AR: Judge Considers Marijuana Licenses

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Photo Credit: Andy Colwell

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 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.

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