Little Rock's first cannabis dispensary has set a tentative opening date of Nov. 7, ahead of state plans to punish medical marijuana outlets it sees as dragging their feet on starting operations. It has been nearly three full years since Arkansas voters approved patient use in November 2016.
Herbology, affiliated with Grassroots Cannabis of Chicago, is eager to open its outlet at 7303 Kanis Road, former home to Joubert's Tavern, according to Talley Wettlaufer, the company's vice president and head of retail. A pre-opening peek at the dispensary is scheduled for 5:30 p.m. Tuesday. "Obviously we have to go through the licensing and inspection process, but Nov. 7 is the grand opening goal," said Wettlaufer, a former marketing executive at J.Crew and Abercrombie & Fitch.
"This will be our 23rd dispensary," she told Arkansas Business in a telephone conversation Thursday. "We're finished with the buildout on the property, and we're excited to serve patients in Little Rock. This is the sixth state market we've been in, and so far they've all been medical marijuana states. Being in a new market lets us help a whole new set of patients."
The grand opening will come as the state moves to put added pressure on licensed dispensary companies to open and serve the state's growing ranks of qualified medical cannabis users, at last count 26,000 Arkansans.
Arkansas Beverage Control Director Doralee Chandler announced at an Arkansas Medical Marijuana Commission meeting Wednesday that new rules are in the offing to let regulators revoke cultivation site and dispensary licenses for operations that haven't opened by mid-2020.
The state also released a list of anticipated openings for licensed marijuana businesses, including three that list "mid-2020" as their likely opening dates: THC RX Inc. of West Memphis, River Valley Relief in Morrilton and Johnson County Dispensary in Clarksville. Another dispensary, Big Fish of North Central Arkansas in Heber Springs, lists "late spring 2020" as its likely time frame, and THV Rx Inc., a West Memphis dispensary, put its opening date as "unknown."
Of the 22 licensed dispensary companies yet to open their outlets, six told the state they plan to open next month, and five set timelines to open in December.
The state issued all dispensary licenses in January, and the 10 dispensaries that have opened since May have sold more than 2,159 pounds of medical marijuana worth more than $15 million. A breakdown of sales at each dispensary is below.
Chandler and other state officials say that additional dispensary openings are needed to drive competition and push cannabis prices down. At more than $400 an ounce, Arkansas' medical marijuana is among the costliest legal cannabis anywhere in the country.
"We are encouraging them to speed up every time we communicate with them," Chandler told the state's five medical marijuana commissioners. "We have also sent across rules and if 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."
The Herbology dispensary is 70% owned by Lindsey Lovett Estes of Fayetteville, but Grassroots Cannabis founders Mitchell Kahn and Matt Darin have a 4% investment between them, state records show.
Another dispensary less than a quarter-mile away at 900 S. Rodney Parham Road, Natural State Wellness Dispensary, was practically complete last week. Construction continues at Natural Relief Dispensary on Kiehl Avenue in Sherwood, co-owner Brian Faught said.
Wettlaufer of Herbology said the Kanis Road location will have the vibe of a "modern apothecary" with "herbologists" on hand to answer questions and walk patients through the medical cannabis process. "Most of our retail locations operate under the Herbology brand in a nod to the plant-based, natural essence of the products," she said. "As a culture that's how we think about the business. We have a passion for helping people."
A privately held company, Grassroots Cannabis does not report revenue figures. It agreed in July to a $875 million cash-and-stock acquisition offer from Curaleaf Holdings Inc. of Wakefield, Massachusetts, a publicly traded company that bills itself as the world's largest cannabis company by revenue. Regulatory approval of that merger would make the Little Rock dispensary one of 131 licensed to the combined company, and its 69th operating retail location.
"One advantage of being a multistate operator is that we can scale up operations quickly," said Wettlaufer, who predicted the Kanis Road shop will employ 15 to 20 people. Grassroots now has about 400 employees nationwide, and is hiring.
Embattled Dispensary
Meanwhile, a Hot Springs medical marijuana dispensary is fighting state fines even as its two owners battle in court filings, with the 60% owner accused in a lawsuit of banishing the 40% owner from the property and denying him his share of proceeds.
Bruce Simpson, minority owner of Green Springs Medical, which leads the state with about 30% of gross statewide cannabis sales, has sued auto dealer and majority owner Dragan Vicentic in Garland County Circuit Court. The lawsuit claims Vicentic ordered Simpson off the premises and cut him out of the business after Simpson refused a buyout offer. The suit also alleges Vicentic has defied orders from the state Medical Marijuana Commission.
Green Springs has sold 30% of the cannabis products consumed so far by Arkansas patients: 633 pounds out of a total 2,159 pounds sold as of Oct. 22, according to state records.
That's roughly $4.2 million in sales for Green Springs since it opened May 12. The dispensary has also rejected a $3,550 fine proposed by the state for numerous violations discovered by inspectors, calling for a hearing. Total legal marijuana sales statewide through Oct. 22 totaled $15.36 million.
Reached by Arkansas Business on Oct. 18, Simpson said he couldn't comment on the court case, beyond saying a court date has been set for March 19, and that he expects a fair hearing from "12 honest citizens" of Garland County. Vicentic did not return a call for comment, though his lawyer, Ryan K. Culpepper of Hot Springs, acknowledged the suit in a series of emails with Arkansas Business. In his answer to the court, Vicentic denied some of Simpson's allegations and alleged Simpson had made no financial investment in the dispensary and is presenting himself as a co-owner only because the permit application identified him as one.
The Arkansas Supreme Court appointed a special judge, Ted Capeheart, to come out of retirement to hear the case after Garland County's four circuit judges all recused themselves. Last week, Capeheart sealed records of a four-hour preliminary hearing on Simpson's request for an injunction forcing Vicentic to allow him in the business and to share profits. The ruling said public knowledge of evidence presented at the Oct. 7 hearing would risk security at the dispensary and reveal sensitive financial information.
State Weighs In
Scott Hardin of the Arkansas Department of Finance & Administration, which oversees the new medical marijuana industry's compliance with state rules, said the state holds no position on the Green Springs ownership dispute, but said both Vicentic and Simpson were listed as owners on the dispensary's state license application.
"As a result, ABC [the department's Alcoholic Beverage Control Division] issued registry ID cards allowing them access to work inside the dispensary," Hardin said, suggesting both men should be allowed in the facility, which is at 309 Seneca St. in Hot Springs.
"Absent a court order or joint resolution in which both owners agree to change existing ownership percentages, Mr. Vicentic and Mr. Simpson will remain on file at ABC as owners of Green Spring Medical," with both maintaining their registry ID cards, Hardin said.
The state spokesman also said the ABC recently issued the first set of violations to dispensaries, issuing notice to Green Springs, Hot Springs competitor Doctor's Orders, and Fiddler's Green, a dispensary in Mountain View. The violations cited against Green Springs included improper storage, a lack of video surveillance, failure to maintain biometric locks and failure to restrict access to sensitive areas.
"In each case, the dispensary had the option to accept the terms of a settlement offer" from the state, Hardin said, "or request an administrative hearing before ABC's director." Doctor's Orders, which has sold more than 150 pounds of medical marijuana since it became the first dispensary to open May 10, has accepted and paid the $3,550 fine. Fiddler's Green, which had sold 176 pounds of marijuana as of Oct. 13, also agreed and paid the fine.
"Green Springs requested an administrative hearing," Hardin said. "We've tentatively scheduled this hearing for Oct. 28. At this hearing, Green Springs is given the opportunity to discuss each individual violation."
After hearing testimony, Chandler will determine whether to dismiss some of the violations. Green Springs next appeal would be to the full board, Hardin said.
Total Arkansas Sales Through Oct. 22
- Suite 443 in Hot Springs (formerly Doctor's Orders dispensary) has sold 157.13 pounds of medical marijuana since opening on May 10.
- Green Springs Medical of Hot Springs has sold 633.31 pounds since opening May 12.
- Arkansas Natural Products of Clinton has sold 140.11 pounds since opening June 20.
- Greenlight Dispensary of Helena has sold a total of 143 pounds since opening June 27.
- Native Green Wellness of Hensley has sold 294.57 pounds since opening July 2.
- Fiddler’s Green of Mountain View has sold 202.06 pounds since opening July 11.
- The Releaf Center of Bentonville has sold 269.76 pounds since opening Aug. 7.
- The Source of Bentonville has sold 176.14 pounds since opening Aug. 15.
- Acanza of Fayetteville has sold 126.27 pounds since opening Sept. 14.
- Harvest of Conway has sold 17.27 pounds since opening Oct. 11.
Combined sales are more than 2,159 pounds worth $15.36 million, state officials said.
