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Arkansas Times: Arkansas medical marijuana legal wranglings

Read the full story at Arkansas Times.

The Natural State’s medical marijuana industry is high on intrigue.

The state Medical Marijuana Commission decided in its Dec. 8 meeting  to award the latest dispensary license to 3J Investments, owned by  Jeffery Catlett Fitch and Jeremy Ruiz, who plan to open a dispensary in Lamar (Johnson County). There was some controversy at the meeting over whether 3J was next in line to receive the lucrative license.

When the applications were scored and ranked in 2017, River Valley Sales LLC, the owner of River Valley Relief Dispensary, was ranked seventh in Zone 4 and 3J Investments was ranked eighth. Two applicants ranked ahead of them chose to pursue applications in other zones and pulled their applications from Zone 4.

The commission, which has divided the state into eight zones, allows a maximum of five dispensaries in each zone. Zone 4 consists of eight counties between Conway County and the Oklahoma border.

Before the Dec. 8 commission meeting, 3J Investments’ attorney Michael Goswami submitted a letter stating that River Valley was not eligible to receive a license because the company was dissolved and not registered with the secretary of state’s office. The letter cited language in Amendment 98 of the state constitution that states “A dispensary and a cultivation facility shall be an entity incorporated in the State of Arkansas.”

Commissioners were unsure whether to consider River Valley or 3J Investments as the next applicant in line to receive the license.

“You’re probably going to get sued no matter what you do,” Sara Faris of the state attorney general’s office advised the commission.

Stephen Smith, a representative for River Valley, attended the meeting via Zoom and attempted to speak, but commission chairwoman Dr. Ronda Henry-Tillman did not recognize him. Before the meeting, River Valley submitted a letter arguing its case for the license based on access and need in the area but did not address the issues of dissolution or eligibility. The commission voted 4-1 to consider awarding a license in Zone 4 and then voted 5-0 to award it to 3J, making it the state’s 38th dispensary to be licensed.

Storm Nolan, who submitted the application for River Valley, said after the meeting that he believes his application was wrongly passed over and hopes to settle the disagreement with the commission “amicably” rather than through a lawsuit.

Nolan said he dissolved River Valley Sales because he was following guidance from the secretary of state’s office on inactive businesses. The commission accepted applications for dispensaries in 2017 and has held them in reserve until a Jan. 9 expiration date.

Nolan also said the commission was violating its own rules by recognizing the corporation rather than the individual (Nolan) as the applicant.

The commission’s rules and regulations define the “applicant” as “the natural person in whose name a license would be issued and any entity: (a) the natural person represents; or (b) on whose behalf the application is being submitted.”

“We followed the commission’s guidelines,” Nolan said. “We followed the secretary of state’s guidelines. For this to happen on a very minor technicality and counter to their rules and regulations, it’s a sad deal.”

Fort Smith, the state’s second largest city, is home to one dispensary, Fort Cannabis. Nolan’s letter to the commission pointed out that Sebastian County has the most medical marijuana patients of any county, yet has only one dispensary.

Nolan said he has held onto the retail space in Fort Smith that he intended to use for the dispensary.

“We were ready, willing and able and we still hope that we can bring this home to Fort Smith,” he said.

After an initially slow rollout, there are now 31 dispensaries operating in Arkansas. The other seven are said to be working toward opening. Voters approved the medical marijuana amendment in 2016, but the state did not open its first dispensary until May 10, 2019, when Doctor’s Orders (now known as Suite 443) opened in Hot Springs. Fourteen dispensaries open that year and 17 opened in 2020.

As of Dec. 17,  the state’s dispensaries had sold 30,648 pounds of medical marijuana for $200.7 million since the first dispensary opened in 2019. Last year, the state’s dispensaries sold 4,200 pounds of medical marijuana for $28 million.

The commission passed on the opportunity to award the final two licenses, in Zones 6 and 8, during its December meeting. Unless the commission holds an emergency meeting before the Jan. 9 expiration date, it will have to open a new application process.

The next dispensary in line for a license in Zone 6 is Green Remedies Group and the next in line in Zone 8 is T&C Management.

Will the commission solicit new applications next year?

“I think it really depends on where we see the industry,” Scott Hardin, spokesman for the  commission, said.

The commission licensed three additional cultivators earlier this year, giving the state the maximum eight cultivators to provide products to the dispensaries. Hardin believes the introduction of more product from additional cultivation facilities will help shape the industry in 2021.

“That will be the point at which everyone can look at this industry and understand exactly where it stands from a patient and product perspective,” Hardin said. “You’re still going to have this issue of lack of adequate product from dispensaries, but until these other three cultivators come on, it’s hard to tell where we stand.”

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