Arizona court declines to void or reassign contested marijuana social equity permit

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An Arizona judge has declined to revoke and reassign an adult-use marijuana social equity permit that a lawsuit claimed was stolen from a qualifying applicant via predatory means, court records show.

Allegations have swirled for years in Arizona that out-of-state moneyed interests hijacked the licensing process for the 26 so-called social equity stores that state officials permitted in line with the adult-use legalization law voters approved in 2020.

Proposed legislation that would have “reset” the contested process failed in the state Legislature earlier this year, so aggrieved social equity applicants have resorted to the courts.

Case in point

In one such case, Arizona resident Anavel Vasquez claimed she had been approached by investors to file an application for one of the social equity stores.

In return for the investors paying the $4,000 application fee and taking responsibility for the paperwork, Vasquez would hold 51% ownership in a shell corporation called Juicy Joint that owned the retail license.

In a 2023 lawsuit, Vasquez said her partners in the application process took advantage of a term sheet of which she was ignorant to force her out and claim the license for themselves via arbitration.

However, a Maricopa County Superior Court judge ruled Oct. 4 that Vasquez apparently had entered into a side agreement with another party that violated her original pact.

In that side agreement, she “secretly transferred the License” from Juicy Joint to a company called Menvas for $2.7 million “without any consent or authorization from” her initial partners, court records show.

That meant Vasquez “breached her contractual agreement” with her partners, the principals of Helping Handz and Investing in the Future, according to Judge Christopher Coury, who noted in his ruling that Menvas had anticipated litigation.

Coury’s ruling rejected Vasquez’s request to void the license her former partners now hold.

‘Attempt to steal’ license fails

Mike Halow, the manager of Helping Handz and Investing in the Future, dismissed the idea that Vasquez’s legal challenge was “about any perceived problems with the social equity licensing system.”

“It was about an outlandish attempt to steal a dispensary license,” Halow said in a statement.

A separate claim on Vasquez’s part that the Arizona Department of Health Services should never have granted the license in the first place is still pending, according to a court docket.