Medical Marijuana Commission publishes rules for medical marijuana cultivation license

The Arkansas Medical Marijuana Commission has published the requirements for submitting bids to five operators to grow and cultivate medical marijuana under the constitutional amendment that was approved by voters in the November 2016 election.

First applications will be accepted June 30 with the final deadline being Sept. 18.

In the 25-page request for application released on Monday, the commission said cultivation operators will be “authorized to grow and possess usable marijuana in an amount reasonably necessary to meet the demand for and needs of qualifying patients as determined by the commission with the assistance of the Arkansas Department of Health.”

In early May, the Legislature approved the proposed emergency and regular rules that were submitted by state Department of Finance and Administration (DFA). At the time, Joel DiPippa, an attorney with DFA’s Office of Revenue Legal Counsel, said the commission would begin accepting license applications for cultivation facilities and dispensaries July 1.

“Hopefully by the end of September, we will see the first cultivation facility and dispensary licenses being issued, awarded,” DiPippa said. “And then that gives three months of time where it may take them to build out and meet the requirements” as well as grow and test the plants.

In the final rules handed down this week, the commission said it plans to issue up to five cultivation facility licenses, however, fewer licenses could be awarded “if an insufficient number of qualified applicants submit applications prior to the deadline.” The first day for applications to be accepted will be June 30 with the final deadline for receipt of those submissions at 4:30 p.m. on Sept. 18.

Once applications are delivered to the Commission, those accepted will be time-stamped and applicants must then submit a payment voucher for the required fee of $15,000. Applicants will be able to modify a submitted application at any time prior to the final submission deadline, which will be subject to the state Freedom of Information Act. Applicants must also provide proof of assets or a surety bond in the amount of $1 million and proof of at least $500,000 in liquid assets.

The Commission will be able to disqualify submitted applications for a number of reasons, including failure to respond to requests for additional information, false, fraudulent or misleading data, and applications with troublesome backgrounds. DFA has said it expects the market to mature 18 months after the drug is available. It expects $40 million to $45 million in retail sales based on estimates derived from six other states that have legalized marijuana only for medical use.

The amendment passed in the November election allows the licensing of up to eight cultivation facilities and 40 dispensaries. However, under rules adopted by the legislature and promulgated by the Commission, licenses will be granted to five cultivation facilities and 32 dispensaries initially.

Among those hoping to build a cultivation facility is Storm Nolan, a Fort Smith-based real estate developer and manager who with his partners at CSK Hotels owns 600,000 square feet of real estate. They expect to submit their application not long after filings open July 1.

Nolan said he and his partners, who have not previously owned a marijuana-related business, are working with a consultant who has been successful in competitive licensing elsewhere.

He believes it will take about six months to begin selling the product. They will begin constructing a 16,000-square-foot shell building in Fort Smith before July 1. If they win a license, they’ll complete it as a marijuana facility, and if not, it will become something else. That facility will enable them to grow the plants under extended lighting hours. If they win the license, they’ll then attach 6,000-square-foot greenhouses that can be completed in six to eight weeks. Those will enable the company to reduce energy costs.

Link here for a PDF of the license application.