Pot Dispensary May Take In $6 Million Yearly

Payson medical marijuna dispensary license holder Andrew Provencio in his new facility.

Photo by Alexis Bechman. |

Payson medical marijuna dispensary license holder Andrew Provencio in his new facility.


From the empty side yard of the proposed medical marijuana dispensary, the red letters from the Rim Country Middle School glows just past the APS maintenance yard.

Although within sight, the non-descript building is well outside the town’s 500-foot separation requirement from anything child-related. However, the dispensary will not initially grow marijuana at that site until it after it gets up and running. The dispensary will open in a few months to provide medical marijuana patients with the drug initially grown by caregivers, in accordance with the law.

Although possessing or growing marijuana remains a federal crime, medical marijuana dispensaries are opening across the state under the terms of the 2010, voter-approved proposition legalizing its limited-medical use.

Recently, shops opened in Glendale, Eloy, Bisbee and Fort Mohave, with more planned for Sedona, Deer Valley and Marana. In theory, the 36,600 Arizonans with medical-marijuana cards can buy the drug there legally — up to 2.5 ounces every two weeks. A statewide computer system will track every purchase.

In fact, the state health department is keeping a close eye on all aspects of medical-marijuana to avoid many of problems seen in other states. States like California, the earliest to allow medical marijuana dispensaries in 1996, have seen rapid growth in sales — and tax revenues.

Last year, Oakland, Calif. collected $1.4 million and Colorado Springs, Colo., $771,000 (40 percent more than the year before). The state of Colorado has amassed $5.4 million in state sales tax.

In Payson, medical marijuana could puff new life into the town’s struggling tax base.

The Roundup met with the owners of the yet-to-be named Payson dispensary last week (Uncle Herbs is one idea) for a tour of the still-under-construction dispensary/cultivation site off North Tonto Street.

Co-owner and principal investor Andrew Provencio estimates the dispensary could bring in $2.4 million in its first year if patients spend $100 each month, a conservative estimate.

The dispensary will collect a 9.72 percent sales tax on each sale, with 2.12 percent going to the town, said Tim Wright, town attorney.

Payson could therefore see an additional $50,000 in annual sales tax revenue, which has hovered between $5 million and $6 million each year since 2008. That’s a little less than the salary and benefits cost of one police officer. Sales taxes account for most of the town’s revenue.

The federal government still considers distributing marijuana for any purpose a crime, but the U.S. Department of Justice said in 2009 it would not “focus” on prosecuting use of medical marijuana if patients follow state laws.

Still, medical marijuana dispensaries in Arizona may risk federal prosecution under the Controlled Substances Act, according to a 2012 Joint Fiscal Office fee and tax report.

Provencio and Tiffany Young, co-operator, said they are following every town and state rule closely.

“It’s super important we are meeting / exceeding both state and federal law (which we are). We don’t want the perception to be, under any pretense, we are not 100 percent compliant with both,” Young said.

Provencio has already invested hundreds of thousands of dollars and says he won’t risk it all by bending the rules.

Costs to open the former Rock Yard dispensary site include a beefed-up electrical system, state-of-the-art security system, an expanded cultivation/grow room, kitchen and general remodeling. However, once open, the dispensary could make millions.

Provencio said the dispensary could bring in $6 million to $8 million each year. Once it breaks even, the not-for-profit plans to invest money back into the community.

“We are here to support the local community,” he said. “Any excess money will go toward the community.”

A committee would most likely decide where to best to use the money, from fixing up baseball fields, to establishing an improvement fund.

But that is all down the road.

Right now, Provencio and Young are working with the town to get construction under way.

“Everyone has been really great, the town has been really cooperative,” he said.

Work should take six weeks to 90 days.

The group will get the dispensary open and set up the grow room later. They will rely on caregivers and other dispensaries for medicine until their crops are in. Dispensaries and caregivers can supply other dispensaries under state law.

“We may have to do it in two phases. One is to open the dispensary floor and then work on the back half on the cultivation,” Young said. “We are trying to figure out how we can get the best possible medicine for the patients while following the rules.”

Young said the dispensary will have to provide a high quality product to compete with the other dispensaries. Young and Provencio hope to offer at least 30 strains of medicinal marijuana, each targeting a specific ailment.

The Payson dispensary will have glass display cases of medicine for patients to choose from and the medical director or bud tender will help cardholders pick their product. Provencio said he hasn’t figured out the price the dispensary will charge, but one Valley dispensary is selling an eighth of an ounce for $65.

“Ultimately it is going to be the market that justifies the price,” he said. “We want to make it less expensive to get it here than to get it from an illegal place ... we intend to have it at very a competitive price and have it be so good people from the Valley are coming here.”

The pair expects an older client base, roughly 55 years old, and chronic pain as the most common ailment. In Colorado, the average male cardholder is 40 and the average female cardholder is 43. Severe pain accounts for 94 percent of all reported conditions in Colorado.

Provencio said many people assume most cardholders are 20-something males, but in reality older clients with debilitating conditions account for the bulk of cardholders.

As a former senior captain with the Anchorage Fire Department, Provencio said he saw many people die, including those from prescription overdoses. Prescription narcotic painkillers now account for far more overdose deaths in the U.S. than all illegal drugs combined, according to the federal Centers for Disease Control.

He believes medical marijuana is a safer alternative. “I think this is a great opportunity to help people.”


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