Cannabis Firm Claims Gov. Hobbs’ Aide Illegally Influenced Marijuana License Decision

A lawsuit has been filed by Arizona Wellness Center Springerville, LLC and its owner Mason Cave against both state health department officials and Governor Katie Hobbs, including her chief of staff, Chad Campbell. The plaintiffs accuse them of improperly issuing a late dual-use marijuana license to Trulieve, Arizona’s largest cannabis retailer, after the statutory deadline.

In their complaint, dated April 13, the plaintiffs argue that this license issuance contravenes Arizona law and the state’s Gift Clause, which restricts the state from providing benefits to private entities. The lawsuit centers on the allegation that Campbell collaborated with Trulieve’s lobbyist, Wendy Briggs, to facilitate the issuance of the dual license to Sherri Dunn, LLC, a Trulieve subsidiary, despite prior court rulings declaring such late licenses unlawful.

The governor’s office dismissed the claims as unjustified, describing the lawsuit as “sour grapes” due to the plaintiffs’ inability to obtain a similar license. Spokesman Christian Slater indicated that the state intends to file a motion to dismiss the lawsuit and is confident of a favorable outcome.

As part of the 2020 legislation allowing adult-use cannabis in Arizona, the Department of Health Services was empowered to grant dual establishment licenses—permissions for both medical and adult-use marijuana sales—to applicants who met specific criteria. However, applications for these licenses were restricted to a narrow timeframe between January 19, 2021, and March 9, 2021. The complaint highlights that Sherri Dunn, LLC applied for its Dispensary Registration Certificate in 2016 but initially received no approval due to the presence of an existing dispensary in La Paz County.

After a legal challenge regarding certificate denials, the Arizona Supreme Court concluded that the Department of Health Services made an error. Following the court’s ruling, Sherri Dunn, LLC received its certificate in December 2021 and attempted to secure an establishment license shortly thereafter. However, this application was denied because it fell outside the established window.

The dispute escalated through administrative processes, ultimately culminating in a settlement agreement in February 2023, which the plaintiffs argue was influenced by Campbell’s alleged communications with Trulieve’s lobbyist. These interactions included requests to expedite the licensing process and claimed assurances from Campbell that he was “taking a look internally” at the situation.

Despite the lawsuit targeting officials rather than the businesses involved, Cave and Arizona Wellness Center contend the license was granted due to improper state influence. The complaint’s absence of specific mention of Trulieve and Sherri Dunn, LLC as defendants has raised eyebrows, as the focus remains directed at state officials and their decision-making processes.

As the case unfolds, the governor’s office has stated that both Sherri Dunn, LLC and Arizona Wellness Center communicated their licensing issues to the state, insisting decisions were made based on independent assessments. Slater emphasized that each application must be evaluated under the law without favoritism.

The underlying legal question also extends to claims of a potential violation of the Gift Clause, with plaintiffs arguing the license’s estimated worth of $10 million vastly outweighs the application fee paid, raising concerns about the public purpose served by such awards. In response, the state argues that proper procedures were followed, with Trulieve submitting the same application fees as other applicants.

This ongoing legal battle exemplifies the complexities surrounding cannabis licensing in Arizona and the scrutiny applied to governmental decisions, particularly regarding potential favoritism towards large corporate entities.