Firm on list for Arkansas pot license seeks suit slot

Filing joins 4 other growers in bid to intervene in case

*CLARIFICATION: Natural State Wellness Enterprises was ranked third among five companies that were to be awarded a medical marijuana cultivation license. A previous version of this article should have made clear that the firm was the first among the top five applicants to ask to join a lawsuit that has kept the Arkansas Medical Marijuana Commission from issuing the licenses. The other firms in the suit were not on the list to receive the licenses.

A company* that stood to receive one of Arkansas' five new medical-marijuana growing licenses asked Thursday to intervene in the lawsuit that derailed the state's plans for handing out the licenses.

Natural State Wellness Enterprises joins four other marijuana-cultivation applicants that have asked Pulaski County Circuit Judge Wendell Griffen to allow them to become parties in a lawsuit against the Arkansas Medical Marijuana Commission, but it's the first to argue in the commission's favor.

Griffen, in an order Wednesday, declared the commission's rankings of the 95 cultivation applicants "null and void" and barred the panel from awarding the first five growing licenses. The judge cited the appearance of bias in the evaluations of two proposals and also cited the Arkansas Alcoholic Beverage Control Division's failure to verify that applicants complied with key requirements.

That ruling, Natural State Wellness Enterprise's motion said, threatens its own growing license on "erroneous grounds" without giving it a chance to be heard.

"NSWE's application was not subject to any of the irregularities alleged in Plaintiff's Complaint," the motion reads. "The bias and other alleged irregularities (the existence and effect of which NSWE denies) appeared to affect NSWE's application (under Plaintiff's theory) the same as every other applicant."

The way forward remained unclear Thursday as Arkansas Attorney General Leslie Rutledge's office, which could appeal Griffen's ruling to the state Supreme Court, continued to deliberate its next move.

Natural State Wellness Enterprise's filing further complicates a morass of legal challenges that followed the commission's Feb. 27 announcement of the five companies it planned to award permits to grow marijuana.

Those five groups -- Natural State Wellness Enterprises, Bold Team LLC, Natural State Medicinals Cultivation, Osage Creek Cultivation and Delta Medical Cannabis Co. -- have generally defended the commission's scoring process; some of the remaining 90 applicants have mostly complained about conflicts of interest, scoring irregularities and a host of other concerns they see as oversights by the commission.

Griffen's order has put the commission's work on hold. The panel had planned to issue the growing licenses March 14, but a temporary restraining order that Griffen issued hours before the meeting stopped it. The commission also was carrying out a similar evaluation process for 227 dispensary applications, but Scott Hardin, a spokesman for the state Department of Finance and Administration, which provides administrative support to the commission, said the agency was reviewing Griffen's order to "determine the next steps with dispensary scoring."

The snags will delay the availability of medical marijuana to patients with one of 18 qualifying conditions. Arkansas became one of 29 states to legalize the drug in 2016 after voters approved Amendment 98 to the Arkansas Constitution, but the amendment requires patients to use marijuana grown and processed under licensing in Arkansas.

[DOCUMENTS: Read complaints filed + winning applications from top five growers]

Before the court action, industry insiders' earliest projections had medical cannabis available for purchase late this year, but most don't expect the first dispensary to open until 2019.

Natural State Wellness Enterprises, in its complaint, argued that it had already received its license, pointing to a document from the Alcoholic Beverage Control Division issued when it paid its $100,000 licensing fee and posted a $500,000 performance bond.

The document includes a permit number, but Hardin said it was a receipt proving that the company had submitted its licensing fee and performance bond. The document says that an official license, signed by the commission's chairman, will be issued later.

The company also pointed to Griffen's order, which said the commission's official awarding of licenses was simply a formality.

An attorney for Natural State Wellness Enterprises, whose ownership includes former Attorney General Dustin McDaniel, also said that state attorneys failed to make many arguments against Griffen's order, including that no errors were alleged in the scoring of his client's application and that the admission of an article from the Arkansas Democrat-Gazette should not have been allowed to be entered as evidence.

Natural State Wellness also said that Griffen didn't consider an exception to the "'appearance of bias' standard; namely whether recusal was possible for the commissioners under Arkansas law (which it was not)."

Another disgruntled applicant also asked to join the lawsuit Wednesday afternoon.

In its request to intervene, River Valley Relief Cultivation added to the mountain of allegations against the five companies that stood to receive a growing license.

River Valley Relief, the sixth-highest scoring company, accused Natural State Medicinals Cultivation of providing false information in its application about the residency of one of its owners.

The company cited voter-registration records from Arkansas and Colorado for Robert deBin, a part owner of Natural State Medicinals Cultivation. DeBin was registered to vote in both Colorado and Arkansas in 2016, according to voting records attached to River Valley Relief's complaint. Commission rules require all cultivation and dispensary license applicants to have lived in Arkansas for the past seven years.

River Valley Relief also cited deBin's current marijuana occupational license in Colorado. To hold a license there, the state requires license holders to be residents.

"A failure to engage in an inquiry and verification of each applicant undermines the integrity of the selection process and is a failure of the Commission to enforce its own rules," an attorney for River Valley Relief wrote.

DeBin, who is also president of the Arkansas Cannabis Industry Association, didn't respond to an email requesting comment on Thursday, and a phone call to the association went unanswered.

Metro on 03/23/2018