COMPASSIONATE CARE DISPENSARY, INC., Plaintiff/Appellant-Cross Appellee,
ARIZONA DEPARTMENT OF HEALTH SERVICES, et al., Defendants/Appellees-Cross Appellants.
from the Superior Court in Maricopa County No. CV2012-057041
The Honorable Aimee L. Anderson, Judge
Potenza Baran & Gillespie, PC, Phoenix By Jesse Callahan
Counsel for Plaintiff/Appellant/Cross-Appellee
Sherman & Howard, LLC, Phoenix By Gregory W. Falls and
Michael W. Wright Counsel for
Presiding Judge Kenton D. Jones delivered the Opinion of the
Court, in which Judge Jon W. Thompson and Judge John C.
Gemmil  joined.
Compassionate Care Dispensary, Inc. (CCD) appeals entry of
summary judgment in favor of the Arizona Department of Health
Services (the Department) on CCD's complaint for
declaratory judgment and mandamus relief. The Department
cross-appeals the denial of its motion for sanctions.
CCD argues the evidence establishes that the Department acted
arbitrarily and capriciously in interpreting the Arizona
Medical Marijuana Act (AMMA) and corresponding regulations in
a manner that permitted a competitor to participate in a
lottery for a medical marijuana dispensary registration
certificate without first obtaining a conditional use permit
(CUP). The interpretation and application of these provisions
present a question of first impression. We hold that neither
the statutes and regulations, nor the applicable municipal
code, require applicants to obtain a CUP before applying for
a dispensary registration certificate, and the Department did
not act arbitrarily and capriciously in its application of
the law. We further hold that the "sworn statement"
required to accompany a dispensary registration application
need not take any particular form so long as it impresses
upon the signatory the importance of telling the truth.
Because we find no error in the trial court's resolution
of the issues presented on summary judgment and in the
Department's motion for sanctions, we affirm.
FACTS AND PROCEDURAL HISTORY
In 2010, Arizona voters passed Proposition 203, now codified
as the AMMA, Ariz. Rev. Stat. (A.R.S.) §§
36-2801 to -2819, to allow for the medicinal use
of marijuana within the state. See White Mountain Health
Ctr., Inc. v. Maricopa Cty., 241 Ariz. 230, 233, ¶
3 (App. 2016). The AMMA requires non-profit medical marijuana
dispensaries to register with the Department - the agency
tasked with implementing and administering the AMMA.
See A.R.S. §§ 36-2803, -2804(A). A
prospective dispensary's application for a registration
certificate must contain, among other things, documentation
that the proposed dispensary location complies with local
zoning restrictions. See A.R.S. §
36-2804(B)(1)(d); Ariz. Admin. Code (A.A.C.)
Initially, the A.A.C. authorized the Department allocate only
one dispensary registration certificate for each Community
Healthcare Analysis Area (CHAA). See A.A.C.
R9-17-302 (2011). If the Department received more than one
application for a single CHAA, it would randomly select a
qualifying applicant according to the priority set forth in
In May 2012, CCD applied to operate a dispensary at 1600 East
Second Street in the City of Winslow (the City), within the
Winslow CHAA. CCD established its compliance with applicable
zoning restrictions by providing: (1) a "Sworn Statement
of Compliance with Local Zoning Restrictions, " executed
by an officer and board member of CCD; (2) a copy of a CUP
for the Second Street location issued by the City; and (3) a
Department form entitled "Documentation of Compliance
with Local Jurisdiction Zoning" executed by the
City's Principal Planner.
Two other entities, Green Cross Medical, Inc. (GCM) and The
Medicine Room, L.L.C. (TMR), also submitted applications for
the Winslow CHAA. Each application was accompanied by the
same type of Department form, again executed by the
City's Principal Planner, and a statement of compliance
executed by the companies' principal officers. The
Department determined all three applications were
substantively complete in June 2012 and scheduled a lottery
in August 2012 to determine which entity would be awarded the
certificate for the Winslow CHAA.
In the meantime, CCD notified the Department it believed
GCM's and TMR's applications had been errantly
accepted because the proposed locations were not in
compliance with City zoning ordinances. At the same time, the
City Attorney notified the Department, GCM, and TMR that City
ordinances require applicants to obtain a CUP before the City
could certify a proposed dispensary location as compliant
with zoning restrictions. The City Attorney explained the
City's Principal Planner had issued letters of compliance
for GCM and TMR by mistake, the Planner believing only that
he was affirming the proposed dispensary locations were,
generally, in the proper zone. The City Attorney confirmed
the proposed locations were in fact "in the commercial
zone, and would be . . . appropriate location[s] for a
medical marijuana dispensary." However, neither GCM nor
TMR had yet applied for, let alone received, a CUP.
In July 2012, the Department notified GCM and TMR their
applications were not substantively complete because they had
not obtained a CUP from the City and therefore were not in
compliance with local zoning ordinances. After further
discussion with the City Attorney, the Department advised it
did not require a CUP at the application stage. The
Department explained: "DHS has formulated a two-step
process for applicants and does permit them a period of time
from when they are awarded a dispensary registration
certificate to receive actual documentation (such as
certificates of occupancy or conditional use permits)
authorizing their occupancy as a dispensary." The
Department assured the City that, after a certificate was
issued, "DHS will require the applicant to be in full
compliance [with the City's zoning and business
requirements] before [a dispensary] is allowed to open."
The City Attorney admitted he had been unaware of the
two-step process but maintained his position that the City
independently required "both commercial zoning and a
conditional use permit be granted for a marijuana dispensary
to be located in the city limits."
Based upon its "two-step process" analysis, the
Department accepted the City's prior assurances that the
proposed locations would be appropriate for a medical
marijuana dispensary and re-designated GCM's and
TMR's applications as substantively complete. However,
GCM was unable to demonstrate it had the requisite financial
backing and lost its preference for selection. See
A.A.C. R9-17-302(B). The Department conducted the lottery as
between TMR and CCD, and, as the randomly chosen applicant,
TMR was awarded a dispensary registration certificate for the
In December 2012, CCD filed a complaint alleging the
Department acted arbitrarily and capriciously in permitting
TMR to participate in the lottery and sought: (1) a
declaration that the Department improperly accepted the
application of TMR; (2) a writ of mandamus ordering the
Department to void the lottery results and award a dispensary
registration certificate to CCD; and (3) an award of damages,
attorneys' fees, and costs. After discovery, both parties
moved for summary judgment, and the Department sought
sanctions against CCD for maintaining a frivolous claim.
After briefing and oral argument, the trial court entered
judgment in favor of the Department but denied its motion for
sanctions. CCD timely appealed, and the Department timely
cross-appealed. We have jurisdiction over both appeals
pursuant to A.R.S. §§ 12-120.21(A)(1) and
The Department Did Not Violate Rule 56(c)(3).
CCD argues the trial court erred in granting summary judgment
to the Department because, it contends, the Department did
not submit a separate statement of facts in the form
prescribed by Arizona Rule of Civil Procedure 56(c)(3). That
rule requires a party filing or opposing a motion for summary
judgment to file "a statement separate from the
supporting memorandum, [setting forth] the specific facts
relied on in support of the motion." Ariz. R. Civ. P.
56(c)(3). We have reviewed the Department's statement of
facts and find it contains concise, numbered paragraphs
identifying specific relevant events, in chronological order,
and referencing supporting portions of the record and
exhibits, and therefore find no merit in CCD's
CCD's suggestion that the format of the Department's
separate statement of facts made it difficult for CCD to
identify the factual issues in dispute is likewise
unsupported by the record. CCD's objections to the
Department's statement of facts total 593 pages and
reflect it had adequate opportunity and ability to address
the statements contained therein and to act to protect its
Moreover, the trial court has broad discretion in granting
judgment regardless of the form of a party's response.
Although the court may enter summary judgment against a party
who does not properly oppose a motion, see Ariz. R.
Civ. P. 56(e), so may the court "grant summary judgment
for a nonmoving party; . . . grant summary judgment on
grounds not raised by a party; or . . . consider summary
judgment on its own after identifying for the parties
material facts that may not be genuinely in dispute, "
Ariz. R. Civ. P. 56(f). In determining the appropriate
disposition, the court is required to consider the portions
of the record brought to its attention by the parties,
regardless of their technical compliance with Rule 56(c).
See Hunt v. Richardson, 216 Ariz. 114, 122 n.7,
¶ 25 (App. 2007) (citing State ex rel. Corbin v.
Sabel, 138 Ariz. 253, 256 (App. 1983)).
CCD has not proved reversal is warranted upon this ground.
See Ariz. R. Civ. P. 61 ("At every stage of the
proceeding, the court must disregard all errors and defects
that do not affect any party's substantial
CCD Abandoned Its ...