Arkansas Regulators Revoke Medical Cannabis Cultivator’s License

Regulators in Arkansas on Monday revoked a medical marijuana cultivator’s license to operate after a judge ruled earlier this month that the state erred when it granted the license two years ago. Doralee Chandler, the director of the Alcoholic Beverage Control Administration and the head regulator of the state Medical Marijuana Commission (MMC), revoked the license from medicinal cannabis cultivator River Valley Relief (RVR) on November 28 at a hearing that lasted nearly an hour.

The Arkansas Medical Marijuana Commission granted RVR a license to cultivate medicinal cannabis in July 2020, making the company the last of eight growers authorized by the state. But another company, 2600 Holdings, filed a lawsuit in January 2021, arguing that RVR should not have been granted the cultivation license. The plaintiff asked the court to disqualify River Valley Relief and award the license to 2600 or provide other relief under the Arkansas Administrative Procedures Act.

Attorneys for 2600 argued that the MMC had illegally granted the license to Nolan Storm, the owner of RVR, during the state’s second round of cultivator licensing. They maintained that the action violated state law because Storm’s license application was no longer valid and the site for the cultivation operation was too close to Sebastian County Juvenile Detention Center. The plaintiff argued that the site violated state requirements that medical marijuana facilities be located at least 3,000 feet from schools, churches, and daycare centers.

The case was litigated for the state by attorneys for the DFA, which submitted a 36-page brief disputing 2600’s filing. Nolan and his legal representatives were blocked from participating in the case by Pulaski County Circuit Court Judge Herb Wright. 

Earlier this month, Wright ruled that 2600 had proven its case and should be granted relief, ordering that RVR’s license be revoked. The judge decided that the MMC’s action had exceeded the agency’s authority, which is referred to as an “ultra vires” act.

“Plaintiff has, therefore, met its burden in showing that the undisputed facts of the case, viewed in a light most favorable to Defendants, prove that the plaintiff is entitled to relief,” Wright noted in his ruling handed down on November 3. “Defendants have acted unreasonably, unlawfully, and capriciously by awarding Nolan a license.”

“An effort was clearly made by the MMC to give Nolan thread to stitch up the holes in the RVRC application,” Wright continued in his decision. “Whether that was fair or unfair to any of the applicants, it was at minimum an unconstitutional and ultra vires act.”

Arkansas License Revoked at Hearing on Monday

At a Monday hearing of the Arkansas Department of Finance and Administration (DFA), the MMC oversight agency, Nolan and his attorney Matthew Horan argued that Wright’s decision contained important errors. Nolan addressed each point while under oath during the hearing, saying that he was trying to abide by the state Medical Marijuana Commission’s rules and the guidelines of officials including the secretary of state. Among other points, the attorney argued that the cultivation site, which is 2,400 feet from the youth detention center, did not violate MMC regulations.

“There is no evidence anywhere that the detention center is operated by a public school,” Horan said, adding that the Arkansas Department of Education issued a letter saying the juvenile facility was not a school. But Chandler noted that the hearing was being held solely for the purpose of deciding on the license revocation and refused to reconsider matters settled by the court case.

“We’re not here to litigate matters over any other location,” Chandler told Nolan, according to a report from the Arkansas Times. “You need to worry about your permit and your application.”

Scott Hardin, a spokesman for the DFA, said in a statement that the formal license revocation order would likely be issued no later than the end of the week, according to a report from Arkansas news site Talk Business & Politics.

Hardin also noted that Nolan has appealed Chandler’s administrative decision to revoke the license. The appeal temporarily halts the license until after a hearing by the full board overseeing Arkansas Alcoholic Beverage Control. The next hearing of the board is scheduled for December 21, meaning that RVR will be able to continue operating at least until that time.

After Monday’s hearing, Nolan said that the case would be appealed to the Arkansas Supreme Court.

“River Valley Relief Cultivation has appealed the Pulaski Circuit Court decision to the Arkansas Supreme Court,” Nolan said in a statement to Talk Business & Politics. “RVRC has asked that proceedings be stayed until the appeal is heard. We await the decision of the Supreme Court.”