In medical marijuana lawsuit involving Fort Smith cultivator, plaintiff says state in contempt of judge’s ruling

 This Sept. 30, 2016, file photo shows a marijuana bud before harvesting at a rural area near Corvallis, Ore. (AP Photo/Andrew Selsky, File)
This Sept. 30, 2016, file photo shows a marijuana bud before harvesting at a rural area near Corvallis, Ore. (AP Photo/Andrew Selsky, File)

State medical-marijuana regulators are flouting a judge's order to revoke the license of an illegally certified Northwest Arkansas cannabis grower by refusing to immediately strip the company of the license like they were told to do, lawyers for the Little Rock company that claims it's rightfully entitled to the license assert in an emergency motion on Tuesday. They warn that regulators are trying "to pull the wool over the court's eyes" and have "misled" the judge.

The cultivation license is the last of eight authorized by the state constitutional amendment passed by voters in 2016 to legalize medical marijuana. It was awarded to Fort Smith businessman Bennett "Storm" Nolan, whose River Valley Production LLC of Fort Smith began growing marijuana last year and started selling it in February as River Valley Relief Cultivation.

Pulaski County Circuit Judge Herb Wright ruled 13 days ago that Nolan and company weren't qualified candidates and shouldn't have been licensed, but for marijuana regulators ignoring their own rules, while making up others, to award the certification. He told regulators to take the license and properly award it to a legitimate candidate.

The judge was acting on a 2021 lawsuit brought by a company that claimed it had been wrongly passed over for the license, 2600 Holdings doing business as Southern Roots Cultivation.

Tuesday, Southern Roots attorney Abtin Mehdizadegan called on Wright to again intervene, stating in an emergency motion that, rather than just cancel the license like they had first promised, regulators had instead substituted an administrative process that would not conclude until the end of the month and could give Nolan and River Valley another chance to stake a claim to the license, despite the judge's ruling.

Further, Southern Roots wants the judge to hold Doralee Chandler, the director of the Alcoholic Beverage Control Administration, the enforcement arm of the medical-marijuana regulators, in contempt.

Mehdizadegan pointed out that the judge found regulators went to curious lengths to favor Bennett and River Valley, stating that Chandler appears again acting to benefit Bennett.

"Director Chandler is doing her best to deliver once again. Rather than moving with the appropriate expediency in revoking the unconstitutionally awarded license, Director Chandler is now attempting to (1) judge this Court's findings of fact and conclusions of law; and (2) provide Mr. Nolan an end-around," Mehdizadegan stated in the seven-page motion and 22-page supplemental brief. "Director Chandler is attempting once again to rinse and repeat [River Valley's] unconstitutional application through another administrative cycle. Mr. Nolan and [River Valley] (which does not exist) have no administrative rights to a hearing."

Southern Roots is asking the judge to put the issue on a fast-track to resolution by giving the state defendants until the end of the week to respond to its assertions.

Southern Roots' accusations come just as the Medical Marijuana Commission reported that patients spent about $23.4 million on 4,588 pounds in October at the state's 38 dispensaries. The largest seller was Natural Relief Dispensary in Sherwood with 443 pounds, while Suite 443 in Hot Springs sold 414 pounds. Overall, six dispensaries sold more than 200 pounds in October, the commission reported. Sales tax on medical marijuana was $2.8 million in October, for a total of $26.8 million state revenue.

As of Nov. 1, patients paid $228.4 million for 41,188 pounds of medical marijuana, with sales predicted to reach a record $275 million if the sales pattern holds up, the agency reported. The state Health Department reports 90,148 active patient cards.