Bidders to grow pot add in perks
Educational gifts, charities in plans
Officials in socially conservative Jackson County don’t want one of the five medical-marijuana cultivation facilities coming to Arkansas later this year; they want all five.
In medical pot, leaders in the small northeast Arkansas county see more than a controversial drug. They see the economic boost and charity the cannabis growers would provide to the economically depressed region.
The jobs and the tax dollars are the obvious benefit, but hopeful cannabis cultivators are sweetening the pot in more creative ways.
One group has pledged to establish a foundation that would fund early-childhood education for low-income children. Another group said it would sponsor youth athletic tournaments and holiday turkey giveaways.
Other applicants have promised to offer opportunities for internships to university students in science and agriculture fields, and most plan to support substance-abuse programs.
These prospects excite people like Jon Chadwell, executive director of the Newport Economic Development Commission. The commission has determined that one cultivation facility alone could inject
more than $1.2 million in local taxes and wages into Jackson County.
“We see the spinoff impacts [of marijuana cultivation facilities] to be higher than that of traditional factories,” Chadwell said. “Plus, you have the nonprofits and charity benefits; that’s gravy on top.”
Applicants trumpet their efforts as great ways to give something back to the community, but they benefit, too. Potential growers can earn up to 7.5 bonus points for the economic impact potential and community benefits described on their cultivation facility license applications.
The Arkansas Medical Marijuana Commission next month plans to announce the five successful bidders for cultivation licenses. Winners of the 32 dispensaries will be announced later this year.
Arkansas voters approved the legalization of medical pot in 2016, making the Natural State one of 29 in the U.S. with comprehensive medical-cannabis programs, according to the National Conference of State Legislatures.
States with similar programs have seen companies participate in community service organizations and contribute to charities, especially those dealing with substance abuse. In Colorado, for example, a group of marijuana retailers created a volunteer organization immediately after the drug was legalized to improve the public perception of medical pot.
The 95 bids for Arkansas growing centers are being graded on a 100-point scale — 10 points for applicant qualifications; 50 points for demonstrating the ability to operate in compliance with the law; 20 points for a solid operations plan; 10 points for financial disclosure; 2.5 points for affiliation with a doctor; 2.5 points for community benefits; and 5 points for economic impact and diversity.
While the bonus points for economic impact, diversity and community benefits represent a rather small portion of the overall score, David Couch, a Little Rock attorney who was the primary backer of Amendment 98, suspects those few points will play a major role in determining which applicants are successful.
“I’d be surprised if someone scores high enough to get a license if they didn’t have something included for
the giving-back-to-the community aspect,” said Couch, an applicant himself seeking licenses to grow and sell the drug. “One of the key parts of the application process is seeing how an applicant can distinguish themselves. Sure, you can show you have a great business plan, but community involvement is where you can really set yourself apart.”
A spokesman for the Department of Finance and Administration declined to comment on how specific categories of the applications will be considered. The department provides administrative support to the independent board reviewing all the bids — the Arkansas Medical Marijuana Commission.
“While the cultivation applications are currently under review by the five members of the Medical Marijuana Commission, it would not be appropriate for us to speculate how Commissioners will consider specific categories,” said Scott Hardin, a finance department spokesman. “The Commission developed and approved each category in the cultivation applications, applying a specific weight to each. The Commission included ‘Community Benefit’ among factors to be scored. This is a highly competitive process in which each point matters.”
The Department of Finance and Administration doesn’t have a specific estimate on the number of jobs the medical-marijuana industry will create, but officials suspect it will be “hundreds” initially.
The industry should develop into a $40 million-a-year retail market once matured, translating into about $2.4 million in state sales tax, according to Department of Finance and Administration figures.
At the outset, the state expects to collect more than $1.5 million in licensing and application fees. It cost $7,500 to apply for dispensary license (244 applied) and $15,000 for a cultivating license. Losing bidders will be refunded half of their fees.
Prospective growers and sellers have spent well beyond the application fees preparing their own plans and securing land. The high upfront cost has applicants ensuring they cover every base in their applications.
Delta Medical Cannabis Co., for example, has pledged to start the Northeast Arkansas Learning Initiative, which would help send low-income children to early-childhood education programs.
Delta Medical Cannabis
Co. is one of nine bidders vying for a growing operation in Jackson County. The company’s stakeholders modeled their plan for the Northeast Arkansas Learning Initiative after a similar program in Minnesota. Economists at the Federal Reserve Bank of Minneapolis have said that a $1 investment in early-childhood education can return $16 in benefits to society on the back end.
Delta Medical Cannabis Co. has promised to donate 10 percent of its annual net profits to charity with 7 percent going to the learning initiative.
Don Parker, a Jonesboro attorney and company shareholder, said he and his partners hope to eventually expand the learning initiative across the region and state. He added that early education is the best economic development investment.
“The jobs the business will create are one thing,” Parker said. “But we looked at it and said, ‘What can we really do to make an impact?’”
Another Jackson County applicant — Mothers Accountable for Marijuana in Arkansas — created a charitable trust to direct 4 percent of the company’s profits to charities at the start. The company’s founder and chairman, Lauren McDonald, said the group plans to increase that figure to 10 percent down the road.
McDonald said she and her co-owners have also discussed partnerships with several other charitable groups and the nursing program at Arkansas State University, Newport.
“This is a way to do something and really give back, not just make a lot of money,” she said.
Jerry Cox, president of the Family Council and opponent of medical marijuana, said it’s a “bad idea” for any charitable or government group to become dependent in any way on money originating from “vices,” putting medical marijuana in the same category as tobacco, gambling and alcohol.
In other states, medical-marijuana groups hit a wall when trying to donate money. One medical-marijuana company tried to give to a Colorado children’s hospital, but the hospital declined the donation fearing association with the marijuana industry.
“The fact they may be throwing a few dollars at a good activity in the community doesn’t negate the harm [medical marijuana] is going to cause,” Cox said.