Arizona appeals court upholds dismissal of lawsuit over dispensary license award that named Gov. Hobbs and her chief of staff

The Arizona Court of Appeals on Oct. 14, 2026, affirmed a Maricopa County Superior Court judgment dismissing a lawsuit that challenged the state's award of a marijuana establishment license to Sherri Dunn, LLC, according to a memorandum decision written by Judge Michael S. Catlett and joined by Presiding Judge Veronika Fabian and Judge Kent E. Cattani.

Arizona Wellness Center Springerville, LLC and a co-plaintiff sued the Arizona Department of Health Services, the State of Arizona, several state officials and Dunn, alleging that awarding Dunn the license violated Arizona's Gift Clause and was ultra vires. The court docket lists Gov. Katie Hobbs and her chief of staff, Chad Campbell, among the defendants. According to the decision, Arizona Wellness alleged that the governor's chief of staff intervened to ensure the department issued Dunn the license. The license came through a February 2024 settlement that deemed Dunn's January 2022 application to have qualified as an "early applicant," even though that application period had already lapsed, the decision says.

The panel did not rule on those allegations. It held that the plaintiffs lacked standing, finding that their competitive-harm, declaratory-relief and taxpayer theories showed no particularized injury. The court noted that Arizona Wellness never opened a dispensary, lost its medical dispensary registration certificate and never competed with Dunn. It also found the co-plaintiff had not alleged that he contributes to the Smart and Safe Arizona Fund, which pays for regulating the licenses.

The ruling is a memorandum decision that is not precedential under Arizona Supreme Court rules. The court's docket lists Nov. 13 as the due date for a petition for review to the Arizona Supreme Court. Marijuana Moment's Oct. 16 newsletter also reported the ruling.

This report describes a court decision and is not legal advice.