Garland County marijuana cultivation center could be $40 million boon; other runners-up mount legal challenges

by Roby Brock (roby@talkbusiness.net) 626 views 

A sixth place runner-up for a medical marijuana cultivation center in Garland County hopes an economic impact study of benefits to the region may persuade state officials to add at least one more additional nursery to the mix. Other runners-up for the state’s first coveted cultivation licenses are making legal arguments for reconsideration.

New Day Cultivation of Garland County and River Valley Relief Cultivation of Sebastian County tied for sixth place, falling just out of the running of the initial top five cultivation centers the state Medical Marijuana Commission approved two weeks ago. The commission limited its final choices to five centers, but the law allows a maximum of eight.

On Tuesday (March 13), New Day representatives shared with community leaders an economic impact study conducted by well-known Boyette Strategic Advisors. The study suggests that between 2019 and 2021, the local economy in and around Hot Springs could benefit to the tune of $40.7 million. Beyond that, a cultivation center could boost the Garland County economy by $41.5 million in the year 2022.

The report did not include the impact of the capital investment needed to establish the cultivation center, but it analyzed inter-industry spending from purchasers and producers, payroll impact, gross regional product, and the tax impact.

$13,304,298 – Contribution to Garland County economy
$9,116,661 – Total labor income
$1,159,440 – Total state and local taxes
$17,136,375 – Additional local industry sector input/output
$40,716,774 – Total impact

“New Day Cultivation anticipates total Phase I employment in cultivation of 42 positions, with a total associated annual payroll of $1,428,684. Additionally, Phase I manufacturing employment will be five, with an annual payroll of $290,000,” the report says.

When Phase II rolls in after the first 36 months of operation, the economic study says New Day would employ 107 in its cultivation operations with an annual payroll of $3,810,216. Manufacturing employment associated with the project would have grown to 15 with a payroll impact of $845,000.

“[The] one-year economic impact of Phase II employment is projected to be $41,502,503,” the report noted.

ARGUMENTS, PROTESTS & LAWSUITS
One concern raised by observers of the selection process is that four of the five top scorers for cultivation centers are centered mostly in the Delta. Two winners will locate in Jackson County, one in nearby Woodruff County, one in Jefferson County, and a final center in Carrol County.

To draw a line diagonally from Northwest Arkansas to Southeast Arkansas would leave the bottom half of that map without any cultivation centers, which could impact the cost to dispensaries in that region due to transportation costs.

The Garland County economic impact study was viewed positively by Sen. Bill Sample, R-Hot Springs, the chairman of the Arkansas Legislative Council . While he is not certain the commission should expand its five cultivation centers to the allowed eight, he does want to see his region represented.

“I don’t know if I want to see them open it up to eight, but I’d certainly like to see one go to Hot Springs and Garland County,” Sample said.

The Medical Marijuana Commission meets on Wednesday (March 14) in Little Rock to ratify its scoring results. The meeting will be well-watched as commissioners are likely to discuss concerns presented since their results were revealed and the expansion of licenses. Also, the panel may take up at least three complaints that have been filed to change the final results.

On Monday, Fort Smith-based River Valley Relief Cultivation alleged that fifth-place finisher Delta Medical Cannabis Company of Jonesboro provided “misleading, incorrect, false or fraudulent information” to the commission. They have asked the five-person panel to halt the final award of medical marijuana licenses until the claims are investigated.

Attorney David Couch representing Boll Weevil Farms of the Delta delivered a letter to the commission claiming his client’s application was not scored accurately. Couch, who led the successful medical marijuana amendment’s passage, said Boll Weevil should receive 22 more points, which would boost its finishing score to 434. That score would move Boll Weevil’s application into fourth place, putting it ahead of Osage Creek Cultivation and Delta Medical Cannabis Co.

Naturalis Health LLC filed a lawsuit against the commission and other state parties on Tuesday (March 12) in Pulaski County Circuit Court. The legal challenge requests a temporary restraining order and preliminary and permanent injunctive relief to “stay the issuance of medical marijuana cultivation licenses by the Commission until a full review can be completed and proper safeguards put in place, including but not limited to the appointment of an independent application review and selection committee, and a declaratory judgment finding the Commission failed to follow its Rules and violated relevant parts of the Arkansas Administrative Procedures Act.”

Claiming the commission’s decisions were “arbitrary and capricious, constituted an abuse of discretion, was without any rational basis, was plagued by unlawful and inconsistent procedures,” Naturalis Health said its rights to due process and equal protection under the 14th amendment of the U.S. Constitution were violated.

The lawsuit also makes claims that investors in several winning bids have tax liabilities. It also states the commission executed irregular scoring and failed to discount potential conflicts of interest. You can read the lawsuit here.

KATV’s Marine Glisovic contributed to this report.

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