Medical marijuana cultivators in Arkansas were ready to make moves and open their canna-businesses this week, but the process has now been put on hold by a local judge, delaying the rollout of the state's new MMJ program for the foreseeable future. State regulators were planning to formally award the first five cannabis cultivation licenses, but two applicants who failed to make the cut filed a lawsuit alleging that the state's application review process was unfair.
Last month, the state's Medical Marijuana Commission (MMC) announced their decision to award the coveted cultivation licenses to the five highest-scoring applicants out of the 95 applications they received. All five of these companies paid their $100,000 license fee and posted a $500,000 performance bond, and were planning on beginning the construction of their grow-ops as soon as the MMC officially granted their licenses this Wednesday.
Naturalis Health LLC and Delta Cannabinoid Corp., two companies that were not awarded licenses, filed a lawsuit alleging that the commission's grading process was flawed due to arbitrary criteria and conflicts of interest. Naturalis Health, whose cultivation application was scored 39th out of the 95 total applications, accused one commission member of awarding a license to a canna-business owned by a friend, and another member of awarding a license to one of his law firm's clients.
The lawsuit argues that the flawed review process "caused a complete distrust in the newly implemented medical marijuana industry, approved by Arkansas voters, to serve the medicinal needs of qualifying Arkansas residents," the Associated Press reports. "Arkansas is the first state in the South to legalize medical marijuana. The state has an obligation not only to plaintiff, but to its citizens, to get this right." In order to address the situation, the lawsuit argues that the state should order an independent review of the applications.
In response to the complaint, Pulaski County Circuit Court Judge Wendell Griffen issued a temporary restraining order to prevent the state from issuing any license, and the MMC postponed their license-awarding hearing until further notice. The restraining order only applies until this Friday, when Judge Griffen will hold a hearing to rule on the request for a preliminary injunction.
Until this issue is resolved, the state's medical marijuana program is on hold indefinitely, and the 4,410 patients who have already been approved to receive medical cannabis treatments will have to wait even longer for their medicine. The delays in Arkansas' licensing process are no surprise to cannabis industry professionals, however, given similar delays in Ohio and Maryland caused by legal challenges over those states' application review processes.
Joshua Horn, attorney for Pennsylvania cannabis law firm Fox Rothschild, said that these sorts of delays are becoming standard practice in the new industry. "The reason why, I think, is so many people look at Colorado and think, 'Boy, if I get a license, I'll never have to work another day in my life,'" Horn said to the Arkansas Democrat-Gazette. "I hate to break it to you, but you're probably not going to make a profit for the first two or three years."