Commission adopts plan to hire consultant to review, score applications for medical pot retail licenses

The state Medical Marijuana Commission (AMMC) on Monday (July 2) approved a non-binding proposal to explore plans to hire an independent consultant to review and score over 200 dispensary applications to license the state’s first medical pot retailers.

The decision comes nearly two weeks after the Arkansas Supreme Court overruled a lower court decision to halt the implementation of the state’s medical marijuana industry, saying a Pulaski Circuit Court erroneously applied the law in blocking the award of the state’s first five licenses for pot cultivation greenhouses in a lawsuit brought by Naturalis Health of Little Rock.

That case was handed off to the Supreme Court on appeal after a March 21 decision by Pulaski County Circuit Court Judge Wendell Griffen declared Commission’s process of scoring and awarding Arkansas’ first licenses to five pot cultivators as “null and void,” citing the constitutional amendment approved by voters.

The five-person regulatory panel, created under a constitutional amendment approved by Arkansas votes in the November 2016 election, unanimously approved the measure to consider hiring an outside consultant after nearly 20 minutes of discussion on the “next steps” for the fledgling industry that has been stalled since the Pulaski Circuit Court injunction.

“The public has lost or is losing trust in this Commission,” said Dr. Stephen Carroll, who made the motion to hire an independent consultant to grade and score the 227 applications submitted to the medical pot regulators in September 2017.

The movement to hire an outside consultant began to pick up steam in April after Gov. Asa Hutchinson said he would prefer that the state hire an independent body to handle the scoring and award process for the cultivation and dispensary licenses. At the time, Hutchinson, who opposed the amendment before it was passed in 2016, said he had made his views known to state Department of Finance and Administration (DFA), the Alcoholic Beverage Control Board (ABC), and Commission Chair Dr. Ronda Henry-Tillman.

“There’s obviously frustration that’s out there, that we in the administration worked hard to implement the will of the people in the Medical Marijuana Amendment,” Hutchinson said, adding that “the will of the voters is really being frustrated right now.”

According to ABC Director Mary Robin Casteel, the proposal by the Commission must now be approved by the Arkansas Legislative Council, the influential bicameral committee that carries out the will of the legislature in between regular sessions. Casteel and her staff attorney told the AMMC board members they can put the proposal before the legislative panel at an Aug. 17 meeting. If approved by lawmakers on the joint interim committee, the DFA staff can then promulgate new rules that give the medical pot regulators the leeway to hire a consultant to handle the review and scoring process without losing final authority to oversee the process.

“You could have the rules drafted such that you have the authority at this point to seek the guidance of an outside consultant. Any consultants sought would be done so under the procurement laws of the state of Arkansas …, and no consultant recommendations or advice would be binding on the Commission unless a majority of the Commission said it was,” Casteel told the commissioners.

Over a year ago, the Legislature approved the proposed emergency and regular rules submitted by the DFA in the 2017 regular session. Under those rules that were enacted into law and signed by Gov. Hutchinson, the Commission cannot cede its authority to score and award cultivation and dispensary licenses unless they come back to the legislature to do so.

DFA spokesman Scott Hardin said he believes there is a lot of support in the legislature for the idea to hire an independent consultant due to all the legal wrangling over the past several months.

“I don’t think it is a major rule change at all, I think is a small change. But to be abundantly clear, we are going to run it through the (Legislature),” he said. “The idea has been out there to (hire) a consultant, and there is a lot of support from the top down.”

The Commission also will hold another meeting on July 12 to hear from state procurement officials on the necessary steps and costs for setting up the bidding process and timetable to hire an independent consultant before restarting efforts to get the state’s medical pot industry back on track.

Also, the state Supreme Court is expected to issue a final ruling on its decision to overturn the injunction from the Pulaski Circuit Court that blocked the implementation of Arkansas’ medical marijuana program on July 9. At that point, the medical marijuana regulators can continue any action that was underway or scheduled prior to the injunction.

The AMMC board first received the applications in December 2017 and completed the scoring process for the five cultivation licenses on Feb. 20. A week later, the Commission selected Natural State Medicinals Cultivation, Bold Team LLC, Natural State Wellness Enterprises, Osage Creek Cultivation, and Delta Medical Cannabis Company to grow and supply the state’s first legalized cannabis products to medical patients across the state.

At the time, the commissioners had hoped to immediately begin a similar award and scoring process for the dispensary licenses, but a restraining order by Griffen halted the proceedings amid a flurry of legal protests and complaints by several runners-up and also-rans for the highly-coveted cultivation licenses. Altogether, there were 95 proposals for the state’s first legalized greeneries to grow marijuana for use in cannabis-related products submitted to the Commission on Sept. 18. Of the 227 dispensary applications, the commission plans to award 32 licenses at up to 40 retail locations in eight zones across the state.

Before the Naturalis lawsuit, 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. All five had met the state’s requirement to pay a $100,000 licensing fee and post a $500,000 performance bond to begin construction on the state’s first cultivation facilities. Four of the five cultivators plan to build their greenhouses in the Arkansas Delta.

The AMMC board also briefly discussed getting guidance from the legislature on possibly hiring staff to directly represent the Commission as the agency’s public influence continues to grow. The Commission’s day-to-day operations are now handled by DFA and ABC staff, and the five directors selected by the governor and top Senate and House leaders are part-time, unpaid volunteers who serve two-year terms.

There was no discussion at Monday’s 30-minute meeting concerning Arkansas Supreme Court Chief Justice Dan Kemp’s decision to release the contents of a letter from Attorney General Leslie Rutledge that one of the five commissioners was offered a bribe by one of the companies hoping to receive of the one of highly-prized cultivation licenses. The AG’s office, which is investigating those allegations, has yet to release the name of the commissioner who reported the bribe attempt and has offered no timetable for the completion of its inquiry.