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MOHAVE CANNABIS CO., Continued on
A rendering of the interiors for the new location. Courtesy image.
Mohave Cannabis Co., Continued from page 1
“Having been raised in rural Arizona, it was critical to me that we had licenses that would serve the rural communities,” says Mohave general counsel Sara Presler, who filed the conditional use permit for the business with the City in August. “We could open anywhere in Gila County, but intentionally selected Globe, because we really want to serve this community and the surrounding communities.”
Presler has been involved with the cannabis industry from the beginning, in 2010 when Arizona legalized medical marijuana, and has a long resume of service in the state, including two stints as mayor of Flagstaff. She and her business partners all grew up together in Mohave County and base their operations there, so she sees a relationship with Globe as a natural fit.
Mohave Cannabis Co. operates in three states and grows its product in Bullhead City and Needles. Members of its ownership group have facilities in Mohave County, Yuma, and Safford, among other places, and the company has a team of professionals that scouts out potential opportunities throughout the state.
A billion-dollar industry
The Arizona marijuana market is highly regulated and began with the legalization of medical marijuana in 2010. Prop 207, legalizing adult use of recreational cannabis, was approved by 60 percent of Arizona voters in November 2020, and recreational weed went on sale throughout the state at the end of January 2021.
Marijuana revenues are expected to exceed $1 billion in 2021, and through September, the Arizona Department of Revenue reported more than $977 million from both the medical and recreational programs, with tax collections of more than $154 million through that time period.
Medical marijuana is taxed at a 6 percent rate, while recreational is taxed at 16 percent. A Transaction Privilege Tax of about 6 percent also applies, in addition to local taxes that usually run around 2 percent.
Prop 207 included specific guidelines for how the tax pie would be divided up in order to help fund schools and public safety, as well as restorative justice programs to help repair the damage to communities from the decades-long “war on drugs.”
Community colleges, including those in Gila County, get the biggest piece of the pie, receiving 33 percent overall. Of the 33 percent, 15 percent is divided equally between the community colleges in the district, and additional funds are given to provisional community college districts based on population.
The next tranche, 31 percent, goes to public safety, including police and fire departments, fire districts, and first responders. Then 25 percent goes to the Arizona Highway User Revenue Fund.
The final 10 percent goes to a justice reinvestment fund to help communities that have been ravished and disproportionately impacted by marijuana arrests and criminalization. The money helps provide public health services, counseling, and job training, as well as other services to help those communities.
The City of Globe will charge a 2.3 percent tax rate on an estimated million dollars in annual economic activity for the location.
There are currently about 130 facilities throughout the state selling cannabis, with more coming online in the next year. Most of those facilities sell medicinal marijuana. Most recreational sales are done through dual licenses that have allowed medical dispensaries to diversify into the recreational market.
To fill a void in rural communities and ensure legal access throughout the state, last April the Arizona Department of Health Services allotted 13 new adult-use marijuana licenses for eight counties: Apache, Cochise, Gila, Graham, Greenlee, La Paz, Santa Cruz, and Yuma. Gila County has two of those licenses. No matter who owns those licenses, they must remain in the county - although they are not specifically tied to any one city.
The additional licenses were a result of the passage of Prop 207 and meant to increase access and reduce black market activity.
“We had a medical dispensary licensed in Globe for some time, but everybody moved their licenses to the Valley where there’s more money,” says Dana Burkhardt, Globe’s Zoning Administrator. “This new legislation requires [the license] to remain in the counties, and [the licensee] doesn’t have that opportunity to move on.”
MOHAVE CANNABIS CO., Continued on page 27
Image of one of many products which will be available through MCC. Marijuana revenues are expected to exceed $1 billion in 2021, and through September, the Arizona Department of Revenue reported more than $977 million from both the medical and recreational programs, with tax collections of more than $154 million through that time period. Photo by Christopher Mortensen
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Burkhardt added that in anticipation of the flurry of action the City knew was coming, City Council directed staff to update its cannabis zoning codes to match the new reality of legal recreational weed.
“We had the guidance of a model city ordinance from the Arizona League of Cities and watched other communities put it in place,” Burkhardt says. “It was nice to have time to see how the Scottsdales in the Valley and Tucson communities were processing that legislation into local codes. We were fortunate that we could learn from the best in that scenario.”
A local tsunami
The City of Globe is no stranger to the legal cannabis industry. Aside from the currently empty storefront on Broad Street that has housed a number of dispensaries since 2010, in the summer of 2018 City Council okayed a grow facility behind the Holiday Inn at the site of the old bowling alley.
“Medical marijuana is a benefit to the population,” says City Manager Paul Jepson, who personally is not a fan of cannabis. “We’re agnostic about cannabis. We do it by the law and do not play favorites with legitimate businesses.”
Jepson says it was a “common sense” decision to “depoliticize” the process. Additionally, the chief of police was on board, so there was nothing standing in the way of welcoming a lucrative business into the community.
But the competition for a business license worth millions of dollars throughout its life was intense. ADHS allotted the licenses via lottery, which meant applicants wouldn’t know if they could set up shop until “the balls were pulled from the hopper.”
Jepson said that beginning in July, the City received more than 70 inquiries from applicants. Eventually there were 33 requests from applicants hoping to win the lottery.
In order to get a cannabis license in Arizona, the applicant must pay a $25,000 non-refundable fee, have $500,000 in liquid assets and also have a viable location identified.
In the months leading up to the lottery, a whirlwind of activity took place in the local real estate market that left many people frustrated, as much of the City’s available commercial property went into temporary escrow.
“Some locals thought they would just be able to open a cannabis shop. There was a lot of confusion,” says Stacey Herrera Murry of Kachina Properties in Globe, who fielded many calls, but did not have any properties that fit the zoning requirements. “The intent was to use the address, but the applicants only needed it to produce a contract.”
“It was like a tsunami,” says Stallings & Long Realtor Gail Lenox. “It was frustrating, too, because every single contract that was written had the contingency that it would only go forward if they won the license lottery. I felt really bad for the commercial owners because all but one failed.”
Lenox says her agency tried to let the sellers know the prospect of a contract was “a shot in the dark.”
Lenox says, “They were looking at anything they could put down on a piece of paper. It didn’t really matter to the cannabis companies if it wasn’t a decent building, if it needed work, if there were problems, because they could switch it once the license was awarded.”
In the end, Lawrence Health won the license. Once that was in hand, the company had its choice of the properties in escrow. Lenox worked with Lawrence Health, first putting the boarded-up John’s Furniture & Floor Covering into escrow. But they canceled that contract, losing a few thousand dollars in earnest money.
After carefully considering all the locations, the company finally opted for one of the prime properties in the GlobeMiami area - the Cobre Valley Plaza location. This location allows Mohave to serve the wider community, and its location at the crossroads of two heavily traveled state highways gives the shop the opportunity to serve commuters and vacation travelers heading to Roosevelt Lake and beyond.
Another property that sold as a result of the “tsunami” was the former site of Jerry’s Restaurant on Ash Street.
The buyer is Susan Hwang of Best Dispensaries, who has a diversified portfolio of businesses, including real estate, technology, and restaurants, in multiple states.
Hwang has several friends in the area and decided she would like to set up shop here despite losing the lottery. She envisions some type of restaurant filling the space and thinks she might expand into other types of businesses in the region eventually.
“I love investing in the rural areas of Arizona, so I just decided to hold on to this one property,” Hwang says. “Oftentimes, bigger companies and investors overlook small towns. I saw that [Globe] was a really cool community, very artistic, a hidden gem that is also very beautiful. I have some exciting plans.”
Susan Hwang of Best Dispensaries plans on keeping the building she purchased in Globe despite losing the bid to open a dispensary here. She sees potential in the Globe market for future investment. Photo: Instagram.
The winner
Presler hopes to hold a grand opening somewhere around the Fourth of July in 2022. The location and the nature of the business will require a lot of construction and inspections by the state before Mohave Cannabis Club will serve its first customers.
Scheduling contractors and finding construction materials has been challenging during a global pandemic, which only adds to the time needed to do it right.
But in the end, Presler hopes to have a very long and fruitful relationship with Globe and Gila County, because she’s not going anywhere.
“It was mission critical to me that we would be serving the rural communities and all people of the state,” she says. “The broader organization that I’m a part of originates out of Mohave County. That’s where I went to high school. That’s where I was raised. I think that idea of serving rural Arizona is just in our blood.” u
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