As a nervous, standing-room only crowd looked on, the state Medical Marijuana Commission (AMMC) on Tuesday (Feb. 26) selected a handful of Arkansas companies to grow and supply the state’s first legalized cannabis products to medical patients across the state.

The historic announcement took place at the state headquarters of the Arkansas Beverage Control (ABC) Board after the agency staff’s and AMMC board took pains to explain the tedious process the regulatory panel undertook to award pot-growing licenses to five Arkansas-based companies that were selected out of 95 applicants.

“This has been a long two months. It was almost not feasible,” AMMC Chair Rhonda Henry-Tillman said of the two-month long process to review, score and select the winners.

Added Commissioner Dr. Carlos Roman: “(This) was brutal.”

Following are the five companies selected to blossom the state’s newest industry from the startup stage to an expected $70 million dollar industry by 2025.

• Natural State Medicinals Cultivation in Jefferson County

• Bold Team LLC in Woodruff County

• Natural State Wellness Enterprises in Jefferson County/Jackson County

• Osage Creek Cultivation in Carroll County

• Delta Medical Cannabis Company in in Jackson County.

ABC Director Robin Casteel said while the Commission awarded five licenses, the top six scoring applications included one applicant that had two of the top five scores. That company, Natural State Wellness, will be limited to ownership stakes in only one cultivation facility and one dispensary location. That means Natural State Wellness will have to decide between operating in Jefferson or Jackson County.

Once each winning applicant receives a formal notification letter from the AMMC, they will have seven days to pay an application fee of $100,000 and post a performance bond of $500,000.

“If someone doesn’t meet those guidelines, we will notify the next applicant that they are on-deck” to receive one of the five licenses, Casteel said.

The remaining top 10 applicants include River Valley Relief Cultivation of Fort Smith, New Day Cultivation, Southern Roots, and Delta Cannabinoid Corp. Arkansas Department of Finance & Administration (DF&A) attorney Joel DiPippa said his agency and ABC staff would complete the redaction of personal information for the top 10 cultivation applicants by end of business on Wednesday.

Alex Gray, an attorney affiliated with the Arkansas Medical Marijuana Association trade group, said the process to select the state’s first cultivation centers was fair and difficult. However, he does believe there will be several groups that did not receive licenses who will appeal the Commission’s decision.

THE PROCESS

Since the Commission’s last meeting in early December, the five-person regulatory board has been sequestered away from public purview to read, review and score the applications based on a 100-point merit scoring system approved by the state legislature in May 2017.

Ahead of Tuesday’s meeting, interest in the five cultivation facility awards was so heightened that the AMMC board had to change the forum to handle the crush of media attention and limited space in the cramped headquarters of the state Alcohol Beverage Control (ABC) boardroom, which can only seat about 100 people.

Late Monday evening, DF&A spokesman Scott Hardin alerted media representatives that ABC offices would remain closed until 30 minutes before the AMMC meeting because of security and safety concerns.

“We did consider moving locations but DFA doesn’t have any larger conference rooms that could accommodate our needs,” Hardin told Talk Business & Politics, adding that the AMMC livestreamed the meeting on YouTube.com to handle the expected influx several hundred people planning to attend the historic meeting.

NEXT STEPS

Now that the notable first five winners for the highly sought-after after pot-growing facilities have been selected, the Commission will conduct the same scoring and award process for 227 dispensary proposals that will be granted one of 32 licenses to operate up to 40 retail locations in eight quadrants of the state.

According to state DF&A officials, the AMMC’s scoring system breaks down points that applicants can earn into different sections that are focused on operating marijuana facilities in compliance with more than 24 different laws approved by lawmakers. Other sections included applicant qualifications, financial disclosure and an operations plan.

It will now likely take at least an additional two to three months for the AMMC directors to review and score the dispensary applications and then award the licenses for those retail establishments by late April or early summer, DF&A officials said.

In response to a state Freedom of Information (FOIA) request in late December, DF&A officials released the public names of all the companies applying for cultivation and dispensary licenses along with their locations. However, the names of the individual owners were redacted so not as to give any company a “competitive advantage,” Hardin said.

A review of the 322 publicly available applications shows dozens with incomplete or inaccurate information, a potential source of future litigation. As many as one-third of all cultivation and dispensary applications are missing items such as notarization, incomplete contact or registered agent data, incorrect math on percentages of ownership, insufficient financial information, inadequate proof of residency, and inaccurate answers to questions of affiliation or ownership with more than one facility, just to name a few of the errors or omissions.

Hardin said all applicants were released publicly, even if they may be summarily rejected for being incomplete or not meeting qualifications.

“At this point in the process, we are not distinguishing the applications that may not meet minimum qualifications as they are considered active until the commission votes to take formal action on them,” Hardin said. “Since September 18, 2017 — the deadline to submit an application — no applicant has been allowed to sign, supplement or adjust an application.”

As of Friday (Feb. 23), the Arkansas Department of Health (ADH) had approved 4,116 applications for medical marijuana registry ID cards allowing citizens to eventually obtain Arkansas-grown, doctor-prescribed marijuana and other cannabis-related medical products. More than 250 applications are “in-process,” although cards will not be provided to patients until a month before the medial product is available, ADH officials said.

LEGAL ISSUES

In recent weeks, concerns have been raised within legal circles and the state’s fledgling medical marijuana community about the application process for both cultivation facilities and dispensaries. Those legal concerns have been raised just as the Arkansas Supreme Court on Jan. 18 ruled that the state’s sovereign immunity law – which prohibits the state from being named as a defendant – offers blanket immunity for boards, commissions, and agencies.

The lawsuit that initiated this ruling, Board of Trustees of the University of Arkansas vs. Matthew Andrews, centered on a minimum wage dispute, but there is widespread thought that the ruling could apply to Freedom of Information requests, illegal exaction cases, and certainly administrative rules and regulations.

Subsequently, Arkansas’ lower courts have been applying the sovereign immunity decision to a variety of cases, including a recent dismissal of a lawsuit by agricultural conglomerate Monsanto over a state ban on dicamba fertilizer and an Arkansas Oil and Gas Commission regulatory lawsuit involving property owners and royalties.

Rep. Doug House, R-North Little Rock, a local attorney who spearheaded most of the state’s medical marijuana legislation in the 2017 session, thinks the state courts will allow for appeals regarding medical marijuana.