DFA legal team begins process of culling medical marijuana applications

The state Department of Finance & Administration’s legal team is notifying nearly 100 companies who applied to win one of the eight highly sought-after pot-growing greenhouse licenses to let them know if their proposals have cleared the state’s first hurdle.

“Our legal team has made it through the 98 cultivation applications and notified applicants on whether or not they met the basic requirements to proceed,” DFA spokesman Scott Hardin said Tuesday (Oct. 3) in a response to a Talk Business & Politics query. “I should note that although we have notified all cultivation applicants, nothing is formal until the medical marijuana commission votes to take action on these applications.”

Just over two weeks ago on the Sept. 18 deadline, 322 applicants submitted bids for cultivation facilities and dispensaries to the Arkansas Medical Marijuana Commission. Of that total, there were 200 applications processed on the final day, leaving the state’s newest regulatory panel with the unenviable task of evaluating each one.

The Commission first began bids on June 30 for up to five marijuana growing facilities and another 32 dispensary applicants to operate up to 40 retail locations in eight quadrants of the state. Hardin said the Commission will decide at their next meeting on Oct. 16 if applications that don’t meet minimum standards for such requirements as residency and tax issues will be formally disqualified or accepted to proceed to formal review.

Hardin said the DFA legal team has also begun sifting through the 224 dispensary applications to determine if minimum residency requirements are met along with tax status. Besides the DFA legal team and the new five-member medical marijuana regulatory panel, the state Alcohol and Beverage Control (ABC) board and the state Department of Health also have roles in making policy and rules for the medical marijuana industry in Arkansas.

The ABC, which regulates the sale and use of alcoholic beverages and cigarettes in Arkansas, will promulgate rules and policies on how cultivation and dispensary operators will process, distribute and transport medical marijuana according to legislation approved by lawmakers earlier this year. The Health Department is responsible for approving identification cards allowing citizens to purchase Arkansas-grown, doctor-prescribed pot and other cannabis-related medical products at a dispensary.

LAWSUITS, APPEALS EXPECTED
At a recent symposium sponsored by the Arkansas Medical Marijuana Association, Little Rock attorney Alex Gray said he expects appeals from applicants who don’t move forward. An appeal process was created under legislation approved by the General Assembly during the 2017 session earlier this year.

“It is not any different than any other (Arkansas government) agency decision. If the Medical Marijuana Commission scores your application and it is not one of the winners, you do have rights to appeal that decision,” Gray told an audience of about 75 people attending the AMMA symposium at the Bowen School of Law at the University of Arkansas at Little Rock.

Gray noted that under rules promulgated by the Commission under Amendment 98 legalizing medical marijuana that was approved by voters in the November 2016 election, an application can be denied for several reasons, including failure to fully complete an application, failure to meet Health Department standards, and by providing false, incorrect or fraudulent information, or failure to pay all applicable fees. Gray, who practices at the law firm of Steel, Wright, Gray & Hutchinson in Little Rock, said the primary reason most applicants can file an appeal is simply receiving a score that is lower than the winners.

“That will be the section (of the rules) that will provide the basis for appealing the decision of the Commission,” he said.

The Little Rock attorney, whose firm includes former Democratic lawmaker Nate Steel and Republican Sen. Jeremy Hutchinson, R-Little Rock, said an application can also be disqualified because of a failed background check or “any other grounds” that serves the purpose of the Commission and the ABC.

“So, they kind of have a catchall at the end to give them a little latitude,” Gray said.

Gray warned before filing a lawsuit, applicants must request a hearing before one of the State Boards or Commission involved in regulating the state’s medical marijuana industry, or an impartial hearing officer or committee.

“You provide your proof and then the board or hearing officer will make a decision,” Gray said. “Well, oftentimes, the ABC, DFA or whomever is involved, they rarely decide that they are wrong. So, most of the time they will affirm their own decision, but as long as you get a written order … then you can file a lawsuit.”

Gray said that standard for overturning the Commission or ABC decision to deny an application is very high under state law. However, once appeals are exhausted, applications can file a further legal claim in Pulaski County Circuit Court or the county where their medical marijuana cultivation facilities or dispensaries will be located.

“It is a tough standard,” he said. “I’ve worked on several applications, and everybody feels their application is worthy and they should be granted a license. But you can feel that way and you very well may be right …, but even if that is the case that – it may not be sufficient for an appellate court or trial court to overturn the decision of the ABC.”