Five marijuana bills advance through House committees; two blocked

Five medical marijuana bills advanced through the House Rules Committee Wednesday (Feb. 7), but committee members voted against a bill that would require licenses to be granted to a “natural person” and tabled another requiring individuals owning 60% of the interest in a dispensary or cultivation facility to have been Arkansas residents for the previous seven years.

All of the bills are sponsored by Rep. Doug House, R-North Little Rock. He was tasked by Speaker Jeremy Gillam, R-Judsonia, to be the primary sponsor of enabling legislation following the passage by voters in November of the state’s medical marijuana amendment.

Members of the committee approved the following bills by voice vote.
• House Bill 1051 would allow cultivation facilities and dispensaries to contract with transporters, distributors and processors, which would be licensed by the Medical Marijuana Commission that was created by the amendment.

• House Bill 1049 would disallow most people with a felony record from having a cultivation or dispensary license. The Medical Marijuana Commission would determine if an offense is a felony offense. Currently, those licenses are disallowed only for those convicted of a “felony of violence.”

• House Bill 1057 would require cultivation facility and dispensary applicants and agents, along with caregivers, to obtain criminal background checks.

• House Bill 1369 would create an operations fund funded by sales tax revenues in order to pay for administrative and enforcement costs before the money is dispensed elsewhere.

• House Bill 1370 would authorize the Alcoholic Beverage Control Division to regulate advertising, marketing, packaging and promotion by dispensaries and cultivation facilities to ensure marijuana products don’t appeal to children.

Prior to the voice vote, Rep. Lane Jean, R-Magnolia, asked Rep. House to write a bill prohibiting all advertising for marijuana, just as advertising for tobacco products is prohibited. House said he would do so, although he later expressed doubt to reporters that the bill would be constitutional.

Legislators voted against House Bill 1298, which would require licenses for dispensaries and cultivation facilities be given to a natural person, not a corporation. Rep. House said the bill was needed to ensure transparency and accountability, explaining, “You can’t put a corporation in jail.”

However, Sylvester Smith, an attorney and owner of the political consulting firm Change Agents, said attorneys advise businesses to form corporations to limit liability, and failure to do so in this case would harm the medical marijuana market. Smith, who said a client of his could be applying for a license, said states can still hold those corporations accountable for theirs and their employees’ actions. He said “sophisticated business people” with enough resources to open cultivation and dispensary facilities would find “straw people” without real responsibility to be granted the license.

“The state needs to know who is actually running the show, and that’s the person we need to be able to hold administratively accountable,” he said.

House disagreed, saying authorities need to know who to approach when enforcing or regulating a company. They would be able to determine if that person is not actually exercising responsibility once they begin investigating.

“I just don’t want anybody hiding under a corporate veil. We need to be able to look somebody square in the eye and get straight answers,” he said.

After the failure of that bill, Rules Committee members tabled House Bill 1371, which would require individuals owning 60% of the interest in a dispensary or cultivation facility to have been Arkansas residents for the previous seven years. Under the amendment, 60% of the owners must be Arkansas residents, which would mean a facility would qualify even if that percentage of owners controlled very little of the company.

Rep. Deborah Ferguson, D-West Memphis, said the failure of House Bill 1298 left the fate of House Bill 1371 unclear. Rep. House told reporters he would try again to pass both bills as written.