Legislative panel approves plan to hire consultant for medical pot dispensary applications

A legislative panel on Thursday (July 19) approved emergency rules allowing the state Medical Marijuana Commission (AMMC) to hire an independent consulting firm to review and score more than 200 applications to operate pot dispensaries, opening the door for Arkansas to possibly have medical cannabis products on the shelf by mid-2019.

In a meeting that lasted less than 30 minutes, the Arkansas Legislative Council’s (ALC) executive subcommittee also approved a proposal to allow AMMC to keep 300 losing applications for medical pot greenhouses and retail locations submitted to state regulators in September on hold for more than two years.

A third measure was also approved by the legislative panel that will allow medical marijuana regulators to develop, with the help of Arkansas Beverage Control Board (ABC) staff, new rules for a “double-blind” lottery in case of a tie for one of the highly-sought-after licenses for five pot cultivation centers and up to 32 dispensary locations across the state.

ABC Director Mary Ann Casteel told lawmakers in the overcrowded ALC meeting room at the State Capitol that the proposal to hire a consultant was necessary to score the 203 dispensary applications now in queue. She said the AMMC needs to move “expeditiously” to accomplish the will of Arkansas voters.

EMERGENCY RULES
“The emergency here for this particular rule is that (AMMC directors) wanted to seek an outside source to score the dispensary applications. We’ve had those applications since September and they would like to get moving on that as quickly as possible, so this third and final amendment would allow them to do that and hire a consultant subject to the procurement laws of the state of Arkansas,” said Casteel.

Following Casteel’s brief testimony to amend rules enacted by the 91st General Assembly after Arkansas voters approved the constitutional amendment to legalize medicinal marijuana in November 2016, several lawmakers expressed concerns about the lengthy process to make pot available to more than 5,000 medical patients with a doctor’s OK to purchase cannabis product for a qualifying health ailment.

Rep. Jim Dotson, co-chair of the bicameral ALC committee that represents the General Assembly in between regular sessions, quizzed Casteel as to why she felt lawmakers needed to adopt emergency rules to hire an outside expert to review the waiting dispensary applications.

“What is the particular time restraint that you are referring to that the (AMMC) is under?” the Bentonville Republican asked Casteel.

The ABC director explained to the Dotson that the terms of two commissioners on the five-person panel that regulate the state’s fledgling pot industry will expire in late 2018, two years after Arkansas voters approved the constitutional to legal marijuana for medical use in the fall election in 2016.

The five members of the commission were announced in December 2016 by Gov. Asa Hutchinson, former House Speaker Jeremy Gillam, R-Judsonia, and outgoing Senate President Pro Tempore Jonathan Dismang, R-Searcy. Dr. Ronda Henry-Tillman of Little Rock, appointed by Hutchinson, serves as chair. Gillam appointed Dr. Stephen Carroll, a pharmacist from Benton, and Travis Story, a Fayetteville attorney. Dismang appointed James Miller of Bryant and Dr. J. Carlos Roman, a Little Rock physician. Roman and Carroll two-year terms expire at the end of 2018.

“I don’t know if the commission has time to score those dispensaries as they sit before their terms expire,” Casteel told Dotson. “Conceivably they couldn’t get them all done (by November), and we can’t have commissioners scoring different parts of the application process.”

Casteel added: “That’s why we need the emergency to know which direction to take.”

PROCESS CONCERNS
Following Casteel’s explanation, incoming House Speaker Matthew Shepherd, R-El Dorado, peppered the ABC director about several complaints now before the AMMC commission concerning the scoring process for the cultivation facilities, possible conflicts of interests and other questions on alleged fraudulent applicants raised in a lawsuit brought by Naturalis Health of Little Rock earlier this year.

On July 10, the Arkansas Supreme Court overturned a controversial ruling by Pulaskic County Circuit Court Judge Wendell Griffen in March that declared the AMMC’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 state high court’s recent decision then put the five-person regulatory panel back in charge of the process of scoring medical marijuana applications again, leaving the commission possibly open to a volley of new complaints and legal threats from runner-up applicants.

Griffen’s order had postponed AMMC meetings for more than four months and had prevented the part-time regulatory board from moving ahead to ratify winners of the five cultivation licenses for pot greenhouses, or handing out new permits for retail locations to sell marijuana products to thousands of Arkansas patients with state-approved medical ID cards.

Casteel told lawmakers legitimate complaints to the AMMC board will be handled by the ABC Board’s investigative staff in the same manner as grievances concerning alcohol licenses. She told lawmakers that “letters of denials” won’t be sent to the long-list of also-ran companies who don’t receive licenses for cultivation facilities or dispensaries until those complaints have been adjudicated by the ABC staff.

Following Shepherd’s volley of questions, Sen. Bill Sample, R-Hot Springs, said he has asked for an opinion from Arkansas Attorney General Leslie Rutledge whether the application of one of the five winning cultivation licenses should be thrown out because the proposed site for a pot greenhouse is too close to a school.

Casteel said the ABC staff believes the application for a pot cultivation center near a high school on the campus of the Arkansas State University in Newport meets all the requirements of ABC regulations enacted by the legislature.

Two of the five cultivation award winners announced in February – Natural State Medicinals Cultivation and Natural State Wellness Enterprises – have announced plans to build pot greenhouses in Jackson County near Newport. The other winners include Osage Creek Cultivation, Bold Team LLC, and Delta Medical Cannabis Company Inc.

The ABC Director also told Sample that if the legislative subcommittee failed to approve the measure to hire a consultant, she didn’t believe the part-time regulators on the AMMC board would be able to score, review and award up to 32 dispensary licenses before the end of the year.

“The hope is that we would be able to hire a consultant as quickly as possible through the proper procurement channels,” said Casteel. “I don’t think the commissioner with their full-time jobs and everything else can score 203 applications by the time they go off the (AMMC board) in November.”

‘SEED IN THE GROUND’ BY DECEMBER
Following Casteel’s appeal, the legislative subcommittee quickly gave the AMMC board approval to begin the process to hire an independent consultant to score the waiting dispensary applications. The board is scheduled to hold a meeting next week to discuss the parameters for the bid guidelines to hire a national consulting firm.

At an AMMC board meeting last week, a DFA procurement official told AMMC directors that state procurement officers could prepare a bid proposal piggybacked with a cooperative contract arrangement with another state later this month if the legislative panel approved the proposal to hire a consultant.

After that, it would take up to 30-60 days to receive proposals from prospective bidders and then hire a consultant under the state’s “lowest-bidder” rules by end of year, officials said. After Thursday’s meeting, DFA spokesman Scott Hardin reiterated that the same timeline still stands.

“The timeframe as it stands right now and getting the licenses out, there’s a hope that these licenses are out the door by (November),” Hardin said. “Once they receive that license and they get an ABC agent there to check the box, they can put a seed in the ground by December and maybe open the doors by mid-2019.”

The AMMC first began accepting bids on June 30 for up to five marijuana growing facilities and another 32 dispensary applicants to operate up to 40 retail locations in eight quadrants of the state. At the Sept. 18 deadline, there were 322 applicants that submitted bids for cultivation facilities and dispensaries to the state’s newest regulatory agency.