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story.lead_photo.caption Republican Reps. Austin McCollum of Bentonville (from left), John Eubanks of Paris and Johnny Rye of Trumann participate in Thursday’s hearing with the medical marijuana commission at the state Capitol. - Photo by Staton Breidenthal

Seeking to avoid further setbacks, the Arkansas Medical Marijuana Commission will hire a consultant to evaluate proposals for the state's first cannabis dispensaries.

A legislative panel on Thursday approved an emergency rule change that allows the commission to contract with an outside group to score applications and avoid "catastrophic delays."

There are 203 dispensary applications to score, and that process must be completed by the end of November when two commissioners' terms expire, said Mary Robin Casteel, director of the Alcoholic Beverage Control Division, which provides administrative support to the commission.

"I don't know that the commission has time to score those dispensaries as they sit before those terms expire," she told lawmakers Thursday. "We can't have different commissioners scoring different parts of the application process. It would potentially restart the scoring process, and then we're not scoring now until December. That's the reason for the emergency."

The five commissioners graded 83 applications for growing facilities themselves earlier this year, but they've complained that they felt rushed to complete the grading in two months. That process also led to lawsuits and complaints from losing cultivators, and the commission didn't award licenses until last week.

Arkansans voted to legalize medical marijuana in 2016, but the process for licensing the first five growers and 32 sellers of the drug has been plagued with legal and regulatory delays. The commission just last week issued the first cultivation permits.

On Thursday, the Arkansas Legislative Council Executive Subcommittee also approved a tweak to the rules, allowing the commission to keep unsuccessful cultivation and dispensary applications in reserve for two years in case a company surrenders its license or has it revoked. Unsuccessful applications won't be formally denied until the end of the 24-month term, and the refundable portion of application will also be held, unless an applicant voluntarily withdraws their proposal.

With Thursday's rule change allowing the hiring of a consultant, industry experts and state officials expect medicinal cannabis to be available in Arkansas next summer.

The commission must now go through the state procurement process to contract with a consultant, which will be expected to score the dispensary applications in 30-45 days after the contract is finalized. State officials hope to use cooperative agreements in place with other states to quickly identify qualified consulting groups.

In addition to being faster, outside scoring should help the commission avoid the same complaints and lawsuits that followed its cultivation license evaluation, industry insiders said.

Several unsuccessful growing-permit applicants sued the commission earlier this year, accusing it of a flawed process that included a myriad of inconsistencies and conflicts of interest. The suits were merged and dismissed on procedural grounds after being appealed to the Arkansas Supreme Court.

The licensing process for the lucrative permits has been highly competitive due to the expected money to be made once medical cannabis hits the market, and unsuccessful groups have promised to continue fighting the process, which they believe to be tainted.

But those companies' paths forward are unclear. Questioning Casteel about the rule change that would allow the commission to hold unsuccessful applicants in reserve for two years, House Speaker Matthew Shepherd, R-El Dorado, expressed concerns about the rule's side-effects.

"One of the concerns I had was that by holding the applications for 24 months, that, effectively, you would be, in part, precluding unsuccessful applicants from having the opportunity to contest the matter and take it to court," Shepherd said.

The state Supreme Court, ruling on the lawsuit that challenged the cultivation licensing process, held that a circuit court wouldn't have jurisdiction to review the denial of an application unless there was an adjudication at the agency level.

Casteel said an adjudication can't occur under the current rules.

"For better or worse, there is never an adjudication anticipated under the definition of adjudication in these rules," she said. "And that's to say that there's not a procedure, and there never has been, for a notice and hearing of any denial."

That has frustrated unsuccessful applicants, who in protest letters have objected. While no adjudication process is in place, the commission's rules do include a provision that appears intent on giving aggrieved applicants an avenue to appeal via the courts.

"If the commission denies an application for a cultivation license, the commission's decision may be appealed to the circuit court," the rule reads in part.

But such an appeal is governed by the Arkansas Administrative Procedure Act, which requires an adjudication by the agency before any judicial review, according to the state Supreme Court.

After Thursday's meeting, Rep. Scott Baltz, D-Pocahontas, said the current rules are unfair to groups that didn't receive a license.

"In this country, if you feel you've been wronged, you should be able to have your day in court," Baltz said.

Scott Hardin, a spokesman for the Department of Finance Administration where the commission is housed, said "while there is not an adjudication process in the [commission] rules, there are a variety of ways in which an agency may be challenged." The department did not provide any examples.

Shepherd said later that the path forward for unsuccessful applicants' appeals is "ambiguous."

Emergency rules, like those approved on Thursday, are in affect for 180 days until they can go through the regular promulgation process, which takes several months.

"Anytime you're starting something and implementing rules from scratch, there's always going to be challenges and issues along the way," Shepherd said.

Photo by Staton Breidenthal
Mary Robin Casteel, director of the state Alcoholic Beverage Control Division, told lawmakers Thursday that there are 203 medical marijuana dispensary applications to be scored before the end of the year. A legislative panel approved an emergency rule change to allow an outside contractor to handle the scoring.

A Section on 07/20/2018

Print Headline: Rx-cannabis panel to hire expert to score dispensaries

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  • condoleezza
    July 20, 2018 at 10:02 a.m.

    "Anytime you're starting something and implementing rules from scratch, there's always going to be challenges and issues along the way," Shepherd said.

    I call B.S. There is no need to reinvent the wheel when numerous (30+) other states have already done this successfully. Arkansas just prefers to wallow in ineptitude, as usual.