August 23, 2018 MJ Shareholders
Although legal troubles threatened to halt cannabis business licensing and the launch of Arkansas’ medical marijuana program earlier this year, industry advocates report a relatively smooth and timely rollout in the Natural State.
Arkansas voters passed a constitutional amendment in November 2016 to legalize medical cannabis, and lawmakers moved quickly to implement the program, according to Robert deBin, president of the Arkansas Cannabis Industry Association (ACIA). The industry trade association was founded in 2017 and focuses on advocacy, educating potential business applicants and patient outreach. “It’s government, so there’s a lot of red tape everywhere, but that was really the only real delay, just the government process that’s required by our constitution.”
And lawmakers largely respected the original amendment passed by voters, according to Glen Schwarz, executive director for the Arkansas chapter of NORML. “The government is cooperating with implementing a program,” he told Cannabis Dispensary. “At first, the governor opposed the amendment, but once it got passed by 53 percent of the people, he said, ‘Well, people voted for it. We’re going to implement it.’ And they did not substantially change the amendment in the legislature.”
The state allows smokable flower, as well as concentrates and infused products. “It’s a whole, comprehensive program, which I believe is the first in the south to at least start that way,” deBin, said. “I know some other states started with only extractions or concentrates and there’s now legislation to expand and to have flower, but we were actually able to start with the full program.”
Physicians are not required to prescribe, recommend or even discuss cannabis in Arkansas’ program, deBin added. Instead, they simply certify that a patient has one of the state’s qualifying conditions, which include intractable pain, PTSD, seizures and fibromyalgia, among others.
“That’s one of the things we’re pretty excited about and we feel like it’s going to lower the barriers of entry for a patient because a lot of physicians are hesitant to ever mention the word cannabis because of the federal legal landscape,” deBin said.
Once certified, patients can obtain a medical marijuana card from the state, and they are allowed to purchase two and a half ounces of cannabis every two weeks from one of the 32 state-licensed dispensaries, which will be licensed in the coming months, deBin said. As of Aug. 17, 5,834 patients are registered in the program, according to the ACIA’s website.
The Arkansas Medical Marijuana Commission is the governing body for issuing cannabis business licenses, and it falls under the state’s Alcohol Beverage Control (ABC) arm. The commission is a group of five individuals, deBin said—two physicians, a pharmacist, an attorney and a member experienced in government relations.
The Medical Marijuana Commission scored the 95 applications that were submitted for the state’s five cultivation licenses. The applications themselves were limited to a 25-page summary, but many were well over 1,000 pages, including the exhibits, deBin said. The five licenses were awarded at the end of February to Natural State Medicinals Cultivation, Bold Team LLC, Natural State Wellness Enterprises, Osage Creek Cultivation and Delta Medical Cannabis Company Inc..
Some of the unsuccessful cultivation applicants filed lawsuits in March, leveling allegations against the state’s scoring process. “Their argument was that the scoring process was unfair and that there were some improprieties,” deBin said. “Being a limited-license state, the thought is that there’s a lot of money at stake here. You had 95 groups of people that applied for a license and had a lot of time and a lot of money invested in that. And on top of that, there’s a lot of money to be made with these license holders, so it’s understandable that someone who didn’t get a license would do anything they could to try and remedy that.”
The five commissioners were to score the applications independently, and there was a “blackout” period where they were not permitted to speak to one another or any of the applicants, deBin said.
“They scored these things individually and then came together and tallied these scores together, and then the top five highest scores are the groups that were granted the licenses,” he said. “[The unsuccessful applicants are] upset that they did not get a license, and so that caused a little bit of a delay with the five cultivators being able to move forward. The supreme court ended up ruling in June that the judge that issued a restraining order on issuing the licenses didn’t have jurisdiction to do so, and so on July 10, the licenses were actually ratified, and cultivation facilities began to be constructed.”
The Medical Marijuana Commission has selected Public Consulting Group Inc., a third-party, Boston-based consulting firm, to score the state’s dispensary applications.
“For dispensaries, there are 203 applications and over 5,000 pages, and so we’re actually pretty happy that the commission elected to get the help of an outside consulting firm to help with the scoring of the dispensaries,” deBin said.
The state is in the process of finalizing the contract with the Public Consulting Group, and then the commission will hold an introductory meeting with the firm, deBin said. Then, the company will have 30 days to score the dispensary applications, which means—barring any delays—the applications could be scored by the beginning of October.
“I would imagine that the licenses are going to be issued by the end of October, which is very exciting because we passed the amendment in November 2016, so we’re coming up on that two-year mark, and the patients here have been anxiously awaiting their natural medicine,” deBin said. “We’re just really happy that we can see that on the horizon now. It’s very exciting.”
Once all the licenses are issued, however, patients will still need to wait for the state’s first medical marijuana harvest. The five licensed cultivation facilities will supply most of the state’s cannabis and are building facilities from scratch, but the dispensaries will also be able to grow 50 mature and 150 immature plants if they opted to be a “cultivating dispensary” in their application, deBin said. This allows dispensaries to grow strains they may not be able to get from cultivators, although they will not be able to grow enough to meet patient demand.
Many dispensaries are also building facilities, as well, deBin added, due to distance requirements outlined in the state’s medical marijuana law. A dispensary must be 1,500 feet away from a school, church or daycare, he said, and many applicants have elected to build facilities because they were not able to find real estate that adheres to those requirements.
Medical cannabis will likely be available to patients in spring of 2019, deBin said. “Then I think we’ll see in the summer of 2019 the program fully up and running.”
And the state has already worked out a solution to the industry’s limited access to banking, he added. “We’re going to start off with a cashless system,” deBin said. “There’s a startup here by some local Arkansas guys called MediPays, and it’s both for consumer and business-to-business. It will involve an app where patients can purchase their medicine through the app, and it also allows for cashless, electronic payments for dispensaries [and] cultivators.
“It’s been an exciting but challenging two years, and I’m actually really proud of the state—both the regulators and the legislators,” deBin added. “I’m really proud that our state government has listened to the voice of the people and has expedited the process, but did it the right way.”
Looking ahead, the ACIA is working to add additional qualifying conditions to the program. “We’ve got some broad qualifying conditions, but there are definitely some out there that cannabis is known to be highly effective on, so we’re working to develop some petitions for the Department of Health, which is responsible for adding qualifying conditions,” deBin said.
The ACIA is also looking forward to the state’s hemp program, he added. At the end of June, the Arkansas State Plant Board (ASPB) approved regulations for the state’s Industrial Hemp Pilot Program, which will ultimately allow licensed farmers to grow and process hemp.
“It’ll be interesting to see what happens with the 2018 Farm Bill and how that affects the program here and nationally,” deBin added. “Arkansas farmers are certainly excited for an opportunity for a new industry and a new crop here.”
And although decriminalization and adult-use legalization seem unlikely in Arkansas’ immediate future, NORML will keep pushing for broader reform, Schwarz said. “NORML continues to lobby for outright legalization or decriminalization,” he said. “It’s a very conformist legislature and the people here were forced to do a constitutional amendment just to get this ball rolling. I still don’t see much progress in the legislature, but we will try.”
Top Image: © W.Scott McGill | Adobe Stock
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