Fort Smith cultivator protests state’s medical marijuana licensing awards

One of the sixth-place finishers in the highly-competitive sweepstakes for one of Arkansas’ five prized pot-growing licenses has filed a protest with the state Medical Marijuana Commission ahead of the regulatory panel’s much anticipated meeting on Wednesday.

In a letter from Wright Lindsey Jennings attorney Erika Gee, River Valley Relief Cultivation of Fort Smith alleges that fifth-place finisher Delta Medical Cannabis Company of Jonesboro provided “misleading, incorrect, false or fraudulent information” to the commission. The Little Rock attorney representing the Fort Smith partnership then asks the five-person panel to halt the final award of medical pot licenses until the claims are investigated.

“We would like the commission to delay the final awarding of the licensees until they have a chance to check the top applications for misleading, false or fraudulent information,” said Storm Nolan, spokesman and one of the key investors for River Valley. “Up to this point, there’s been no mechanism for the commissioners to be able to ascertain the veracity of the information in the applications provided to them.”

According to Gee’s complaint, Delta Medical’s application revealed a number of “representations” [that] appear to be false.” For one, the complaint states that the Jonesboro partnership falsely bolstered the background and qualifications of its cultivation team, noting that one employee misrepresented his experience as an owner of a medical marijuana business in Colorado.

According to state business filings and redacted AMMC submissions on the top 10 applicants, Delta Medicinals’ largest investors are affiliated with three limited liability companies (LLCs) based in Northeast Arkansas. Prominent Jonesboro resident and business owners Dr. John and Missy McKee and Ray Osment are listed as part owners of Valentine Holdings LLC. They could not be reached for comment late Wednesday evening.

Following are the five companies selected to blossom the state’s newest industry from the startup stage to an expected $70-million-dollar industry by 2025.
• Natural State Medicinals Cultivation in Jefferson County
• Bold Team LLC in Woodruff County
• Natural State Wellness Enterprises in Jackson County
• Osage Creek Cultivation in Carroll County
• Delta Medical Cannabis Company in in Jackson County.

New Day Cultivation in Garland County tied for sixth place on the commission’s list with River Valley Relief Cultivation of Fort Smith.

To date, the AMMC staff has only posted the scores of the top five cultivators that were awarded licenses at the February meeting. Under the commission’s 500-point scoring system approved by the state legislature nearly a year ago, Natural State Medicinals of Little Rock easily had the highest score at 486 with all five commissioners giving the Little Rock cultivator marks between 90 and 100.

None of the other top five applicants graded higher than 445, or an average score of 89 from each commissioner. Delta Medical scored 432 out of possible 500 for its proposal to build its cultivation facility near Newport in Jackson County. River Valley received a score of 427.5, Nolan said, just out of running for one of the five licenses.

The letter to the AMMC from River Valley’s attorney comes only two days before the regulatory panel’s part-time commissioners are expected to ratify the scores and vote to officially accept the five applicants as the state’s first cultivators to grow and supply medical cannabis products for approved Arkansas patients or care providers.

RUMORS, INNUENDO AND ANONYMOUS COMPLAINTS
Since the days before and after the Feb. 23 meeting, the commission and media have been inundated with a rising cacophony of complaints and rumors that reached a peak over the weekend. One anonymous source sent out a missive on Friday alleging that the commission “never checked with the DFA (state Department of Finance and Administration) regarding delinquent taxes of the cultivator applicants.”

The email correspondence, sent by a person with the pseudonym “George Anon,” included a two-page letter that Rep. Scott Baltz, D-Pocahontas, sent to DFA Director Larry Walther alleging that several of the top 10-scoring applicants for medical marijuana licenses are “rumored to not be in compliance” with the 2017 rules concerning the cultivators’ application, which in some cases numbered well over 1,000 pages.

Noting his General Assembly bona fides, Baltz’s letter requests that Walther and the DFA staff provide documentation that the top 10 medical pot applicants followed the rules enacted by the legislature a year ago. Baltz asked that DFA officials send the letter of compliance to him, all five AMMC board members and Gov. Asa Hutchinson ahead of the commission’s planned meeting on Wednesday that begins at 5 p.m.

In response to Baltz’s letter over the weekend, DFA spokesman Scott Hardin sent Talk Business & Politics a copy of the Northeast Arkansas lawmaker’s correspondence to Walther and a reply from DFA Revenue Commissioner Walter Anger denying the request for information.

“As explained more fully below, confidential tax records include not only tax returns required to be filed with the DFA, but also any records that are derived from information on those returns,” wrote Anger. “Additionally, as you note, this request is based on people or entities ‘rumored not to be in compliance.’”

Three days earlier, Hardin also shot down speculation that some non-winning applicants have lobbied lawmakers to push the commission to expand the number of cultivation licenses beyond the five initial winners, adding that DFA may look at in the future, but not now.

“While the commission is approved to issue a total of eight cultivation licenses, it was determined that five would adequately service Arkansas’ needs,” Hardin said. “Should the need arise in the future for additional cultivation facilities, the commission has the option to open a new application period. There is obviously a tremendous amount of interest from applicants in the potential for additional licenses.”

Hardin continued: “There are those encouraging the commission to consider issuing the three additional licenses immediately. However, the plan has been and remains five total cultivation licenses at this point. Considering three additional licenses now is contrary to the rules and procedures established by the commission.”

As of Friday, all five of the winning cultivators had met the state’s requirement to pay a $100,000 licensing fee and post a $500,000 performance bond within seven days. At Wednesday’s meeting, Hardin said the commission is expected to discuss many of the swirling concerns raised by some of the 95 applicants and others that the scoring by the five-person regulatory panel was inconsistent and prejudicial.

Besides River Valley, the remaining top 10-scoring applicants include New Day Cultivation of Garland County, Delta Cannabinoid of Little Rock, and Southern Roots of Glenwood.