Appeal
from the Superior Court in Maricopa County No.
LC2017-000218-001 The Honorable Patricia A. Starr, Judge
Barrett & Matura, Scottsdale By Jeffrey Matura, Melissa
J. England, Tabitha R. Myers Counsel for Plaintiff/Appellant
Sherman & Howard LLC, Phoenix By Gregory W. Falls,
Matthew A. Hesketh Counsel for Defendant/Appellee
Judge
Randall M. Howe delivered the opinion of the Court, in which
Presiding Judge Paul J. McMurdie and Judge Jennifer B.
Campbell joined.
OPINION
HOWE,
Judge
¶1
JH2K I, LLC appeals the superior court's judgment
upholding the Arizona Department of Health's final
decision denying JH2K's application for a medical
marijuana dispensary registration certificate under the
Department's interpretation of the Arizona Medical
Marijuana Act ("AMMA") and its corresponding
regulations. JH2K argues, among other things, that the
Department abused its discretion because it (1) imposed a
requirement that applies exclusively to an application to
operate and open a dispensary and (2) improperly expanded the
definition of "school" to encompass the surrounding
property.
¶2
We affirm the superior court's judgment. The Department
did not abuse its discretion in requiring JH2K to submit
documentation showing its compliance with the distance
requirement because the AMMA's plain language and
corresponding regulations require it. The Department also
properly interpreted the meaning of "school"
because the term's plain and ordinary meaning includes a
school's property boundaries.
FACTS
AND PROCEDURAL HISTORY
¶3
In 2010, Arizona voters passed Proposition 203, now codified
as the AMMA, A.R.S. §§ 36-2801 to -2819. The AMMA
granted the Department rulemaking authority to enact
regulations to implement and enforce the act. The AMMA
requires prospective nonprofit medical marijuana dispensaries
to register with the Department by filing an application for
a medical marijuana dispensary registration certificate. In
June 2016, the Department announced that it would be
accepting dispensary registration applications.
¶4
JH2K applied for a registration certificate, but the
Department determined that its application was not
substantively complete. The Department sent JH2K a formal
request for information, saying that "some items need to
be corrected or are missing" from its application. The
Department identified 17 missing items in JH2K's
application packet. Citing A.A.C. R9-17-321(A), the 17th item
listed in the request said that "[a] dispensary shall be
located at least 500 feet from a private school or a public
school that existed before the date the dispensary submitted
the initial dispensary registration certificate
application." JH2K responded to item 17 by attaching a
computer-generated map showing that the distance between the
proposed dispensary building and the nearest school's
administration building was 513.75 feet. Nevertheless, the
Department denied JH2K's application because it
determined that, when measured from property line to property
line, the proposed dispensary location was within 500 feet of
a Pima County junior high school.
¶5
JH2K protested the denial of its application and sought
administrative review before an administrative law judge
("ALJ"). Upon receiving notice of an evidentiary
hearing, the Department conducted additional research to
confirm the distance between the school and JH2K's
proposed dispensary location. A team leader from the
Department's Bureau of Special Licensing visited the site
and used a rolling measuring device to verify the distance
between the property line of the proposed dispensary location
and a chain-link fence abutting the school's basketball
court and determined that the distance measured 424 feet. The
team leader then confirmed through Google Maps that the
distance between the two respective property lines was less
than 500 feet. The Department also telephoned Pima County
officials to inquire about the distance between the two
properties. Pima County verified that the distance was less
than 500 feet. In addition, the Department learned that Pima
County determined distances between properties by measuring
from property line to property line.
¶6
At the evidentiary hearing, JH2K argued that applicants are
not required to demonstrate at the initial application stage
that a proposed dispensary is at least 500 feet from a
school. JH2K further argued that the distance between a
proposed dispensary and the nearest school should be measured
from building structure to building structure and that the
Department arbitrarily expanded the definition of a
"school" to include all surrounding grounds. The
Department argued, however, that both "statute and
rule" mandate an application for a registration
certificate to contain documentation that the physical
address of a proposed dispensary location is at least 500
feet from a private or public school. A branch chief from the
Department's Division of Licensing also testified that
the Department consistently measured distance from property
line to property line.
¶7
After the hearing, the ALJ recommended affirming the denial
of JH2K's application. The Director adopted the
recommendation, with minor modifications, and affirmed the
denial. JH2K then appealed the decision to the superior
court, ...