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High Court Stays Marijuana Cultivator’s License Revocation

3 min read

Fort Smith hotelier and medical cannabis cultivator Storm Nolan got a reprieve for his imperiled state marijuana license Thursday when his appeal to the Arkansas Supreme Court yielded an order placing a hold on a license revocation order issued by the state on Monday.

The Supreme Court promised a quick review of an appeal by Nolan’s River Valley Relief Cultivation, which had its license pulled by the director of the state’s Alcoholic Beverage Control Division in the wake of a ruling in Pulaski County Circuit Court that found that the permit had been improperly issued. Circuit Court Judge Herbert Wright last month ordered the state to proceed quickly with revoking Nolan’s license and granting it instead to a competitor, lawsuit plaintiff 2600 Holdings of Little Rock, doing business as Southern Roots Cultivation.

The permit under scrutiny was the last of eight medical marijuana cultivation licenses authorized by the Arkansas constitutional amendment that legalized medicinal cannabis in 2016. 2600 Holdings argued that irregularities in River Valley’s license application should have disqualified it, and that Southern Roots — the next-highest-scoring applicant in the selection process — should have been granted the license.

Wright agreed, finding that the state went to unusual lengths to grant the license to Nolan despite a discrepancy in the names of the corporation he listed on his application and a different but similarly named corporation that is growing the cannabis.

Nolan and his lawyers, including Joseph R. Falasco of Little Rock, moved for the high court to supersede Wright’s ruling and to expedite its review of his appeal. Without comment, the justices granted the motion Thursday.

The appeal argued that Nolan and his company were “indispensable parties” in the 2600 Holdings even though they were not defendants. The suit had been filed against the state’s marijuana regulation agencies, including the ABC, which oversees enforcement of rules on cultivators and dispensaries. The other defendants were the Medical Marijuana Commission and the ABC’s parent agency, the Arkansas Department of Finance and Administration. More than 80,000 Arkansans have medical marijuana cards.

Nolan had sought to intervene shortly before Wright granted a summary judgment in 2600 Holdings’ favor, but the judge said he was too late asking to join a case that had been in the legal system for several years. Nolan’s appeal argued that he should have had a chance to present his case before Judge Wright.

The license revocation decision Monday by ABC Director Doralee Chandler was immediately appealed to the ABC Board, which is scheduled to meet Dec. 21. Nolan is free to continue growing and selling marijuana to medicinal dispensaries until that date.

The high court said the appeal’s argument that Nolan was an indispensable party to the case could come up again months from now in an appeal of the ABC revocation, which is open to appeal in circuit court. “In the interest of clarity for the state agencies involved and the continuity of the medical marijuana supply pending resolution of this issue,” the court promised an expedited review process.

Nolan told Arkansas Business he would have no comment until he received some clarifications from the ABC. State spokesman Scott Hardin did not immediately respond to questions about the current status of Nolan’s license.

In testimony before Chandler on Monday, Nolan said he and his brother had invested more than $8 million in River Valley’s cannabis cultivation center near the Fort Smith airport, and he has said more than $6 million worth of marijuana stands to go to waste if his license is pulled. He has also argued that some 75 employees would be put out of work at Christmastime.

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