Medical pot rules gain panel’s support

Facilities requirements clarified

Rules and regulations to govern the upcoming legal use of medical marijuana by Arkansans cleared their first legislative hurdle Wednesday, despite a local-ownership provision called unconstitutional by some out-ofstate marijuana firms.

Emergency versions of rules from the Arkansas Medical Marijuana Commission, Alcoholic Beverage Control and the Board of Health were approved without debate by a subcommittee of the Arkansas Legislative Council. No lawmaker voted against the rules Wednesday.

One aspect of the rules from the Medical Marijuana Commission — requiring Arkansans to have a 60 percent stake in marijuana facilities — is expected to generate debate in future meetings.

“To be honest, I was surprised that folks who had those concerns didn’t come today to vet them because they would have had the opportunity to do that,” said Senate President Pro Tempore Jonathan Dismang, R-Searcy, after the meeting.

Some lawmakers as well as lobbyists representing out-of-state marijuana companies have argued the provision amounts to the state regulating interstate commerce — a violation of the U.S. Constitution.

“I and other lawyers are reviewing the actions taken by the commission,” Dustin

One aspect of the rules from the Medical Marijuana Commission — requiring Arkansans to have a 60 percent stake in marijuana facilities — is expected to generate debate in future meetings.

McDaniel, the former attorney general who is a lobbyist and lawyer for the Oklahoma-based Ross Group, said in an interview about the rule last week. “The incentive that the rule creates … is to conceal ownership and investment in the state’s new marijuana business and it further stands to discourage investment from qualified participants from beyond our borders.”

In addition to arguing that the provision violates the commerce clause of the U.S. Constitution, McDaniel argued that the marijuana commission was overstepping its authority in making the rule.

But during the meeting Wednesday, lawmakers received a memorandum by

the state Bureau of Legislative Research that stated the commission’s rule is constitutionally compliant and within its purview.

Michael Harry, a legislative attorney with the bureau, wrote that the state has an interest in requiring majority in-state ownership to comply with federal guidelines.

“Specifically, the potential for diversion across state lines warrant investigation or potential enforcement actions by the Federal government against a state medical marijuana program,” he wrote.

Amendment 98, as the Arkansas Medical Marijuana Amendment is known, requires “60% of the individuals owning an interest” to be Arkansans, but it doesn’t specify what share of a business’ ownership Arkansans must hold. If there were 10 owners of a dispensary, seven could be Arkansans to satisfy the amendment, but the remaining three out-ofstate owners could hold a disproportionately large financial stake in the organization.

Harry wrote that the commission “was undertaking its constitutionally mandated duty and providing clarity to the language that they have been charged with administering” by defining that facilities need to have “60% Arkansas ownership.”

House Bill 1371 by Rep. Douglas House, R-North Little Rock, was aimed at making the same change. In this year’s regular legislative session, it was approved by the House but rejected in the Senate in a 17-9 vote. Twenty-four votes are needed in the 35-member Senate to approve bills that would change the amendment.

“The way that I read it, it looks like the commission is reading the constitutional provisions correctly,” Dismang said of the ownership requirement. “They’re adopting rules in compliance with what the rule of the people is.”

The emergency rules will go into effect at 12:01 a.m. Friday and will stand for 90 days. During that time, the full Legislative Council will consider permanent versions of those rules. The Legislative Council is a body of lawmakers that meets when the Legislature is not in session. It provides legislative oversight of the executive branch.

The emergency rules were necessary to comply with Act 4, which delayed implementation of the voter-approved Arkansas Medical Marijuana Amendment. The deadline for rules was extended from March 9 to May 8 by the legislation.