River Valley Relief denied effort to seek trial in license loss litigation, will appeal

The future of 75 jobs and an $8 million marijuana cultivation center in Fort Smith was the focus of continued legal filings in the Pulaski County Circuit Court, with attorneys for River Valley Relief (RVR) unable to seek a day in court for the company’s owners.

Pulaski County Circuit Judge Herbert Wright ruled on Nov. 3 in favor of 2600 Holdings, claiming that RVR was erroneously granted a cultivation license. On Monday (Nov. 21), Judge Wright denied two motions from RVR asking the court for a new trial.

Attorneys for 2600 alleged that in June 2020, the Arkansas Medical Marijuana Commission (MMC) illegally granted RVR owner Storm Nolan a license during a second round of awarding cultivation licenses. The action was illegal because the incorporation in Nolan’s first application was no longer valid, and the proposed center was too close to the Sebastian County Juvenile Detention Center, according to the complaint filed by 2600. The law regulating Arkansas’ medical marijuana requires centers to be at least 3,000 feet away from a school, church or daycare.

The Arkansas Department of Finance and Administration (DFA) rebutted 2600’s complaint with a 36-page filing.

“Everything about the Plaintiff’s lawsuit is wrong – the wrong Plaintiff, the wrong parties, the wrong time, and the wrong arguments. There is no justiciable controversy for the Court to address. 2600 Holdings, LLC is not the real party in interest because it never applied for and cannot hold a medical marijuana cultivation license. Even if it were the right party to bring this suit, the Plaintiff failed to name and serve the eighth license holder, a necessary party in interest,” DFA noted in the introduction of its filing before Judge Wright’s Nov. 3 order.

Wright disagreed with DFA and noted in his ruling that 2600 has proven it should be given relief, and the MMC acted outside its authority – ultra vires – in granting the license to RVR.

2600 ACTIONS
Abtin Mehdizadega, with Little Rock-based Cross, Gunter, Witherspoon & Galchus, the law firm representing 2600 Holdings (aka Southern Roots), on Nov. 15 filed a motion to prevent the MMC and MMC Director Doralee Chandler from conducting a Nov. 28 hearing to consider the revocation of Nolan’s license. Mehdizadega argues that the court has already ruled, and the MMC has no say in the matter.

“Said another way, Director Chandler is operating under the assumption that she and her executive branch board will now sit in appellate review of this Court’s Order. … Director Chandler’s Notice of Hearing demonstrates the State has no intention of complying with the Court’s Order anytime soon, or even at all,” noted part of Mehdizadega’s filing.

Mehdizadega also requested in a separate filing that the court force state officials to expedite actions to revoke the RVR license. Part of that request included a Nov. 22 deadline for the court to issue an “Emergency Motion to Enforce,” but no motion yet appears in the court docket report.

“There is no disagreement among the parties as to what must happen – revocation of RVRC’s license. Indeed, on November 7, 2022, Defendants filed a letter with the Court representing that they were taking the ‘necessary’ steps to revoke RVRC’s license,” Mehdizadega noted in the filing seeking the emergency order.

DENIED MOTIONS
Matthew Horan, an attorney with Fort Smith-based Smith, Cohen & Horan, the law firm representing RVR and Nolan, on Nov. 17 requested in four separate filings a motion to intervene, a motion for a new trial, and two supporting briefs. The primary focus of Horan’s filings is that RVR was not given due process because it was blocked from being a party in the action that resulted in Judge Wright’s Nov. 3 ruling.

Horan wrote that it is “imperative to allow Nolan (and River Valley) to intervene so as to be able to protect their rights, … and then appeal.” He said Nolan paid a $100,000 fee in 2021 to obtain the license and a $100,000 fee in 2022 to renew the license before 2600 Holdings filed its action against the MMC. He also said Nolan and RVR held the license but were not able to defend themselves in the court, making them an “absent party.”

“The absent party held a license (and a permit) prima facie. To deprive the absentees of a license without Due Process is a constitutional violation, condemned by the Fifth Amendment, and by Article 2, Section 8 of the Arkansas Constitution.”

He also noted that MMC rules require Nolan to have a hearing before revocation of a license, “and the Plaintiff this week insists that even these procedural protections be taken from Movants.”

“As a result, Nolan and River Valley stand to be deprived of due process without notice, hearing, or opportunity to be heard,” Horan wrote, adding that RVR has around $6 million in processed product that could be a hardship on the industry if the action against RVR prevents the product from getting to the market.

However, Judge Wright said his ruling of Nov. 3 stands and Nolan “remains a non-party to this case.” Nolan told Talk Business & Politics that he plans to appeal the decisions by Judge Wright.