Mar­i­juana bids un­fairly re­jected, law­suits say

Northwest Arkansas Democrat-Gazette - - NORTHWEST ARKANSAS - JOHN MORITZ

A group of ap­pli­cants vy­ing to open some of Arkansas’ first med­i­cal mar­i­juana busi­nesses filed anony­mous law­suits last week against the com­mis­sion tasked with weigh­ing their pro­pos­als.

The law­suits, which were filed and placed un­der seal in Pu­laski County, al­lege that the Arkansas Med­i­cal Mar­i­juana com­mis­sion erred in its ini­tial assess­ment of hun­dreds of ap­pli­ca­tions sub­mit­ted last month when it culled sev­eral ap­pli­cants for fail­ing to meet the min­i­mum re­quire­ments.

The names of ap­pli­cants and their as­so­ci­ated cor­po­ra­tion were left out of the com­plaints to pro­tect the anonymity of the process, ac­cord­ing to a copy of the fil­ings ob­tained by the Arkansas Demo­crat-Gazette.

The law­suits seek a tem­po­rary re­strain­ing or­der to force the com­mis­sion to in­clude the plain­tiff’s ap­pli­ca­tions when the com­mis­sion­ers be­gin their fi­nal scor­ing re­view, as well as an ul­ti­mate in­junc­tion to keep those ap­pli­ca­tions in the scor­ing pool.

Such an or­der would force the com­mis­sion to “shut down” its work, spokesman Scott Hardin said in an email. The com­mis­sion has al­ready agreed to fully re­fund the ap­pli­ca­tion fees in the thou­sands of dol­lars for bids that are dis­qual­i­fied.

For other bid­ders hop­ing for a spot in the med­i­cal mar­i­juana in­dus­try — as well as pa­tients wait­ing for the re­lief promised when vot­ers ap­proved med­i­cal mar­i­juana

last Novem­ber — court in­volve­ment at this point in the process is un­wel­come, said Storm Nolan, the pres­i­dent of the Arkansas Cannabis In­dus­try As­so­ci­a­tion.

“We don’t be­lieve they have a good chance of get­ting an in­junc­tion,” Nolan said. “But if they do, it will only slow down an al­ready frus­trat­ingly slow process.”

The com­plaints were pre­pared by Alex Gray, an at­tor­ney with the Lit­tle Rock law firm Steel, Wright, Gray & Hutchin­son. State Sen. Jeremy Hutchin­son, R-Lit­tle Rock, is a mem­ber of the firm.

Reached at his of­fice Mon­day, Gray said his firm only be­came in­volved with the prospec­tive med­i­cal mar­i­juana en­trepreneurs af­ter the ap­pli­cants re­ceived a let­ter from the state in­form­ing them that their ap­pli­ca­tion failed to meet the min­i­mum stan­dards. Hutchin­son is “not re­ally in­volved in the suit,” Gray said.

Gray de­clined to com­ment fur­ther on the suits, cit­ing the de­sire of his clients to re­main anony­mous. Hutchin­son did not an­swer a call to his cell­phone Mon­day.

In the law­suits, Gray wrote that his clients sub­mit­ted their bids to open a li­censed cul­ti­va­tion cen­ter and dis­pen­sary sev­eral days

be­fore the Sept. 18 dead­line out of an “abun­dance of cau­tion” to al­low them to iden­tify and cor­rect any er­rors.

The com­mis­sion did iden­tify prob­lems with one of the ap­pli­ca­tions once they were first sub­mit­ted, in­clud­ing miss­ing proof-of-res­i­dency doc­u­ments and sec­ondary forms of ID for some of the peo­ple as­so­ci­ated with the bid, ac­cord­ing to the com­plaints. The ap­pli­cants then col­lected the miss­ing ma­te­ri­als and re­sub­mit­ted their ap­pli­ca­tion be­fore the fi­nal dead­line.

At first, the ap­pli­cants were told their re­sub­mit­ted bids were com­plete, but then, more than 10 days af­ter the dead­line, they re­ceived fol­low-up no­tice that both ap­pli­ca­tions were still miss­ing doc­u­ments, ac­cord­ing to the com­plaints.

Ear­lier this month, and weeks af­ter the ap­pli­cants said they re­ceived no­tice that their bids fell short, the com­mis­sion met to dis­cuss prob­lems that had arisen dur­ing the ini­tial re­view of the ap­pli­ca­tions.

Some of those prob­lems in­cluded ap­par­ent dis­crep­an­cies be­tween what doc­u­ments the rules re­quired and what the ap­pli­ca­tion re­quested. In the rules, for ex­am­ple, it was un­clear whether ap­pli­cants had to pro­vide only a driver’s li­cense or one of sev­eral doc­u­ments ver­i­fy­ing a date of birth while the ap­pli­ca­tion re­quested both the

li­cense and one of the doc­u­ments.

The com­mis­sion voted to go with the plain lan­guage on the ap­pli­ca­tion, mean­ing some ap­pli­cants who did not sub­mit two forms of IDs would not meet the min­i­mum re­quire­ments. Be­cause one of the peo­ple be­hind an ap­pli­ca­tion for a dis­pen­sary pro­vided only a pass­port, the ap­pli­ca­tion was ruled in­com­plete, ac­cord­ing to one of the com­plaints.

The other com­plaint, which dealt with the cul­ti­va­tion cen­ter ap­pli­ca­tion, said that ap­pli­ca­tion was de­nied be­cause one of the ap­pli­cants could not be ver­i­fied as an Arkansas res­i­dent. That de­ter­mi­na­tion was “in­cor­rect, ar­bi­trary and capri­cious,” ac­cord­ing to the suit.

“Plain­tiffs re­lied on the Com­mis­sion’s nu­mer­ous as­sur­ances that the ap­pli­ca­tion was com­plete,” Gray wrote, later adding “The Com­mis­sion should be or­dered to con­sider the ap­pli­ca­tion on its mer­its rather than er­ro­neously re­ject­ing it.”

But Nolan, the in­dus­try as­so­ci­a­tion pres­i­dent who is part of his own bid to bring a dis­pen­sary and cul­ti­va­tion cen­ter to Fort Smith, said he felt the law­suit lacked a good ar­gu­ment.

“The rules for what was nec­es­sary to sub­mit the ap­pli­ca­tion were clearly laid out,” Nolan said, adding that he was not aware of other com­plaints about the ap­pli­ca­tion

process.

The Med­i­cal Mar­i­juana Com­mis­sion is as­signed the task of re­view­ing and scor­ing each ap­pli­ca­tion once the doc­u­ments have been stripped of iden­ti­fy­ing in­for­ma­tion. That process is ex­pected to be­gin in De­cem­ber and con­tinue well into next year.

Un­til a fi­nal de­ci­sion is made, the com­mis­sion will not make pub­lic which ap­pli­cants were dis­qual­i­fied, said Hardin. Some ap­pli­cants have been no­ti­fied that their bids lacked cer­tain re­quired ma­te­ri­als, he added, but no for­mal ac­tion has been taken.

Records pro­vided by the state De­part­ment of Fi­nance and Ad­min­is­tra­tion, un­der which the com­mis­sion op­er­ates, show a to­tal of 16 ap­pli­ca­tions were flagged as in­ad­e­quate for rea­sons sim­i­lar to those de­scribed by the com­plaints. The state re­ceived a to­tal of 322 ap­pli­ca­tions for both cul­ti­va­tion cen­ters and dis­pen­saries.

While the name of the busi­ness is redacted, the law­suits de­scribe it as “ma­jor­ity fe­male-owned,” and con­tends that it is in the state’s in­ter­est to pro­mote such busi­nesses.

At­tor­ney Gen­eral Les­lie Rut­ledge’s of­fice will rep­re­sent the Med­i­cal Mar­i­juana Com­mis­sion in the suit, a spokesman con­firmed Mon­day. The state has not yet filed its re­sponse to the com­plaints.

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