Top Hobbs aide put thumb on scale in Arizona marijuana license dispute, lawsuit alleges

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04-21-2025

Top Hobbs aide put thumb on scale in Arizona marijuana license dispute, lawsuit alleges

Trulieve Cannabis Corp. had a problem: It couldn't get another license to sell recreational marijuana in Arizona.

Its subsidiary's application for the license had been rejected by the Arizona health department, a decision affirmed by an administrative law judge and then a superior court judge.

The rejections spanned roughly a year from 2022 to 2023, after which the company's hired lobbyist tried another path. She appealed directly to Gov. Katie Hobbs' Chief of Staff Chad Campbell, records show.

“This issue will take you," the lobbyist texted Campbell, after Campbell asked if a policy staffer could help instead. "I don't think policy staff will be able to move the needle."

After multiple meetings between the lobbyist and Campbell, the Arizona Department of Health Services reversed course. The department settled a lawsuit and gave the license to Trulieve.

Two weeks before that settlement became official, the lobbyist texted Campbell: "Just wanted to thank you on Trulieve issue. You are pretty awesome."

The conversation and timeline are documented in a recent lawsuit filed against the Hobbs administration in Maricopa County Superior Court. The case brought by marijuana entrepreneur Mason Cave and his company Arizona Wellness Center Springerville alleges that granting Trulieve's application for the license was a violation of Arizona's gift clause and other laws.

The April 13 lawsuit includes a claim the Governor's Office tipped the scales in Trulieve's favor. It documents political donations to Hobbs as the licensing matter was pending and ties between her aides and the marijuana industry.

Cave said he was concerned about disparate treatment of license seekers, himself included, and that the Governor's Office was swayed by what "looks like an exertion of political influence to get a result that's counter to what the department was saying and what the courts had ruled."

Hobbs' spokesperson Christian Slater said Campbell had nothing to do with the settlement, and attacked Cave as motivated by "sour grapes" because he had his own case that did not go the same way.

"There is no evidence that the Governor’s Office improperly directed ADHS decision making in either his, or Trulieve’s, case," Slater said. The health department independently decided to end the legal dispute with Trulieve to avoid racking up more legal fees, he said.

The legal path to Trulieve's license.

Trulieve's licensing issue stems back several years. The Trulieve subsidiary, Sherri Dunn LLC, first applied for a dispensary registration certificate to operate in La Paz County in 2016, but was denied.

Sherri Dunn did ultimately get the certificate, but not until late 2021 and after a ruling by the Arizona Supreme Court found the state improperly denied applications for medical dispensaries in La Paz County in 2016.

Arizona's 2020 measure legalizing recreational marijuana allowed entities that already had a medical dispensary certificate to apply for a dual license as an early applicant. That application had to be made during a three-month window from January to March 2021. The dual license also allowed recreational sales, cultivation or manufacturing.

Sherri Dunn sought a dual license in early 2022. The health department denied the application, explaining that Sherri Dunn did not apply in early 2021 as required. Sherri Dunn went to court challenging that decision.

But an administrative law judge and a Maricopa County Superior Court judge disagreed with Sherri Dunn's position that the state should waive the deadline to apply based on the prior case.

"Granting such a waiver would require this Court to ignore the law, assume the existence of hypothetical upon hypothetical fact, and improperly act in place of ADHS, the agency tasked with regulating these matters," a Maricopa County Superior Court judge ruled in Sept. 2023. Trulieve appealed.

But about six months later, after Trulieve lobbyist Wendy Briggs contacted Campbell, the health department settled. Briggs made an argument that "ADHS is expending tremendous financial resources on outside counsel fighting a case that the Arizona Supreme Court will eventually overturn, in favor of Sherri Dunn, LLC, as it has in the past," according to an Oct. 2023 email to Campbell that is included with Cave's lawsuit.

The Feb. 2024 settlement approved Sherri Dunn for the dual license and ended the appeal. In addition to other provisions, the agreement required Sherri Dunn to defend the settlement should the health department be sued as a result, documents show.

"ADHS chose to settle the matter to avoid a long, costly court battle it was likely to lose at the Arizona Supreme Court based on the unique facts of the case and the Saguaro Healing decision," Slater said.

The Saguaro Healing decision was the older case that led Sherri Dunn to get its medical dispensary certificate in 2021.

In that case, a superior court judge and the Court of Appeals affirmed the health department's 2016 decision denying a dispensary certificate to Saguaro Healing and two others hoping to operate in La Paz County. Sherri Dunn's application was denied, but it was not a party to the lawsuit.

Ultimately the Arizona Supreme Court said in 2020 the prior judges got it wrong and reversed their rulings.

Hobbs administration contends key differences

Cave said he was following the Trulieve case as it wound through the system because he felt it was similar to his efforts to get a dual license for Arizona Wellness Center Springerville.

Arizona Wellness received a dispensary registration certificate in March 2023 and wanted to, alongside another company, get a dual license. That was denied by the health department and so Cave filed a lawsuit, records show.

A Maricopa County judge ruled against him in November, finding that his claim was moot because Cave did not open the medical dispensary within 18 months of getting the certificate, as required by law. Because that invalidated the dispensary certificate, he was not eligible for the dual license, the court said. Cave has appealed.

The state contends the situations between Trulieve and Arizona Wellness were not the same.

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Slater said the department consulted attorneys and decided not to begin settlement negotiations with Arizona Wellness because of a ruling in the case that said Arizona Wellness "cannot, even under the most favorable interpretation of the facts, become a Dual Licensee as a matter of law."

"The simple truth — one Mr. Cave can't seem to accept — is that he and his entity were not similarly situated to Trulieve," Slater said.

Lawsuit follows political donations from marijuana industry to Hobbs

Cave's case documents the lobbyist's communications with Campbell and Campbell's prior role advocating for marijuana legalization. It includes multiple pages of political contributions to Hobbs or the Arizona Democratic Party during the timeframe Trulieve was lobbying the Governor's Office to resolve the issue.

Those donations fueled Cave's concern marijuana licensing provisions are not applied fairly, and that the Governor's Office granted the license to Trulieve based on an assumption of how a court would rule on the case. Cave has previously sued the department over licensing application deadlines and has advocated for making it easier to establish dispensaries in rural parts of the state.

"This situation raises serious concerns about the separation of powers and checks and balances that I was taught in middle school, which are completely askew in this case," he said. The Arizona Capitol Times first reported on Cave's lawsuit.

Prior to joining the Governor's Office in 2023, Campbell ran the political campaign to legalize marijuana. His political firm was paid hundreds of thousands over the course of a campaign through a political action committee primarily funded by Harvest Enterprises, a marijuana company that Trulieve later bought.

Briggs was texting Campbell about Trulieve from Sept. 2023 to Feb. 2024, according to messages attached to Cave's lawsuit. The lawsuit says Trulieve donated $5,400 to the Arizona Democratic Party on Oct. 12, 2023, and Briggs donated $5,000 to Hobbs on Oct. 19. State campaign finance records confirm those donations.

Briggs' donation came about the same time that her lobbying firm, Veridus, hosted a meet and greet for the governor and the firm's clients. The company posted images of the event on social media.

Briggs did not return calls or an email seeking comment for this story.

The Arizona Dispensaries Association, a political action committee funded by dispensaries, has also previously backed the Hobbs administration, including with a $25,000 contribution to the governor's controversial inauguration fund. The dispensary association's largest donor in recent years was Trulieve, state records show.

Hobbs aide: Lawsuit is 'sour grapes'

Cave's latest lawsuit claims the state's settlement with Trulieve is a violation of the Arizona Constitution's gift clause, which prevents public resources from being used for private benefit. Past court rulings have said the dollars spent cannot greatly exceed the value to the public. His lawsuit said the $25,000 fee Trulieve paid for the dual license falls vastly short of its roughly $10 million value.

Cave asked a judge to revoke the license granted to Trulieve and order the state pay his attorney fees. His case does not name Trulieve or the subsidiary as defendants.

Slater denied any gift clause violation and said the Governor's Office would file a motion to dismiss the case on which it "expects to prevail." He said both Trulieve and Arizona Wellness "had those licensing decisions independently assessed by ADHS in accordance with the law."

"Just as any other business could have, Trulieve followed the rules, paid the same application fee as all other applicants, and was granted a license for doing so after settlement proceedings with ADHS," he said.

Slater said the lawsuit was "little more than a sour grapes, ad hominem attack on dedicated public servants that makes a tortured and tangential claim about Gift Clause violations alongside insinuations that belong in a politically driven opposition research hit rather than a court filing."

Cave disputed that attack.

“As a private citizen who voted for Katie Hobbs, not a politically motivated opponent, I find the Governor’s Office’s misleading tactics and attempts to divert accountability deeply frustrating," he said.

By Stacey Barchenger