Pulaski County judge halts medical marijuana proceedings; state officials suspend meeting

A much-anticipated meeting by the state Medical Marijuana Commission was postponed Wednesday (March 14) after Pulaski County Judge Wendell Griffen issued a temporary restraining order preventing the regulatory panel from ratifying Arkansas’ first pot-growing licenses awarded to five cultivators three weeks ago.

The restraining order by Griffen came amid a flurry of legal protests and complaints in the past week filed by several runners-up and also-rans for the state’s first batch of the highly-coveted cultivation licenses. Naturalis Health LLC of Little Rock filed the first lawsuit against the commission and other state parties on Tuesday in Pulaski County Circuit Court.

The commission had originally scheduled a meeting for 5 p.m. Wednesday at the headquarters of the Arkansas Beverage Control (ABC) board, where the agency’s panel of five part-time commissioners were 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.

However, Department of Finance and Administration (DFA) spokesman Scott Hardin said the temporary restraining order entered by Judge Griffen forced the meeting to be postponed.

“A new meeting date will be confirmed by the commission pending further guidance from the court,” he said.

In its complaint, Naturalis Health alleges the regulatory panel’s “findings, conclusions, decisions and overall process” to select the winning applicants to operate the cultivation facilities were “arbitrary and capricious.” In his two-page brief, Griffen acknowledged that Naturalis Health has sufficient legal grounds to halt the commission’s proceedings.

“The Court hereby finds that the … complaint asserts facts showing a substantial likelihood of success on the merits regarding violation of the Administrative Procedures Act, due process and equal protection and that Naturalis Health … will suffer irreparable harm absent entry of a temporary restraining order,” Griffen wrote.

Under the court’s ruling, the Department of Finance and Administration, the state Alcoholic Beverage Control (ABC) division, the Medical Marijuana Commission and associated staff and officers are bound from moving forward with its regulatory proceedings until further notice.

BIG CROWD, PROTESTS AND PACKED AGENDA
The now postponed commission meeting was expected to draw another overflow crowd to the tiny ABC board’s headquarters in Little Rock, across the street from the State Capitol. Besides ratifying the scores of the five highest-scoring cultivators, the panel was also expected to review and discuss letters of protest presented by three of the 90 losing cultivators that participated in the highly-competitive sweepstakes that began in September for the state’s first legal pot greenhouses.

One of those protest letters came from River Valley Relief Cultivation of Fort Smith, which alleged Monday that fifth-place finisher Delta Medical Cannabis Company of Jonesboro provided “misleading, incorrect, false or fraudulent information” to the commission.

“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.”

Like River Valley, Mildred Barnes Griggs, chairwoman of Little Rock-based Delta Cannaboid Corp., also filed a petition with the commission requesting a stay of the Feb. 23 decision to award licenses to the following top five cultivators:
• 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

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 and New Day Cultivation of Garland County received a score of 427.5, just out of running for one of the five licenses. Delta Cannaboid and Southern Roots of Glenwood rounded out the top ten as Natural State Wellness had two winning applications.

The final protest the commission was to consider Wednesday came from Carpenter Farms Medical Group, which applied to build a cultivation facility in Lincoln County near Grady. The owner of planned pot greenery, Abraham Carpenter Jr., had filed a petition to publicly confirm his partnership’s application score.

Hardin also noted that the commission was expected to clear up speculation that some of the winning applicants had multiple tax delinquencies. That issue was raised by Rep. Scott Baltz, D-Pocahontas, who sent to DFA Director Larry Walther a request for information alleging that several of the top 10-scoring applicants are “rumored to not be in compliance” with the 2017 medical marijuana rules enacted by the legislature. DFA Revenue Commissioner Walter Anger denied the lawmaker’s demands, saying state tax officials would not respond to a request based on people or entities ‘rumored not to be in compliance.’”

Hardin also has 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 that in the future, but not now. State rules enacted by lawmakers allow up to eight cultivation facilities, but the commission has chosen to limit the number licenses to only five.

Other business on the commission’s long agenda included confirmation that 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.

Griffen’s decision is also expected to push back the commission’s plans to use the same process to score and award 32 dispensary licenses to operate up to 40 retail locations in eight quadrants of the state. According to the commission’s staff, there are 227 dispensary applications, including many by the same companies that sought cultivation permits.

At the February meeting, the five commissioners said it will likely take at least an additional two to three months for them to review and score the dispensary applications and then award the licenses for those retail establishments by the summer.