The Arkansas medical marijuana industry crossed its fingers in June when a Pulaski County circuit judge struck down 27 laws governing the industry’s operations and products.
Dispensaries, cultivators and cannabis processors are waiting for details to shake out, wary of consequences if they defy limits set by the Legislature.
Judge Morgan “Chip” Welch ruled the 27 laws unconstitutional on June 14, striking a ban on the sale of pre-rolled joints, limits on levels of the psychoactive ingredient THC in edible products and broad restrictions on advertising. He also voided legislation letting employers keep medical cannabis patients out of safety-sensitive positions.
The state is advising the industry to operate as usual, and it is, but industry executives in limbo told Arkansas Business that they hope to start serving patients better if a promised appeal by the state fails.
Other managers fear harm from too much liberalization, and everyone is cautious.
“Most of us prefer not to toe lines when it comes to state regulation,” Ruby Edens said.
As inventory manager of The Hill, a Fayetteville dispensary, she said her shop and its competitors all abide by rules set by the Arkansas Department of Health and the Alcoholic Beverage Control Division, which Amendment 98 of 2016 set up as the rules enforcer for the system.
It was that amendment, which voters approved to legalize medicinal cannabis in Arkansas, that Welch said the Legislature violated. But until new rules are issued by the ABC Division, Edens said, “we will continue to proceed as normal.”
‘Fingers Crossed’
Marijuana cultivators and processors also are playing it safe, despite Welch’s partial summary judgment. His ruling said the case “involves whether the General Assembly may Constitutionally change Amendment 98 by directly enacting amendatory legislation” without referring those changes to voters. Welch ruled that the General Assembly cannot “amend the Constitution unilaterally.”
Edens said her biggest concern is that future legislation “keep the patient’s health at the forefront of the decision-making process. As a medical program, [patients] need to be our No. 1 priority. Fingers crossed.”
Scott Hardin, a representative of the Arkansas Department of Finance & Administration, the parent agency of the ABC, said the industry is operating as it was before Welch’s order. “There have not been any rule changes or changes in day-to-day operation,” he said.
Hardin also said no appeal had been filed as of the end of July, but “an appeal is anticipated,” presumably after Welch rules on unsettled elements of the case.
Plaintiffs in the lawsuit are a cultivator, Good Day Farm Arkansas LLC of Pine Bluff, and a Little Rock dispensary company, Capital City Medicinals LLC.
Robbin Rahman, executive director of Harvest Cannabis Dispensary in Conway, said that with a state appeal expected, “the prevailing wisdom is to just continue as if nothing has changed.”
Rahman, who is also a lawyer, said he expects a “mixed bag” if Welch’s order stands. “Definitely, some of the laws are misguided and could stand to be stricken,” Rahman said, pointing to rules against smoking paraphernalia, pre-rolls and advertising. “But I think it’s going to be problematic from another standpoint — the employer protections that are part of that [legislative] package.”
Arkansas law now prohibits dispensaries from providing cannabis-infused food or drink products with more than 10 milligrams of tetrahydrocannabinol, or THC, the major psychoactive component in marijuana. Leafly, a website on cannabis use and education, lists 10-15 milligrams as a moderate dose, but it calls an acute dose of 50-100 milligrams effective for experienced users with intense physical pain, multiple sclerosis or cancer.
Challenge for Employers
Rahman said employees with medicinal cannabis cards and their employers now have a “decent amount of clarity” about the use of medical cannabis in the workplace, “particularly related to safety-sensitive positions.
If those are part of the laws that are struck down, I think there will be less certainty and, as a result, it may be a net negative for patients and employers alike.”
Amendment 98 says employers cannot discriminate against marijuana cardholders in hiring, termination or any condition of employment. But current law lets employers exclude medical marijuana users from safety-sensitive jobs.
Safety-sensitive positions are defined as those “designated in writing by the employer” as jobs that would present a threat to health or safety if performed by a person under the influence of marijuana.
David Couch, the Little Rock lawyer who wrote Amendment 98, said he agreed the Legislature acted unconstitutionally in changing it.
The amendment left most regulatory authority with the ABC and Health Department, with a few areas carved out for legislative control — “the destination of the tax money, for instance,” Couch said.
Some processors worry that their businesses might be at risk if Welch’s order stands, because processing licenses weren’t included in the original amendment, which mentioned only dispensary and cultivation licenses.
But Couch said the possibility of outlawing processors isn’t likely “since that was not in the original amendment.” The General Assembly, he said, has the ability to legalize processing. “Recall, the General Assembly could legalize marijuana tomorrow should they so choose.”
The safety-sensitive worker legislation is more vulnerable, he said.
“Those requirements contradict the original amendment and the purpose,” Couch said. “Medical marijuana should be treated the same as any other medicine.”
Danielle Buntyon, co-owner of Mink & Kimball Extracts of Marion, awaits clarity. “When the laws and regulations are 100% ironed out, we will make changes according to the rules. Because I am a processor, I want more clarification on where that stands for my business.”
Several processor and dispensary leaders are eager to offer pre-rolls and more potent edibles for patients’ sake. “Some people would like to be able to buy pre-rolls because they can’t roll up their medicines because of arthritis, or maybe they just don’t know how,” said Jesse Trammel, manager of New Day Laboratories of Hot Springs. “We have got to follow the rules, but it would be beneficial to the patients and the dispensaries if we were able to offer higher limits [of THC in edibles] or pre-rolls or other things.”
‘Very Strategic’
Casey Flippo, CEO of Dark Horse Medicinals, a Little Rock processor, said he has been distinctly directed by the state and Medical Marijuana Commission to stick with standard operations. “I wouldn’t necessarily say we’re sitting in a holding pattern or giving our decision-making up to the winds. We are being very strategic about our next steps as a company and as an industry.”
Flippo said he will be ready with the plan in case processors’ licenses are voided, but wasn’t specific. “If the Legislature acted beyond their scope and this decision is upheld, it will expand products within the market, create a little bit more direct communication with the public. Now there are pretty stringent advertising restrictions that we’re all bound by. But I think we’re six months to a year away from having any definitive answers.”
Brittany Phillips, a partner in Shake Extractions of Fayetteville, said her company had been advised to monitor potential appeals. “We’re hoping to benefit, though, from the restrictions being lifted because it will make operating in this industry less difficult, not to mention more reasonable.”
Couch, the amendment’s author, said pre-rolled joints should be allowed. “I mean they have way over-regulated the edible categories,” he said. “Producers and sellers can’t really make products that are easy to use and attractive to consumers. They’re all patients, but they should be able to have a delivery mechanism that’s more attractive. A little sugar helps the medicine go down.”
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