time. The department's
general-fund budget has decreased nearly 50 percent since fiscal 2008
and the number of staff numbers has dropped from 2,500 to 1,800,
spokeswoman Laura Oxley said.

"The finish line comes so quick," Humble said. "I wouldn't be so
nervous if I had a million dollars and a year to get ready."

Three years ago, the department implemented the Smoke-Free Arizona
Act, which prohibited smoking in enclosed public spaces. But the
department had six months to figure out how to enforce that law,
which was far less complex than Prop. 203, Humble said.

There is no extra money allocated in the department's budget, Oxley said.

To set up the electronic data and verification system, the department
could either use staff or outsource the project. But using current IT
staff would delay other projects, such as creating an electronic
licensing system for assisted-living centers, Humble said. And if the
department outsources the job, an outside company could have partial
ownership of the system or charge maintenance fees, he said.

To speed up the process, the department's staff is researching other
states' medical-marijuana rules to see what would work in Arizona.

Generating Money

The medical-marijuana program would be revenue-neutral, and the
dispensaries would be non-profits.

The health department would manage a fund for fees charged to
dispensaries and patients and for donations. The state could not use
this money for its general fund.

The initiative does not address whether the department actively could
raise funds. Humble said the program could eventually make up the
initial costs.

The Arizona Legislative Council estimated that there would be 66,000
medical marijuana cardholders by 2013.

In March, the state Senate passed a bill to tax medical marijuana,
but it did not make it out of the Legislature. Lawmakers who opposed
the tax said that they didn't want to give the impression they
support the initiative or give proponents an extra argument to garner support.