Arkansas company sues state over denial of medical marijuana dispensary license

It alleges racial bias in marijuana panel’s selection process

A Black-owned company is suing Arkansas regulators over the denial of its medical marijuana dispensary license application, alleging racial bias and seeking to prevent the state from issuing any more licenses until it rescores past applications or alters its selection process.

Absolute Essence, a Little Rock-based company, applied for a dispensary license in 2017, which it did not receive despite being a highly qualified applicant, according to the lawsuit filed Monday in Pulaski County Circuit Court.

The lawsuit alleges that "demonstrably less qualified non-black owned businesses -- including many that were patently unqualified to even apply for licenses and who should have been disqualified at the outset -- have been awarded licenses."

It goes on to accuse the Arkansas Medical Marijuana Commission of not uniformly applying its own rules, treating Black-owned businesses differently from non-Black-owned ones.

All licenses that the commission has issued so far are the product of a racially discriminatory process, the lawsuit alleges.

Arkansas voters in 2016 approved the constitutional amendment to set up the state's medical marijuana program. The Arkansas Medical Marijuana Commission has so far issued 38 dispensary licenses and is awaiting approval of a rule change to issue the remaining two allowed under Amendment 98.

Applicants for licenses were scored by PCG, the consulting company hired by the commission. The panel opted to select the two companies that were next in line in their respective geographic zones based on their scores from PCG to receive each of the two remaining licenses, which are expected to be issued in March if the Arkansas Legislative Council approves the rule change allowing the commission to do so.

Absolute Essence's lawsuit seeks to restrain the commission from adopting the rule change, which it alleges is "calculated to revive applications and swiftly jam through the issuance of remaining licenses" in Zone 6, in which the company is an applicant. The suit seeks to stop the commission from taking further action to issue new licenses until steps are taken to either redo the vetting and scoring of applications or require an entirely new process before issuing the remaining licenses.

Zone 6 covers Scott, Polk, Montgomery, Garland, Perry, Saline, Hot Spring and Grant counties. Green Remedies Group, which is next in line for the license based on the scoring, plans to open a dispensary in Garland County.

The lawsuit names the Medical Marijuana Commission, the Arkansas Department of Finance and Administration and the Arkansas Alcoholic Beverage Control division as defendants, along with Green Remedies Group and T&C Management. T&C Management is the company next in line to receive the Zone 8 license; it plans to open a dispensary in Texarkana.

Department of Finance and Administration spokesman Scott Hardin said the agency has a policy of not commenting on the specifics of active litigation. The department's purview includes the marijuana commission and the Alcoholic Beverage Control division.

Hardin said he did not anticipate the lawsuit having any impact on the issuance of the two licenses, unless a judge grants a temporary restraining order.

He added that there have been multiple ongoing lawsuits throughout the process of setting up the state's medical marijuana program, so additional litigation was not a surprise.