Medical marijuana regulators may revoke licenses of those who fail to open after one year

The director of the Arkansas Beverage Control Board (ABC) said on Wednesday (Oct. 23) that agency officials may rewrite state medical marijuana rules that would allow regulators to revoke licenses for cultivation and dispensary owners that have not opened by mid-2020.

At the monthly meeting of the state Medical Marijuana Commission (MMC), ABC Director Doralee Chandler told the five-person regulatory panel there is growing concern medical marijuana growers and retailers are not moving expeditiously enough to provide cannabis to the nearly 26,000 Arkansans with a malady that qualifies for treatment.

“We are encouraging them to speed up every time we communicate with them,” said Chandler. “And we have also sent across rules and it is not set in stone from interviews that I have done that we are in the process of attempting to promulgate rules that will provide for an opportunity if they do not get up and in operation that would allow us the ABC board and myself to revoke those permits.”

It has now been nearly three years since Arkansas voters backed marijuana for medical patients. Under rules approved by the legislature in 2017, state regulators approved licenses for five cannabis cultivation facilities and 32 retail dispensaries. That capacity can be expanded, if necessary, for up to eight marijuana greenhouses and 40 dispensaries.

Four months ago, MMC Chair Dr. Ronda Henry-Tillman and other MMC directors asked Chandler and ABC’s legal staff to investigate why there are still only a handful of cultivators and retailers in operation. The regulatory commission also asked the ABC staff to peruse state law to find out if regulators can impose sanctions if further delays continue.

The MMC board christened the state’s medical marijuana industry in late February 2018 by awarding growing licenses to five cultivation startups, located mainly in the agriculture-rich Arkansas Delta region. Bold Team LLC in Cotton Plant first received approval from ABC’s Enforcement Division in early January 2019 to launch marijuana-growing operations. The south Arkansas cultivator made its first delivery to Doctor’s Order in Hot Springs in early May.

Natural State Medicinals Cultivation in Jefferson County also delivered its first cannabis product on May 31 to Hot Springs-based Doctor’s Orders RX. Osage Creek Cultivation LLC, located in Berryville, delivered its first marijuana crop to market earlier this summer. The remaining two cultivators, Natural State Wellness Enterprises and Delta Medical Cannabis Company in Jefferson and Jackson counties, respectively, are expected to open their greenhouses by year-end, said Chandler

Concerning the dispensaries, the MMC board’s selection criteria allows for four retailers in each of the eight quadrants of the state, mostly clustered near urban centers or county seats. On May 10, Doctor’s Orders RX was the first dispensary to receive clearance from ABC’s enforcement division to sell cannabis products to Arkansans with a doctor-approved, state-issued medical marijuana cards.

Two days later, Green Springs Medical dispensary, also located in Hot Springs, was the second medical marijuana retailer to receive approval from state regulators to put cannabis products on the shelf in Garland County’s largest city.

“We now have six that estimated to open in November 2019, five estimated to open in December, (and) eleven have indicated that will be open in 2020,” Chandler said of the 22 retailers that have not held grand openings. She also noted two quadrants of the state, Zones 3 and 8 in the northeast and northwest corners of the state, respectively, do not yet have medical marijuana dispensaries in operation.

All greenhouses and cannabis storefronts approved by state regulators expire June 30, 2020. The medical marijuana commissioners must approve those licenses at 60 days before the mid-2020 deadline, Chandler said at Wednesday’s sparsely attended meeting.

“So, it would be at that point that you would have the opportunity if they were not up and operational to make the election to not to renew that permit,” Chandler told Henry-Tillman and the four other MMC board members. “It is solely within the discretion of the commission to make that determination. We will be sending out renewal notices to those applicants in late February or early March.”

Under the 2016 act approved by voters and subsequent legislation approved by lawmakers in the 2017 regular session, the MMC board does not have the power to summarily revoke licenses. Between now and early 2020, however, Chandler said ABC staff plans to promulgate rules that will allow state regulators to rescind licenses for operators that have failed to open for business.

Once those rules are completed, Chandler said, they will be submitted to the governor’s office and then brought before the Arkansas Legislative Committee for final approval. The final step in the promulgation process is public comment, said the ABC director, adding the circulating draft of the new rule will allow the ABC staff to revoke licenses for greenhouses and retailers not open after 365 days.

“If they are not commencing operations, they will be considered abandoned,” Chandler said of the one-year grace period. “These rules are in the promulgation process. They are not in place now.”

“Given the rule promulgation process, we’ve been through that before and that is not a short process,” responded MMC Commissioner Travis Story, a Fayetteville attorney.

In other business before the panel, the MMC board approved a measure to provide support for the Arkansas Center for Health Improvement (ACHI) in obtaining data from the state’s medical marijuana tracking system. A 2017 amendment to the Arkansas Healthcare Transparency Initiative Act added several new data elements to the state claims database, including medical marijuana qualifying patient data.

During the hourlong meeting, ACHI President and CEO Dr. Joe Thompson discussed the study that will be conducted to determine the long-term results and benefits of medical marijuana in Arkansas. Through a state contract, Thompson said Arkansas is already the first state to gather information on 18 qualifying conditions and symptoms for which a patient may qualify for medical marijuana.

That data, along with coverage sources and demographics of individuals registered for medical marijuana, can be shared by ACHI with the National Institutes of Health for medical research purposes, he said. According to the Arkansas Department of Health, 25,905 medical marijuana registry cards have been approved for patients and caregivers.