Hopefuls await license decision for growing pot

Lawsuits expected, experts say

Potential medical marijuana growers aren’t sure what to make of this week’s big reveal.

On Tuesday, the Arkansas Medical Marijuana Commission plans to announce the state’s first five groups that will be allowed to legally grow medical cannabis.

It’s a major step toward getting the drug into the hands of qualifying patients after Arkansans approved Amendment 98 to the Arkansas Constitution in 2016, legalizing medical pot.

Approval to sell the drug will be given to 32 dispensaries in the coming months, likely in May, according to a spokesman for the state Department of Finance and Administration.

The medical marijuana community’s excitement is tempered by a mixture of uncertainty and unease. A contentious state Supreme Court ruling in January exacerbated that anxiety, casting doubt on legal options for unsuccessful applicants. Some, however, see the ruling as a positive for the medical cannabis industry.

State medical marijuana commissioners reviewed 95 applications for growing centers. The cost to simply submit an application is $15,000;

those who get licenses will owe an additional $100,000.

Some applicants whose proposals didn’t meet the minimum criteria or that withdrew from consideration early will receive a full refund. Bidders with scores outside the top five will be refunded half of the cost of the application fee.

Most applicants hired outside consultants and attorneys to help prepare their applications. Industry insiders estimate that upfront costs for competitive bidders ran between $150,000 and $200,000.

With so much invested, most expected the losing applicants to file legal challenges after Tuesday’s commission meeting as last-ditch efforts to obtain one of the five growing licenses. But the state high court’s ruling in Board of Trustees of the University of Arkansas v. Matthew Andrews has complicated those assumptions.

In that case, the Supreme Court cemented the state constitutional principle of sovereign immunity, meaning Arkansas and its agencies can’t be sued in state court.

“It’s just another curveball,” said Alex Gray, an attorney at the Little Rock

firm Steel, Wright, Gray & Hutchinson, which represents the Arkansas Medical Marijuana Association. “I think some people will still try to appeal.”

Arkansas is among 29 states that have legalized comprehensive medical-cannabis programs, according to the National Conference of State Legislatures. In other states where limited cultivation licenses were awarded, legal challenges followed closely behind.

Gray represented a handful of applicants who sued the state Medical Marijuana Commission after it was determined that their applications didn’t meet the minimum criteria to be considered for scoring, according to a copy of the civil complaint, which the Arkansas Democrat-Gazette obtained.

The cases were sealed after being assigned to Pulaski County Circuit Judge Mackie Pierce, but a spokesman for Arkansas Attorney General Leslie Rutledge, who represented the commission in court, confirmed that the suits were dismissed last month.

Gray said Pierce cited the Andrews case in his decision to throw out the lawsuits.

Circuit court offers the only avenue of relief for applicants who feel that their proposals weren’t given a fair review.

“If the commission denies an application for a cultivation license, the commission’s decision may be appealed to the circuit court of the county in which the cultivation facility is situated or the Pulaski County Circuit Court,” the commission’s rules read.

Asked whether attorneys for the state would raise the Andrews decision in any legal challenges brought by unsuccessful applicants, Nicole Waugh, Rutledge’s communications director, said in a written statement: “The Attorney General does not comment on hypothetical cases. As a general matter, the Attorney General believes citizens can still sue to prevent state officials and agencies from acting in a way that is unconstitutional, illegal or outside the scope of their authority.”

Gray is part of a group attempting to get a measure on the November ballot that would amend the state constitution to allow the General Assembly to waive sovereign immunity in certain scenarios.

David Couch, a Little Rock attorney who was the primary backer of Amendment 98, is optimistic that the commissioners scored the applications appropriately and that the deserving applicants rose to the top. Couch has applied to grow and sell medical cannabis.

He added that disgruntled applicants also could take their gripes to federal court. Federal judges have hesitated to involve themselves in medical marijuana disputes because the drug remains illegal under U.S. law, but Couch said federal courts will step in if a person is being deprived of a state right.

From a patient’s perspective, the state being immune from lawsuits is probably a positive thing, Couch said. Growers, he said, should be able to start operating quickly.

“Whatever you get from the commission is what we’ll have,” Couch said, adding that winning applicants likely won’t have to wait on court challenges to start operating.

The worst scenario, according to Couch, would be having dispensaries open without having enough product available, driving up prices because of poor supply.

The Arkansas Department of Health has already approved 4,116 applications for registry ID cards for patients with qualifying conditions; 244 applications are pending, according to spokesman Meg Mirivel. The cards will be distributed a month before dispensaries open.