Applications For Medical Marijuana Operators Weeding Out Recreational Entrepreneurs

Jun 6, 2017
Originally published on June 8, 2017 10:56 am

Arkansas Medical Marijuana Commission meeting veterans might have looked around the board room inside the Alcohol Beverage Control Division last week and wondered where the dreamers went. Gone were the cowboy boots and branded T's, the men (some women, not many) who clearly are interested in marijuana and, if given the chance, the business of growing it and selling it — legally. They were replaced by lawyers and other men and women in suits.

Today the Commission holds what may be its last meeting before the application period begins June 30, if all goes as planned. The five-member body voted to make 32 licenses to retail marijuana available, along with five licenses to grow it on an industrial scale. By all accounts, many more interested parties will apply for the licenses. 

One of the veterans is Storm Nolan of Fort Smith, whose family's business is CSK Hotels, a real estate holdings company — a nice advantage in this competition for a license to grow or sell medical marijuana, since a location to grow marijuana must be set back more than half a mile from any school, daycare or church. (For retailing, it's 1,500 feet.)

Nolan says he'll apply for both grow and retail licenses. He's begun a trade group called the Arkansas Cannabis Industry Association — "Arkansas' Voice for the Medical Marijuana Industry."

Of the drop in attendance, he says, "Just through the association and all the contacts we've made, we've known several groups that've said, 'It's too complicated,' or, 'It's going to be too costly,' or, 'It's just too competitive,' and they're bowing out."

"You know, people are starting to realize exactly how much work this is going to be and how much it's going to  ruin a lot of people's summer, I’m sure."

Whether the licensing competition is fierce remains to be seen, but that it's complicated and costly is already down on paper.  According to the draft application, an entrepreneur must know enough to implement chemical profiling of the drug, advanced surveillance and security systems, medical packaging and logistics, even a plan for preventing the cross-contamination of plants.

She must have "a reputable and responsible character" — no felony convictions, sure, but what about a past Driving While Intoxicated conviction? — and have a formal association with a pharmacist and, preferably, a medical doctor as well. All of that’s after the $15,000 application fee has been met, along with proof of far deeper financial resources.

Without question the licensing process favors established business owners, especially business owners with experience navigating a regulatory atmosphere, but it appears to advantage the rich as well. A section of the application called financial disclosure weighs wealth.

"It’s not 100 percent fair, I guess, but on the other hand, [the Commission] has been charged with making sure the patients of Arkansas have access to medical marijuana, and they want to make sure they people they choose have that ability," Nolan says.

It explains why, earlier, when the Commission leaned tentatively toward a lottery system to pick licensees (after baseline competencies and requirements were met), it was convinced to reverse course and establish a weighted, wholly competitive application process.

"I guess my point is, they want the applicant to be able to prove that you have the funds to set this up and keep it going until you can make a little bit of money, but this financial disclosure is only 10 percent of the application. And they actually had that conversation at the last meeting — 'We don't want to overweight this section because then [the license] goes to rich people, and that's not the point.'

"So I imagine they're going to look at someone's net worth, and if it's at whatever [baseline] level they have in the back of their minds, that over and above that doesn't matter so long as you can get this set up and keep it in business as you're showing a negative cash flow."

The Arkansas Medical Marijuana Commission meeting takes place at 3:30 p.m. today at 1515 W. 7th St. Commission meetings do not make time for public comment, as a general rule. 

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