Jonathan D’Aloia shows how you can use Terraform to work with Azure Policies:
As you may all know Terraform serves a great purpose in deploying resources and infrastructure into your Azure environment, however, Terraform can also be used to automate and consistently deploy Azure Policies which can be defined prior to any resources being generated. In this blog, I will cover how you can import policies into your Terraform State to then deploy into an Azure Resource Group in order to secure your landing zone prior to deploying any resources.
Click through for an example.