Arkansas Judge Considers Effort to Halt Marijuana Licenses


LITTLE ROCK, Ark. (AP) — An Arkansas judge said Friday he’ll rule by the middle of next week on whether to allow the state to issue its first licenses for companies to grow medical marijuana after hearing complaints from an unsuccessful applicant challenging the permitting process.

Pulaski County Circuit Judge Wendell Griffen did not rule after hearing testimony from the state and Naturalis Health LLC, which wants the 95 applications for medical marijuana cultivation facilities to be re-scored by an independent evaluator. The Medical Marijuana Commission had planned to issue licenses to the top five applicants on Wednesday, but Griffen issued a temporary restraining order halting the process so he considered the request for a preliminary injunction.

“This is a potential billion dollar industry,” Keith Billingsley, an attorney for Naturalis, said during closing arguments. “Ninety-five people submitted applications and spent a lot of time, including my client, on this process assuming the state of Arkansas would get it right, that the state of Arkansas would conduct a blind examination of applications and that it would be done in a fair and impartial way.”

Naturalis ranked 38th out of the 95 applications submitted, state officials said.

Arkansas voters in 2016 approved a constitutional amendment legalizing medical marijuana for patients with certain conditions. The commission is expected later this year to license up to 32 dispensaries to sell the drug.

The company’s lawsuit claims the process for scoring applications and awarding the licenses is flawed. The company also cites two potential conflicts of interest, including one commissioner whose law firm represents the owners of one of the facilities that was going to receive a license in non-marijuana related matters. The state, however, has said that the applications scored by the commissioners were redacted and did not include any identifying information about the applicants.

The state has also said Naturalis has not proved it would suffer irreparable harm if the state is allowed to award the licenses.

“The fact that they spent money to get ready for an application and they submitted an application that was a losing application and, if they were possibly scored again and they improved their ranks from 38th to one of the top five, they might then reap the return on their investment, those are speculative harms,” Deputy Attorney General Monty Baugh said.

Griffen earlier Friday also denied an effort by the state to dismiss the company’s complaint, rejecting arguments that Arkansas was immune from the lawsuit and that Naturalis did not have standing to sue.

Arkansas has approved more than 4,500 applications for patients to use medical marijuana and will issue registry cards about a month before the drug is expected to be available legally.

Arkansas Judge Stalls Permit Process For Growing Medical Marijuana


In an unforeseen twist, an Arkansas judge stalls permit process for growing medical marijuana in that state, pending a lawsuit by unsuccessful applicants. Pulaski County Circuit Judge Wendell Griffen directed state officials not to issue licenses to the applicants they have already selected. Regulators with the Arkansas Medical Marijuana Commission had planned to issue those licenses today.

Was The Process Unfair?

The commission announced which applications to cultivate medical marijuana in the state they approved late last month. At least two companies with unsuccessful bids subsequently filed lawsuits on Tuesday alleging the selection process was unfair.

Naturalis Health LLC Health LLC and Delta Cannabinoid Corp. are the plaintiffs in the cases. They included in the suits a request that the judge issue a temporary restraining order to stop the commission from granting the licenses.

The judge sees merit in the plaintiff’s arguments, according to reports in local media.

While announcing his order today, he said that Naturalis Health “asserts facts showing a substantial likelihood of success on the merits regarding violations of the Administrative Procedure Act, due process, and equal protection.”


Plaintiffs Don’t Trust The System

The lawsuit from Naturalis Health is 19 pages long, Arkansas Online reports. In the suit, the company states that they have no faith in the permitting process.

“Defendants have caused a complete distrust in the newly implemented medical marijuana industry, approved by Arkansas voters, to serve the medicinal needs of qualifying Arkansans.”

The lawsuit also called on Judge Griffin to act quickly.

“Arkansas is the first state in the south to legalize medicinal marijuana. The State has an obligation not only to plaintiff but to its citizens, to get this right. The State has a limited window of time to correct the problems outlined in this Complaint. This Court must act now.”

The legal filing also notes that one of the commission’s members has an “extremely close personal and professional relationship” with Dr. Scot Michael Schlesinger. Dr. Shchlesinger is a partner in Natural State Medicinals. The commission selected that company to receive one of the permits.


Will A Lawsuit Prevail?

Alex Gray is a lawyer with the Arkansas Medical Marijuana Association. He does not believe a lawsuit against the state can succeed.

He noted that the Arkansas Supreme Court ruled this year that the state can’t be sued in its own courts. Gray has filed lawsuits for growers in the past that were then dismissed by the courts.

“Any challenge naming the state as a defendant is going to have issues prevailing based on the state’s sovereign immunity,” Gray said.

Final Hit: Arkansas Judge Stalls Permit Process For Growing Medical Marijuana

Regulators are now unsure if the commission’s meeting scheduled for this afternoon will still be held. Scott Hardin is a spokesperson for the Arkansas Department of Finance and Administration (DFA). He issued a statement via email to the press today.

“The DFA’s legal team and [Arkansas Beverage Control Division] leadership are currently reviewing the situation to determine whether or not a meeting will take place today,” Hardin wrote.

Judge Griffin scheduled a hearing on the matter for Friday morning.