Litigation to strip a Fort Smith medical marijuana cultivation facility of its grower's license is on the fast track to be decided by a Pulaski County Circuit judge amid accusations that state regulators, their lawyers included, have deliberately lied or engaged in other unethical practices.
Further, attorneys for the Little Rock company that claims it's rightfully entitled to the license argue that the state, represented by Attorney General Leslie Rutledge's office, has technically dropped its defenses, so the judge should side with them in summary judgment.
At stake is the eighth and final grower's license allowed under the voter-approved 2016 state constitutional amendment legalizing medical marijuana.
Presiding Judge Herb Wright has given Rutledge's lawyers until midnight Monday to respond, indicating that he could resolve the litigation by the end of this week but intends to decide the case before the upcoming election, which includes a referendum on marijuana regulation.
Plaintiff's attorney Abtin Mehdizadegan of the Little Rock firm Cross, Gunter, Witherspoon & Galchus PC asked for the case to be expedited. He said Friday the litigation has been drawn out partially by the attorney general's office offering the prospect of a settlement that never came to fruition.
But further, with voters poised to consider legalizing recreational marijuana, they need to see how regulators operate now, he said.
The judge overruled the state's objections to the speedy pace of proceedings and rebuffed the attorney general's request to be relieved as the lawyer for the defendants, the Arkansas Department of Finance and Administration, its Alcoholic Beverage Control division and the Arkansas Medical Marijuana Commission. The agencies want time to get new lawyers, court filings show.
"Due to recent disagreements by the defendants regarding the best course of action in this case, it has become impossible for the Arkansas Attorney General's Office to continue to represent them," Senior Assistant Attorney General Kate Donovan wrote in a recent pleading. "Defendants request the Arkansas Attorney General's Office be withdrawn as counsel."
The lawsuit by plaintiffs 2600 Holdings LLC, which operates as Southern Roots Cultivation, was launched in January 2021 against the state medical-marijuana regulators after they awarded River Valley Production LLC, of Fort Smith, the last grower's license.
Doing business as River Valley Relief Cultivation and owned by Fort Smith hotelier Storm Nolan, the grower began delivering its product to dispensaries last February.
The lawsuit asserts that River Valley should never have been considered for a license because its proposed site was too close to a school to meet state requirements. Beyond that, Southern Roots lawyers argued, there was no legal business entity to give the license to because Nolan had shut down River Valley before the licenses were awarded.
Now, Southern Roots says the operation is growing marijuana at a different site, one that regulators have not properly reviewed. Nolan did not respond to an email sent to his property-management and real estate investment company, CSK Hotels.
Southern Roots wants the judge to void the license issued to River Valley and order state regulators restart the review and award process. The judge declined to immediately intervene last year, refusing to block authorities from giving the license to River Valley.
But in July 2021, he did reject the state's arguments that the lawsuit should be dismissed on sovereign immunity grounds. State lawyers asserted then that regulators were lawsuit-proof because what Southern Roots is trying to do is use the courts to control the operations and administrative decisions of state agencies.
State lawyers appealed the judge's ruling, taking the rejection to the Arkansas Supreme Court. That appeal took about eight months before the justices ruled to side with the judge in July.
During the course of the appeal, state lawyers missed a deadline to formally answer the suit, a failure under the Arkansas Rules of Civil Procedure that gives the judge the authority to disregard the state's response and rule that Southern Roots has proved its case, the company's lawyers state in a recent summary judgment motion.
Southern Roots contends that its proof of state regulators' "gross mishandling and repeated violations" of the state medical marijuana constitutional amendment is unassailable.
Other responses to the litigation as provided by the marijuana commission and alcohol board "reflect a stunning and egregious disregard of the truth, facts, the rule of law, and the most basic notions of fair play and substantial justice," the lawyers wrote, describing them as containing false and misleading denials [and] feigned ignorance."
In its summary judgment motion, Southern Roots, describing those responses as "maddeningly dishonest and disingenuous," lists 18 instances in which it says the marijuana commission or the alcohol board provided contradictory responses to the litigation by denying facts that they had already acknowledged to be true.
The Southern Roots lawyers -- Mehdizadegan, with co-counsel Carolyn Witherspoon, Bonnie Johnson and Brett Taylor -- say state's attorneys have also "advanced inconsistent and incompatible positions," describing six occasions when state lawyers have contradicted arguments they've made in similar earlier litigation in defending regulators in the Southern Roots lawsuit.