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Justices Deliver a Scolding to Cannabis Commission

4 min read

“Here we go again,” began the stark dissent to an Arkansas Supreme Court ruling early this month. “We are wrestling with another legal conflict involving the Medical Marijuana Commission (MMC) and its refusal to follow its constitutional mandate.”

The dissent came in an unusual disposition of a case that gave the state’s medicinal cannabis system both a legal victory and a verbal spanking, including a hard push to even the playing field in marijuana business licensing.

A revised ruling by the high court reversed a Pulaski County decision that found the state should have granted a marijuana dispensary license to a Carroll County dispensary prospect doing business as Eureka Green.

The court backed the state’s decision to deny the license, finding that the lower court lacked jurisdiction over the subject matter of the case. The dissent made note of numerous lawsuits in the four-year history of Arkansas’ cannabis industry, including reports of irregularities up to the point of bribery.

More: Click here to read the full ruling.

An early plurality ruling by Justice Barbara W. Webb agreed with Justice Courtney Rae Hudson’s blistering dissent on one point, that the commission has failed to create workable administrative rules and a clear and equitable path to granting licenses. Arkansas voters legalized medicinal cannabis in 2016. With recreational marijuana initiatives pending, rulemaking is more essential than ever, Hudson wrote.

“We see one appeal after another that highlights the MMC’s shortcomings,” Hudson wrote. “Worse, we should not forget that during our consideration of the Naturalis case in 2018 [an appeal over a cultivation license], the attorney general advised us that a commissioner had been offered a bribe, that he did not report it, and that there were other as-yet unsubstantiated allegations of improprieties in the scoring of cultivation licenses.”

In an unusual twist, Webb wrote a letter last week to fellow justices and lawyers that the ruling disseminated June 2 was distributed in error; a revised version deleted a last paragraph critical of the commission. “The error has since been corrected and the version voted on by the Court on June 1, 2022, has been submitted,” said the letter.

The deleted paragraph recalled that Chief Justice Dan Kemp had scolded the MMC on its rulemaking duties in 2018. “It is now four years later, and the MMC has still not adopted these necessary and mandatory rules.”

More: Click here to read Webb’s full letter.

The dissent hit the commission even harder, citing the case of Carpenter Farms, which initially was denied a license over problems with its application. The grower sued, blaming its paperwork problems on a “scrivener’s error.” Eventually, Carpenter Farms prevailed, and Carpenter Farms got its license in a settlement with the state.

Scott Hardin, a spokesman for  the Alcoholic Beverage Control Division, the state agency that enforces liquor and medical marijuana regulations, said new rules are already being made. “The rules were in the process of being promulgated prior to COVID19 in early 2020,” he said in an email to Arkansas Business. “ABC’s workload increased significantly throughout the pandemic due to a variety of factors. Additionally, the agency was required to promulgate rules for numerous Acts related to the state’s alcohol industry from the 2021 legislative session. The rules mentioned in the Supreme Court opinion are being promulgated and remain a priority for this year.”

More: Click here to read the dissenting opinion.

In the Eureka Green case, filed in 2020, Pulaski County Circuit Judge Tim Fox ruled that the state erred in rejecting the license application of a company that finished fifth in application scoring and should have been next in line when a licensee in the zone pulled out to open elsewhere.

Eureka Green had accepted a refund of half of its licensing fee, in the state’s view withdrawing its application. Fox rejected that reasoning, but was overruled by the state Supreme Court, which reversed his decision and dismissed the suit. The license went to a third party, Natural Root Wellness.

Little Rock attorney Chris W. Burks, who represented Carroll County Holdings, said the high court has generally held that “if you have an issue with the Medical Marijuana Commission, you can’t sue in court unless you get a formal adjudication of your complaint before the commission.”

The problem, he said in an interview, is that “the Medical Marijuana Commission is not giving people a hearing. You’re stuck in an impossible void.”

He agreed with Hudson’s dissent and its fiery conclusion:

“Undoubtedly, medical marijuana is big business in our state, and recreational marijuana may be in the offing. Arkansas medical marijuana sales reportedly totaled almost $265 million in 2021, and … the MMC is abdicating its duty to properly regulate this exploding industry. “The MMC must adopt clear and necessary rules to allow for a level playing field, and we should not excuse its failure to do so.”

Burks, the plaintiffs’ lawyer, said the MMC is an outlier in Arkansas, forgoing model rules laid out by the attorney general for governing other boards and commissions in the state. “The question is, why didn’t the commission use those model rules?”


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