AG Rutledge files appeal in medical marijuana proceedings

Attorney General Leslie Rutledge has filed briefs with the Arkansas Supreme Court raising legal questions in the state’s expedited appeal of a Pulaski County Circuit Court decision to block the award of medical marijuana cultivation center licenses.

In a voluminous briefing due to the state Supreme Court on Thursday (May 10), Rutledge and her senior staff made the argument that Pulaski County Circuit Court Judge Wendell Griffen erred on several key legal questions, including procedure posture, standards of review, standing, sovereign immunity and abuse of discretion. The AG’s office also expressed concerns that Griffen’s controversial March 21 restraining order was “overly broad.”

In addressing each legal issue one-by-one, Senior Assistant Attorney General Jennifer Merritt noted the importance of the state’s appeal due to the weight that Arkansas voters approved a constitutional initiative in the November 2016 election to speedily implement rules to allow a licensed doctor to prescribe medical marijuana to patients.

“The appeal is of substantial public interest due to the strong interest made clear by the people of Arkansas in adopting Amendment 98 to provide medical marijuana to persons who suffer from chronic, debilitating, and life-threatening health challenges,” wrote Merritt.

The AG’s filing comes nearly two weeks after the Arkansas Supreme Court granted the state of Arkansas’ request to take up an expedited appeal of Griffen’s decision in late March to block the issuance of five medical marijuana cultivation licenses across the state.

In his controversial decision, Griffen declared the state Medical Marijuana Commission’s (AMMC) process of scoring and awarding Arkansas’ first licenses to five pot cultivators as “null and void,” citing the constitutional amendment approved by voters. A lawsuit seeking to halt the process had been filed in Griffen’s court on March 13 by Little Rock-based Naturalis Health.

In his 28-page order – issued following a temporary restraining order filed March 14 preventing the regulatory panel from ratifying Arkansas’ first pot-growing licenses – Griffen rejected the process as requested by Naturalis Health. He ruled that the AMMC first disregarded an explicit requirement of Amendment 98 and its own rules requiring medical pot greenhouses not be operated within proximity of public or private schools, churches and daycare centers.

The Pulaski County judge also said the Commission failed to abide by its own rules to evaluate and score whether persons connected with license applications to operate medical marijuana cultivation facilities have been affiliated with entities whose corporate status has been revoked for failure to pay franchise taxes.

In addition, Griffen said the Commission’s decision-making process was compromised because “pecuniary relationships: between Commissioners (J. Carlos) Roman and (Travis) Story with Dr. Scott Schlesinger and Jay and Mary Trulove (of Osage Creek Cultivation) created the appearance of bias in violation of due process of law.

“On those points, Plaintiff’s challenges to the Commission’s actions and decisional process are well-founded,” wrote Griffen.

Rutledge, on behalf of the Arkansas Department of Finance and Administration, Arkansas Alcoholic Beverage Control Division, and Arkansas Medical Marijuana Commission (AMMC), filed the appeal on March 23 requesting the state’s high court to speed up the defendant’s appeal of Griffen’s ruling. The five winning companies selected by the AMMC to receive the state’s first medical pot licenses have also joined the state in its so-called interlocutory order, or an appeal that is made before all claims are resolved.

In the AG’s 630-page appeal, Merritt raised questions surrounding Griffen’s decision, including if the Pulaski County judge erred in consolidating the preliminary injunction hearing with the trial on the merits without notice to the parties, and if Naturalis had standing to challenge the Medical Marijuana Commission’s issuance of cultivation facility licenses to other applicants.

In addition, Merritt raised concern that the lower court abused its discretion in granting what she said was essentially “a permanent injunction to Naturalis based on erroneous findings of actual success on the merits and absent any factual findings of irreparable harm.”

Finally, the AG’s office questioned whether Judge Griffen properly decided on the issue of sovereign immunity, asking the high court if Naturalis is barred from suing AMMC, DFA and ABC due to recent rulings that the state can’t be sued under the Arkansas Constitution.

“Whether the staff of the ABC must independently verify factual assertions made under oath by applicants for medical marijuana cultivation facility licenses, may reasonably rely on tax clearance checks performed by the DFA, and whether the ‘appearance of bias’ standard governs cultivation licensing decisions are important issues needing clarification or development of the law,” stated Merritt.

She added: “Finally, the appeal involves significant issues concerning the construction and application of the Arkansas Constitution and state administrative regulations.”

In a one-page order on April 27, the Supreme Court did not rule on the merits of the case, but granted the appellant’s motion for an expedited schedule with the first briefings due today.

Justices Robin Wynne, Courtney Goodson, Shawn Womack and Rhonda Wood affirmed the decision. Chief Justice Dan Kemp and Justice Karen Baker dissented. Justice Josephine Hart did not participate.

LOUISIANA TO LEAPFROG ARKANSAS AS 1st SOUTHERN STATE FOR MEDICAL POT
Briefs from Naturalis Health and other intervenors in the case must be filed with the high court by May 22, while counter responses from the AG’s office and the five winning cultivations that were awarded licenses by the Commission are due on May 30. The high court is expected to hear arguments in June.

The state Supreme Court’s intervention in Griffen’s contentious ruling to halt the state’s process of awarding medical marijuana licenses temporarily prevents Arkansas from becoming the first southern state to enter the lucrative medical cannabis industry.

Arkansas could lose that position after Louisiana lawmakers took final steps this week to approve legislation to allow therapeutic marijuana for treatment of several diseases and disorders. Louisiana’s state Pharmacy Board has already approved licenses for nine drug stores in that state to sell medical pot products. That expanded program is expected to be available to Louisiana patients this summer.

In a pen-and-pad session with reporters at the State Capitol on April 16, Gov. Asa Hutchinson said the state had looked at “every option” on how to proceed with the issuances of licenses but they “bring you right back into court.” He said he expected losing applicants to file lawsuits, but he didn’t expect the courts to prevent the licenses from being issued.

“(Griffen) first said, ‘You can’t proceed. You’re enjoined from issuing the licenses.’ And then amended it that this is not an appealable order,” Hutchinson told reporters. “And then also said that, ‘I’m going to keep an eye on it and keep control over this and make sure the Marijuana Commission issues the licenses the way that I like it. That is an overly engaged judiciary that is trying to oversee all the details about an executive branch function.”

Before the Naturalis lawsuit on March 13, the commission was expected to ratify the scores of the five highest-scoring cultivators and to review several letters of protest presented by three of the 90 losing cultivators that participated in the highly-competitive sweepstakes for the state’s first legal pot cultivation facilities.

To date, the AMMC staff has only posted the scores of the top five cultivators that were awarded licenses at the February meeting. All five had met the state’s requirement to pay a $100,000 licensing fee and post a $500,000 performance bond to start construction on the state’s first cultivation facilities. Four of the 5 cultivators plan to build their pot greenhouses in the Arkansas Delta. They include:

• Natural State Medicinals Cultivation in Jefferson County
• Bold Team LLC in Woodruff County
• Natural State Wellness Enterprises in Jackson County
• Osage Creek in Carroll County
• Delta Medical Cannabis Company in in Jackson County