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Arkansas Marijuana Finally Set to RollLock Icon

10 min read

Arkansas voters approved medicinal marijuana in November 2016, then passed the idea on: Oklahomans approved medical cannabis sales and use last June, 19 months later.

But by fall, 36,000 Oklahoma patients were cleared to buy and use medical marijuana, and customers were crowding dispensaries.

In Arkansas, 26 months after 53 percent of voters acted to change the state constitution in favor of medical cannabis, patients still wait. But that could end soon; the state’s Medical Marijuana Commission voted last week to approve 32 dispensary licenses, a major hurdle, and Gov. Asa Hutchinson says medical marijuana will be on sale by April.

When that happens, a potential $100 million-a-year Arkansas industry is poised to emerge from a complex and harshly criticized regulatory landscape.

“While some have complained that the process has taken too long,” the state took time “to get this right,” Hutchinson told radio listeners last week. “Also, a state judge stopped implementation for a long period of time. Now the independent commission is back on track.”

As Arkansans waited, the $10 billion legal marijuana industry in the United States charged ahead. Thirty-three states boast medicinal programs, and 10 of those allow recreational use by adults.

Arkansas imposed a far stricter regulatory system than Oklahoma, where production and sales permits were as easy to get as a business license, and employers and human resources professionals here are still looking for certainty. They want to know when to impose new policies for workers with marijuana prescriptions — particularly those in safety-sensitive jobs.

Now apparently just months from the state’s first legal harvest, medical marijuana advocates are hopeful but wary, recognizing that many Arkansas leaders once opposed any cannabis legalization.

Hutchinson acknowledged as much.

“When I was administrator of the Drug Enforcement Administration, I never dreamed I would be a governor with the responsibility of implementing the dispensing of medical marijuana,” he said in a radio address last week. “But the voters approved medical marijuana, and I am committed to making it work.”

7,000 Await Medicine
When medical cannabis products go on sale in April, Hutchinson said, they will be available to the nearly 7,000 Arkansans approved to use it for conditions ranging from cancer to fibromyalgia to intractable pain. Leaders like David Couch, the Little Rock lawyer who wrote the medical marijuana amendment, predict that 60,000 or more Arkansans will eventually be certified for cannabis. New Mexico, which Couch used as a template for Arkansas’ system because of similarities between the states, has 68,000 medical cannabis users, and total sales for 2018 were expected to top $100 million.

The Arkansas commission has approved five cultivation centers around the state, which are frantically getting their multimillion-dollar operations up and running, and on Wednesday the state panel approved 32 dispensary sites from among 200 applicants. (See last item in timeline.)

But patients’ advocates, industry groups and legal voices say the path to relief has been unnecessarily long and that roadblocks remain — including legal challenges from unsuccessful cultivation-site applicants who say they were abused by a muddled selection process. Wednesday’s unanimous decision to accept the dispensary scores recommended by the Public Consulting Group of Boston will likely bring more action from spurned applicants.

Hutchinson’s Rundown
So where does the state’s medical cannabis system stand?

“The Arkansas Department of Health has certified nearly 7,000 patients who have at least one of the 18 medical conditions that qualify for treatment with medical marijuana. The first medical-grade marijuana may be available in Arkansas by April,” the governor said, adding that legal marijuana cards will be issued to them by mid-February.

“All I can say is that it’s about time,” said Melissa Fults, a Little Rock native and medical cannabis champion who directs the Drug Policy Education Group, an advocacy organization. “They’ve done everything they can possibly do to delay it, so we can only hope.”

Brandon Thornton, a Little Rock doctor of pharmacy and CEO of one of Arkansas’ first medical marijuana testing businesses, Steep Hill Arkansas, stands to profit as cultivation sites and dispensaries pay for state-required testing of their products for purity and potency. He understands patients’ frustration, but sees daylight ahead.

“Cannabis is coming soon. We promise!” he told Arkansas Business before showing off equipment “worth seven figures” at Steep Hill’s headquarters in west Little Rock. “Cultivators are on track to have medical cannabis available in a few short months.” Thornton noted that all cultivation and dispensary sites will be majority-owned by Arkansans and that the industry’s economic impact will spread far beyond the 37 businesses that will grow and sell cannabis. “Many new startups in banking, security and compliance are opening and hiring staff.”

The 37 cultivation and dispensary sites will need more than 500 workers nearly right away, estimated Robert deBin, president of the Arkansas Cannabis Industry Association. He and Couch predicted last year that the Arkansas industry could eventually employ 1,500, and that peripheral jobs will magnify the economic impact.

Brandon Thornton of Steep Hill Arkansas offers an industry view with 5 Key Facts About Medical Cannabis in Arkansas.

Thornton, also an ACIA board member, said the group is “all about patients, and promoting the industry’s interests,” including lobbying at the upcoming legislative session. He’s encouraged that health professionals are adding cannabis to their treatment plans. “From Dr. Sanjay Gupta to local physicians, cannabis is gaining acceptance.” He said perceptions of medical cannabis use are shifting. Many marijuana health products have little or no THC, the plant’s psychoactive chemical, relying on other cannabinoids for their health effects.

“And politically, it’s no longer even a left vs. right issue,” Thornton added, pointing out that Congress’ legalization of the hemp plant in the recent agriculture bill was promoted by none other than Mitch McConnell, the GOP Senate majority leader.

Still, Couch laments the time and money lost as Arkansas dithered, in his opinion, and other states plunged ahead. “All that revenue lost because we still do not have marijuana available to Arkansas patients,” he said in response to developments in Oklahoma. Arkansas will reap its regular 6.5 percent sales tax on marijuana, and Couch chuckled at the fact that the program’s rollout has been so slow that an additional 4 percent excise tax has already passed its 18-month sunset date. That tax may be reinstated by the Legislature.

Business Concerns
Couch also fears that demand might overwhelm supply as the system gets started. Referring to long lines of people waiting to enter Wednesday’s marijuana commission meeting, he remarked on Twitter: “Can you imagine how long the line will be when the first dispensary opens?”

Attorney Stuart Jackson of Little Rock, who specializes in employment law, said many businesses are seeking certainty on the timing of medical marijuana’s rollout. “They’re developing policies on how to treat employees who have been certified for medical marijuana,” he said, especially for jobs where marijuana’s effects might compromise safety. “Those businesses are trying to decide when to roll those policies out.”

He expects medicinal cannabis to be on the market in Arkansas pretty soon, but fears it could be delayed by “some new legal challenge to the cultivation center selection process.” Earlier challenges to the cultivation selections were dismissed by the Arkansas Supreme Court, which found the complaints premature since no licenses had yet been issued. Once all licenses are issued, more lawsuits are likely.

“That may not totally stop the supply of medical marijuana available to those with certifications,” Jackson concluded, “but it will certainly impact it.”

Slowly Going to Pot: Medical Marijuana’s Long Timeline in Arkansas

November 2012

Arkansas voters narrowly defeat a ballot measure to legalize medical marijuana, but the support of 47 percent persuades David Couch, a Little Rock lawyer and the initiative’s leader, to vow to try again. Couch, who also led Arkansas’ initiative to raise the minimum wage, which was approved by voters in November, predicts big demand when medical marijuana becomes available. “Can you imagine the first dispensary opening? They’ll sell out in a day,” he told Arkansas Business.


November 2016

Arkansas becomes the 29th state and the first in the Bible Belt to approve the sale and use of medicinal cannabis, passing Issue 6 by a 53-47 percent margin that might have been higher if a competing but nullified marijuana measure had not remained on the ballot. The measure comes to be called Amendment 98. Three state agencies are enlisted to oversee the program, with a state commission governing licensing for cultivators and dispensaries; the state Department of Health registering patients and caregivers and setting testing standards; and the Alcoholic Beverage Control Board governing security, the licensing of marijuana industry workers and overall enforcement.


December 2016

Gov. Asa Hutchinson and legislative leaders appoint the inaugural Arkansas Medical Marijuana Commis-sion: Dr. Ronda Henry-Tillman, a Little Rock surgical oncologist; Stephen J. Carroll of Benton, COO of Allcare Correctional Pharmacy in Arkadelphia; Travis W. Story, a Fayetteville attorney; Dr. J. Carlos Roman, a Little Rock pain management specialist; and James Miller of Bryant, a lobbyist. They face an original deadline of September 2017 to have the program up and running.


August 2017

The Arkansas Medical Marijuana Association is formed. The next month, the trade group names Dr. Regina Thurman, director of Optimal Pain & Wellness of Fayetteville, to chair its board. Eventually, the group is absorbed by the Arkansas Cannabis Industry Association in a merger of the trade groups.


December 2017

Little Rock businessmen Brian Bauer, John Foley, Greg Ellis and Dan Roda launch a company offering cashless banking to the new industry via MediPays, a mobile wallet offered by Rockview Digital Solutions LLC. In fall 2018, Roda announces that the service will start by serving patients in Oklahoma. Oklahoma’s lightly regulated medical marijuana program, approved by voters in June 2018, was up and distributing marijuana in a matter of months.


February 2018

The Arkansas Medical Marijuana Commission grants five licenses to build marijuana cultivation facilities, the grow operations that will supply dozens of dispensaries. The companies, which each paid a $100,000 state licensing fee and posted $500,000 performance bonds, are Natural State Medicinals Cultivation in Pine Bluff; Bold Team LLC in Cotton Plant; Natural State Wellness Enterprises in Newport; Delta Medical Cannabis Co., also of Newport; and Osage Creek Cultivation in Berryville.


March 2018

Pulaski County Circuit Judge Wendell Griffen halts the granting of the cultivation licenses after an unsuccessful applicant, Naturalis Health LLC, files suit against the Medical Marijuana Commission, calling its evaluation process unfair. The Arkansas Supreme Court later allows licensing to move forward, ruling that legal action was premature because licenses hadn’t yet been issued.


July 2018

The Arkansas Supreme Court reveals a potential conflict involving Roman, the marijuana board member, and an applicant for a cultivation license, Ken Shollmier. Both men suggest that the other was making an attempt at undue influence, and a video-tape of a meeting between them eventually emerges. However, no charges ever result.


September 2018

The Medical Marijuana Commission hires Public Consulting Group Inc. of Boston to grade 203 dispensary applications to help cull them down to 32 sites for selling cannabis. The board had faced great criticism for grading the huge volume of cultivation license applications themselves, inviting accusations of overwork and unfairness resulting from panel members’ past dealings with applicants.


December 2018

Medipays gives its full-service online platform for cannabis-related businesses a new name, Abaca.

The Arkansas Cannabis Industry Association merges with the Arkansas Medical Marijuana Association. The combined group, called the ACIA, will have a 12-member board after dispensary licenses are issued. Initial members are Robert deBin, president of the group’s board of directors and owner of Natural State Medicinals, the Pine Bluff cultivation site. Other board members include Thurman, Roda, Adam Hodge of North Little Rock, Dr. Kyle Felling of Greenbrier, and Brandon Thornton, CEO of Steep Hill Arkansas, a Little Rock laboratory soon to be paid by medical marijuana producers to test products’ potency and purity.


January 2019

As Oklahoma dispensaries continue sales, Hutchinson warns that it’s illegal for Arkansans — even those with state authorization for medical marijuana — to transport cannabis across the state line. Oklahoma law allows temporary licenses for out-of-state patients with valid marijuana cards, but interstate transport is forbidden.

The state reports that 6,700 Arkansans have been approved for medical marijuana cards, to be issued in February.

The Medical Marijuana Commission heads into the crucial dispensary meeting with five members: Tillman, Carroll, Story, and two newcomers: Benton Police Department Capt. Kevin Russell and pediatric nurse Justin Smith of Cabot, who works at Arkansas Children’s Hospital. Russell replaced Roman, whose two-year term expired amid questions over the doctor’s interactions with a cultivation site applicant. Last week, Smith replaced Miller, who resigned from the panel in December.

The commission approves the consultancy’s scores and awards letters of acceptance to 32 dispensaries. Licenses will go to the top four scorers in each of eight zones, but some top scorers applied in more than one zone and will have to choose a zone to operate in. The companies with top scores in multiple zones include Valentine Holdings LLC, whose registered agent is Donald L. Parker II of Jonesboro; Acanza Health Group LLC, registered agent Dover Dixon Horne PLLC of Little Rock; Natural State Wellness Dispensaries, registered agent Bart Calhoun of Little Rock; and Grassroots OpCo AR, an affiliate of Grassroots Cannabis of Chicago.

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