Arizona’s $250 Million Social Equity Heist: Broken Promises, Political Maneuvers, and Fraud Shielded

The first in a series of disclosures, interviews, and a chance to tell the victims’ stories — the Arizonans who believed the promise of equity, only to be left with nothing but betrayal. (VIDEO)

Sen. Sonny Borrelli (Arizona Legislative Hearing Feb. 13, 2024):

“What we have here is an injustice that needs to be fixed. Twenty-four of 26 of these social equity licenses are now fully controlled by companies or people who do not belong in these special groups.” (Legislative Hearing)

Critics now say the social equity program did the “exact opposite of what voters intended.”

Inside Arizona’s Social Equity Scam

When Prop 207 passed in 2020, it was pitched as a path to justice: expungements for past marijuana convictions, equity licenses for the disenfranchised, and a safer legal cannabis market led by Arizonans who needed it most.

Progressives demanded the social equity component, voters paid attention, and communities hoped for change. Experts noted that each license could sell for as much as $10 million, the kind of generational wealth that could transform families and communities long targeted by the war on drugs.

Collectively, the heist of Arizona’s social equity licenses represents an estimated $250 million in lost opportunity — wealth that was meant to flow into marginalized communities but instead was siphoned off by corporations.

The program’s design seemed straightforward. The Arizona Department of Health Services established a lottery system to award 26 social equity licenses tied to the legalization of recreational marijuana. Applicants were required to meet three out of four prerequisites: earn less than 400% of the federal poverty level, have been personally affected or related to someone affected—by enforcement of prior marijuana laws, and reside in a ZIP code disproportionately impacted by marijuana arrests.

The majority shareholder had to meet those standards, and licenses would be awarded through a randomized lottery system. On paper, it was supposed to tilt the scales toward disadvantaged Arizonans.

In practice, the system was hijacked almost immediately. Corporate players swooped in with offers that looked like help but came with strings attached. Some companies covered the $4,000 application fee in exchange for nearly half the ownership of any winning license. Others promised to open dispensaries at no cost, only to saddle the winners with millions in “loaned costs,” from consulting fees to vague “community outreach” charges that had to be repaid.

Behind the scenes, many applications weren’t truly independent at all but were packaged and managed by large dispensaries through so-called mentorship programs designed to stack the deck.

These companies didn’t wait for applicants to come to them. They canvassed inner-city neighborhoods with flyers and knocked door-to-door, aggressively recruiting people who qualified under the program. Many were told it was an opportunity they couldn’t pass up. The tactics were deceptive: contracts were written to give the appearance of equity while ensuring control stayed firmly in corporate hands.

Photo Credit: Mita-az.org

Corporations quickly learned how to game the lottery. One company alone submitted more than 200 applications under the names of individual “partners.” Some corporations walked away with four or five licenses, a direct contradiction to the spirit of the program that was supposed to distribute opportunity broadly. Instead of empowering communities, equity licenses were concentrated in the hands of the very companies voters thought they were keeping in check.

The result was devastating. Out of 26 equity license winners, only one still controls their own license. The rest are effectively under the thumb of corporations that used their financial power, mass applications, and aggressive outreach to corner a program designed for justice. What was supposed to create opportunity for the marginalized turned into a windfall for the well-connected.

State leaders and regulators have acknowledged the failures, but to date they have taken no meaningful action. They have stayed largely silent, showing little evidence of investigating how a program meant to deliver fairness was transformed into a marketplace for predatory contracts. That silence is part of a larger pattern: decades of government-branded “equity” initiatives that launch with lofty promises but collapse when it comes time to deliver.

Communities have seen this story before. Programs roll out with thick reports and press conferences, but the results are thin. Money is swallowed by consultants and bureaucracy, while those most in need see little change. The Arizona cannabis equity program was supposed to break that cycle. Instead, it has become a case study in how justice can be promised on the front end and stolen on the back end, leaving the people it was meant to serve with nothing but broken promises.

Photo Credit: Facebook - Smart and Safe AZ

Journalists Have Sounded the Alarm

Numerous articles — have exposed how these licenses were drained of their intended purpose, leaving disadvantaged applicants buried in debt or stripped of control altogether. Despite this flood of reporting, Arizona Democrats have stayed almost entirely silent. The very leaders who demanded equity provisions in Prop 207 as a condition of legalization have offered lip service without meaningful reform, allowing a program built on promises of justice to collapse into a pipeline for big business.

Here is some of the reporting on the Social Equity Disaster:

• AZCIR which highlighted how predatory agreements and corporate takeovers stripped licensees of control

• Phoenix New Times which criticized the program’s outcomes as the “exact opposite” of what voters intended

• Arizona Mirror which explained how the concept was structurally flawed and set up to fail marginalized communities

• The Agenda which called the program a scam from inception and exposed manipulative corporate recruitment tactics

• The Beacon News which tracked early lawsuits and uncovered companies using equity licenses as “placeholders” to game the system

• MJBizDaily which detailed failed reform efforts and exposed partisan friction over predatory practices

• Fourth Estate 48 examines DHS and Chad Campbell’s role in the controversy after they reversed itself and granted a highly valuable marijuana license

Mayes and Hobbs: Silence in the Face of Fraud

Republican lawmakers tried to intervene. In 2024, SB 1262 was introduced to give the Attorney General power to investigate predatory contracts, claw back licenses, and restore them to rightful equity winners. It also spelled out clear rules for cases where majority owners had concealed felony convictions.

But because Prop 207 was passed by voters, any changes required a three-quarters supermajority in the Legislature. The bill failed.

• Attorney General Kris Mayes has offered no public statement on the equity crisis.

• Governor Katie Hobbs has also stayed silent publicly. Behind the scenes, however, her administration reportedly circulated a memo urging lawmakers to vote “no” on SB 1262,” arguing that equity licenses were transferable property rights and that existing revocation tools were enough (MJBizDaily).

Arizona’s top progressives have built their brand on social justice, often quick to weigh in on questions of equity and fairness. But on the collapse of Prop 207’s social equity program, their silence has been striking. Despite multiple investigations showing how corporations captured nearly every license, Governor Katie Hobbs and Attorney General Kris Mayes have allowed the allegations of fraud to persist without public comment or corrective action. For all the promises of equity, the state’s highest offices have stood by as the program unraveled.

Chad Campbell: From Selling Equity to Shielding Corporations

Chad Campbell, Hobbs’s chief of staff, co-chaired the Prop 207 campaign that promised voters justice. In 2020, he stood alongside legalization advocates to sell Arizonans on what was billed as a fairer, more accountable cannabis market.

“Vote YES on Prop 207 to legalize marijuana,” Campbell urged, highlighting that the measure would bring expungements for past marijuana offenses and create new opportunities for those most harmed by prohibition.

At the time, Campbell and other campaign leaders emphasized the equity component as a centerpiece of the initiative, pitching it as a safeguard to ensure that legalization wasn’t just a windfall for established dispensaries.

But four years later, Campbell’s role looks very different. As Governor Hobbs’s top aide, he was allegedly tied to the internal memo urging lawmakers to vote against SB 1262 — the one bill designed to give the Attorney General power to investigate predatory contracts and return licenses to the rightful equity winners.

That memo argued that social equity licenses were “transferable property rights” and that existing revocation mechanisms were enough to protect the program. Critics counter that this argument effectively handed cover to corporations who had already scooped up licenses through predatory partnerships.

“Chad Campbell helped create the program and told voters it was about justice,” said one lawmaker frustrated by the lack of reform. “Now he’s using his position to make sure nothing changes, even when everyone can see the fraud that’s happening.”

Another equity applicant put it more bluntly:

“We trusted the promise of Prop 207. Campbell told us this was for people like us. Now those same people are telling us to sit down and shut up while the companies run off with everything.”

In short, the man who once sold equity as progress is now the gatekeeper protecting corporations that captured it.

The Felony Loophole

Arizona law disqualifies applicants with excluded felony convictions. Anyone with a 20% or greater ownership stake must pass a background check.

Yet at least one equity licensee with a felony record — a direct violation of program rules — was able to obtain and hold control of a license. This was raised during committee hearings but went unaddressed.

Under current law, ADHS has the authority to revoke such a license, yet it has failed to act. In our next report, State 48 News will examine in detail how a person with a felony conviction was able to secure a license and why ADHS has remained on the sidelines.

Missouri: A Stark Contrast

While Arizona’s leaders shrug, Missouri regulators are showing what action looks like:

• By December 2024, 41 of 96 microbusiness licenses were either revoked or at risk.

• In April 2025, regulators revoked 25 licenses in a single day, bringing the total revoked to 34.

• Draft rules released in August 2025 would ban repeat offenders, tighten ownership rules, and outlaw predatory contracts.

“We’ve seen contracts that strip away the applicant’s rights,” said Missouri DCR Director Amy Moore. “We want to make sure predatory agreements don’t undermine the intent of the program.”

Arizona is not alone — many states are wrestling with their cannabis social equity programs. From New York to Illinois, lawsuits and scandals have plagued efforts to ensure minority communities benefit from legalization. But among them, Arizona stands out as a national disgrace.

Trade press and policy watchdogs now hold up Arizona as the prime example of how equity can be hijacked, describing its program as rife with fraudulent schemes and government inaction. Instead of correcting course, state leaders have allowed the problem to fester — leaving disadvantaged Arizonans further marginalized while corporate players consolidate power.

Arizona’s equity program was built on promises to marginalized communities, but in practice it has become a textbook case of corporate capture. Progressives who demanded these provisions in Prop 207 delivered lip service, not reform.

• Kris Mayes has remained silent.

• Katie Hobbs stayed quiet publicly while her staff helped kill reform.

• Chad Campbell, once the face of legalization, has become the face of its failure — turning equity into a slogan rather than a reality. Critics now question whether he is compromised, asking why the same man who lobbied so hard for equity during Prop 207 refuses to stand up for the very victims the program was meant to protect.

Meanwhile, Missouri is cleaning house. Arizona is protecting it. Until state leaders take real action, Arizona’s equity program will remain what it has become: a scam sold as justice, abandoned as policy, and captured by the very corporations it was supposed to restrain.

Injustice can’t be swept under the rug. This is the first in a series of disclosures, interviews, and a chance to tell the victims’ stories — the Arizonans who believed the promise of equity, only to be left with nothing but betrayal.