Medical marijuana regulators are questioning whether the affiliation of the state Democratic Party chairman with one of Arkansas' first medical cannabis companies violates state rules.
However, the company's president said the Alcoholic Beverage Control Enforcement Division violation report relied on an inaccurate set of facts.
Former state Rep. Michael John Gray of Augusta, who is now the chairman of the Democratic Party of Arkansas, isn't and has never been an owner of Delta Medical Cannabis Co., said company President Don Parker.
Alcoholic Beverage Control Administration Director Doralee Chandler must now decide if she agrees with the Enforcement Division's assessments.
The Arkansas Medical Marijuana Commission licenses cultivators and dispensaries, and the Enforcement Division investigates complaints and whether licensees conform with laws and regulations.
On another matter related to a cultivator, Chandler on Friday dismissed a charge against a different medical marijuana grower that it misled the state about the residency of one of its owners.
The owners of each medical cannabis growing facility were required to be reported to the Medical Marijuana Commission when license applications were submitted in 2017. Any changes in ownership also must be reported and approved by the commission.
Gray, according to Delta Medical Cannabis Co.'s internal records, would only become a member of the Newport company if his mother, Penelope Stanley, died. Stanley is one of Delta Medical's founding owners, holding a 7.41 percent stake.
In a violation report, an Alcoholic Beverage Control Enforcement investigator concluded that Gray became involved with Delta Medical in March 2018, shortly after the company learned it would be one of the first five Arkansas companies to receive a cultivation permit. The agency had been reviewing Delta Medical's documents; its report didn't stem from an external complaint.
"A review of the documents voluntarily provided by [Delta Medical] to ABC Agents on September 19, 2018, indicated on March 5, 2018, Michael John Gray was appointed by his mother, Penelope "Penny" Stanley; who is one of the owners of [Delta Medical], as her proxy with the full power of substitution to vote as a member of [Delta Medical]," the report states. "Gray was also admitted as a member of [Delta Medical] on or about March 27, 2018.
"This information was not presented previously to the [Medical Marijuana Commission]."
Parker said the investigator's conclusion was incorrect.
"Michael John Gray has never been a member of [Delta Medical] and will only become a member upon the death of his mother," Parker said, adding that the company would notify the commission if such a situation occurred.
Parker said neither the agreement for Gray to inherit his mother's stake nor his role as a proxy should be reported to the commission.
"The proxy provided to him by his mother, Penny Stanley, is not a change of ownership," Parker, who is an attorney, said. "A proxy is a widely used and accepted practice in everyday business, which is used to allow the holder of a proxy to vote at ownership meetings when the owner is unable to attend. The MMC Rules do not require notification to MMC of a proxy."
Reached Friday, Gray said that he wasn't a member or owner of Delta Medical.
The violation report is being reviewed by Chandler, the agency director. She'll determine how the issue will be adjudicated and whether it should be dismissed altogether. Medical cannabis companies can be fined or have their licenses suspended or revoked if found to have violated state law or regulations.
An agency spokesman said Chandler's decision on the Delta Medical matter is expected in the next two weeks.
In the other case, Chandler on Friday dismissed a charge against Natural State Medicinals Cultivation of White Hall.
Robert DeBin, who owns a 4.46 percent stake in the White Hall cultivation facility, claimed that he'd been an Arkansas resident for the past seven years. The claim was made in a portion of Natural State Medicinals Cultivation's application for a growing permit that was notarized on July 31, 2017, according to a violation report.
However, DeBin also claimed five months earlier that he was a Colorado resident in an application for an occupational license in Colorado's marijuana program, the report said.
Chandler, in her dismissal order, wrote that DeBin provided additional proofs of residency during the investigation, including tax returns for 2016 and 2017.
"There is insufficient evidence that Robert DeBin provided false or misleading information on his application with the Medical Marijuana Commission in Arkansas," Chandler wrote.
Chandler also dismissed a complaint against a company that applied unsuccessfully for a growing license. River Valley Relief Cultivation of Fort Smith had been accused of locating a facility too close to a juvenile detention facility and church. Chandler dismissed the complaint because it doesn't have a facility, and it therefore couldn't be violating the requirement that prohibits marijuana facilities from operating near churches, schools and day care centers.
Arkansas is one of 33 states where marijuana is legal for medicinal use. Voters approved Amendment 98 to the Arkansas Constitution in 2016, but legal and bureaucratic delays have stalled the program's rollout. The first dispensary is expected to open in April.
A Section on 02/02/2019
Print Headline: Medical marijuana regulators question if firm's tie to state party chief violates rules