Arkansas Alcoholic Beverage Control Division Director Doralee Chandler revoked the state license of Fort Smith medicinal cannabis cultivator Storm Nolan on Monday just minutes after he made a detailed 45-minute case for keeping it.
The revocation by Chandler of the ABC, which oversees licensing compliance under Arkansas’ medical marijuana legalization laws, came in the wake of a stern finding by a Pulaski County circuit judge who said that the cultivation company, River Valley Relief Cultivation LLC, had received its license improperly. The judge, Herbert Wright Jr., had found in favor of another cultivation company that sued to have the license pulled, 2600 Holdings of Little Rock, doing business as Southern Roots cultivation.
“The decision of the director is to revoke the permit,” Chandler said after Nolan’s testimony and a five-minute recess. She said a written order would be forthcoming, then adjourned the meeting.
Nolan, a Fort Smith hotelier, had received the last of eight medical cannabis grow licenses and was cleared by the state to begin growing marijuana in August 2021. He was not a party to the 2600 Holdings lawsuit, which named the ABC and its parent agency, the Arkansas Department of Finance & Administration, as defendants, along with the Arkansas Medical Marijuana Commission.
Monday’s ABC hearing was Nolan’s first opportunity to defend his licensing, and he said in a statement that he is appealing Chandler’s decision.
“River Valley Relief Cultivation has appealed the Pulaski Circuit Court Decision to the Arkansas Supreme Court,” Nolan said in the statement after a brief phone conversation with Arkansas Business. “RVRC has asked that proceedings be stayed until the appeal is heard. We await the decision of the Supreme Court.”
Under questioning by one of his attorneys, Joseph Falasco, Nolan testified Monday that his grow operation was never within 3,000 feet of a school, one of the allegations on which the revocation decision rested, and that the state fined him $15,000 for a corporation name discrepancy between the LLC on his application and the name of the company now growing marijuana.
He testified that the fine should have pre-empted further state punishment on the basis of that flaw, citing Arkansas law. Judge Wright had ruled Nolan’s objections moot in court last week.
Chandler’s ruling was somewhat expected, considering the judge’s order, but still was a blow to Nolan, who said he had invested $8 million in building his marijuana cultivation facility near the Fort Smith airport and would be forced to let $6 million worth of marijuana go to waste. He also said 75 employees stand to lose their jobs.
Nolan forcefully testified that he never had any indication that a county juvenile detention facility near his operation would be considered a school. Instead, he said his team had done considerable due diligence to confirm that it wasn’t operated by a public school district, which he and his legal team contended was the legal basis for considering a facility a school under state setback requirements.
He added that the detention center itself was more than 3,000 feet from his facility’s front door, meaning the site had always been legitimate.
“We did a bunch of legwork with the Arkansas Department of Education, with Sebastian County and with Fort Smith public schools to take it to the bottom of this,” Nolan said. “That this facility was not being operated by a public school district. What's not a matter of record is I had conversations with the administrator of Fort Smith public schools, and also the president of Fort Smith School Board, who said this was not one of their schools.”
Nolan testified that all of River Valley’s paperwork was filed properly, and that a corporate name change that the judge viewed as a fatal flaw in his license application shouldn’t be held against him twice, once as the subject of a $15,000 check that the state cashed, and again as a reason for revoking his license.
Those arguments clearly did not sway Chandler, who had been accused by the judge of showing undue deference to Nolan in the licensing process. During the hearing, Chandler repeatedly instructed Nolan to stick to the details of his own licensing, and to stop introducing testimony on other licenses and applications.
The state’s licensing process has been riddled with inconsistencies and lawsuits — and even accusations of outright bribery — since Arkansans voted to legalize medical cannabis in November 2016.
State spokesman Scott Hardin has said the process for revoking a license requires a hearing, and Chandler’s decision may be appealed to the agency’s board. Chandler was the ABC’s sole representative at Monday’s hearing, Hardin told Arkansas Business.