Fort Smith Cultivator License Keeps License But Remains in Court

Storm Nolan, owner of River Valley Relief Cultivation (Corey S. Krasko)

A Fort Smith medical marijuana cultivator saw his license renewed by the Arkansas Medical Marijuana Commission this month even as the state Supreme Court reviews a lower court’s order for the license to be stripped and awarded to a competitor.

The commission had put River Valley Relief Cultivation’s relicensing on hold in late May even as it renewed all of the state’s other annual medicinal cannabis licenses.

The cultivator, Fort Smith hotelier Bennett “Storm” Nolan, told Arkansas Business last week that he was buoyed by the license renewal and holds strong hope that a ruling against his company, River Valley, late last year in Pulaski County Circuit Court will not withstand the high court’s scrutiny.

Circuit Judge Herbert Wright invalidated RVRC’s license and ordered the state to grant the permit to 2600 Holdings, a runner-up in the licensing process known as Southern Roots LLC. In accepting River Valley’s appeal early this year, the state Supreme Court let River Valley continue cultivation operations.

“We’re happy that the Medical Marijuana Commission followed the directions of the Supreme Court and renewed our license as it should have been,” Nolan said. The high court is still awaiting briefs in the case, he said.

Rubber Stamp

At a June 1 meeting, the Marijuana Commission was told by its new legal counsel, Julie Chavis of the state attorney general’s office, that it was required to “rubber-stamp” the license because documents had been vetted and approved by staff.

Nolan noted that Chavis had chastised Abtin Mehdizadegan, a lawyer for 2600 Holdings, for writing a letter to commissioners that Chavis called “highly unusual and highly unprofessional.” Mehdizadegan’s letter asked the commissioners to withhold the licensing and claimed a conflict of interest existed in the attorney general’s office because a former medicinal cannabis overseer now works with the attorney general. Mehdizadegan said he did nothing wrong and said the commission’s inclination to be a “rubber stamp” is part of a longtime problem with the state’s medical cannabis system. Arkansas’ licensing process has faced fierce scrutiny for years, and even members of the commission have conceded that inconsistent and dubious decisions have resulted.

Another complication is that Doralee Chandler, who oversaw marijuana system enforcement as director of the Department of Finance & Administration’s Alcoholic Beverage Control Division, left that job in January to join Attorney General Tim Griffin’s legal staff. Griffin’s office is representing the MMC in the lawsuit.

Mehdizadegan has asked a judge to remove the attorney general’s office as the commission’s counsel. Griffin called the request frivolous.

In an email to Arkansas Business, Mehdizadegan said the license renewal at Chavis’ “explicit direction” was “incoherent, wrong, and frankly dystopic.” He said that by suggesting the commissioners could be subject to civil or criminal contempt charges if they didn’t vote for renewal was a misinterpretation of the Supreme Court’s stay in the 2600 Holdings case.

Mehdizadegan also took issue with the ABC Division’s representation that River Valley Relief was in “good standing,” noting that it was cited in February for “failure to cooperate” with ABC investigators. Mehdizadegan suggested that the AG’s office views the MMC as “simply a rubber stamp,” and that might have been the reasoning “that led Julie Chavis to hold an illegal public meeting with the commissioners” before the June 1 meeting.

Attorney General Tim Griffin said that “Mr. Mehdizadegan is wrong. My office did not participate in nor is it aware of any meetings held outside of the public view.”

Griffin said that the Medical Marijuana Commission complied with its “ministerial duty” in approving Nolan’s permit, consistent with the Supreme Court’s order. “The June 1 meeting regarding the application, called by the Commission’s chairman, was held in compliance with the Arkansas Freedom of Information Act. The Commission … followed the legal recommendation of my office and rightfully ignored the improper communication submitted by attorney Abtin Mehdizadegan directly to the Commission.”

Mehdizadegan said the renewal vote illustrated a larger problem: Since the commission has no staff or attorneys of its own, it has “largely been treated as a rubber stamp… .” Until the MMC hires an executive director and counsel, “I believe the commission will continue making bad decisions.”

No Supreme Court ruling is expected until September at the earliest.

Nolan’s Hope

Meanwhile, Nolan, RCRC’s principal owner, cites a concurring opinion in a Supreme Court decision in February as reason for his confidence in his appeal. In that case, Osage Creek Cultivation v. Arkansas Department of Finance & Administration, the justices dismissed a challenge to three new cultivation licenses brought by the state’s original five cultivation licensees.

“They dismissed the lawsuit, which was right and proper,” Nolan said, noting that his licensing survived that round in the high court. “The reason I’m bringing it up is because it pertains to the 2600 Holdings litigation.”

2600 Holdings is making two main arguments, he said. One is that RVRC had dissolved as a legal entity between being denied one of the state’s first five cultivation licenses in 2018 and being accepted in 2020 when the state decided to grant three additional grow licenses. The other was that RCRC site was within 3,000 feet of a school.

Judge Wright in November ruled that the Marijuana Commission had awarded River Valley’s license in error after Nolan registered a new similarly named cultivation company.

“In that [state Supreme Court] ruling, Justice Courtney Rae Hudson said at the time that the MMC issued the license to me,” the dissolution held no legal significance, Nolan said. “The licensing issue that 2600 Holdings brought out has pretty much been decided at the Supreme Court level.”

Hudson’s concurring opinion said that “when cultivation operations commence,” state law “requires the entity to be incorporated in the State of Arkansas. At the time the MMC issued the license to Nolan, it mattered not that the entity had been dissolved.”

The remaining issue is proximity to the juvenile facility, which Nolan says isn’t a school. It’s run by the county, not the Fort Smith School District, “and … we were able to show that our property was more than the 3,000 feet required away from that,” Nolan said.

“We’re pretty confident that the Supreme Court will recognize that and it will be found in our favor.”