Last week, Pulaski County Circuit Judge Wendell Griffen issued a preliminary injunction to prevent the state Medical Marijuana Commission from awarding five permits to companies to cultivate marijuana in the state.
He declared the earlier scoring of five top applicants "null and void," with a key factor being commissioners' conflicts of interest.
The state later announced that it would appeal to the Arkansas Supreme Court.
Griffen's decision came in a lawsuit filed by Naturalis Health, one of dozens of applicants that finished low in the scoring. It alleged faulty judging, conflicts of interest and arbitrary scoring. Other intervenors made similar complaints. The commission announced the top scores Feb. 27. The winners, in order, were Natural State Medicinals Cultivation, Bold Team, Natural State Wellness Enterprises, Osage Creek Cultivation and Delta Medical Cannabis Co. Inc.
The judge agreed with plaintiffs that there were questions about the application rules requiring set distances between marijuana facilities and schools. He also said connections between Commissioners Travis Story and Carlos Roman and successful applicants (one a legal client of Story's; others professional colleagues of Roman) violated the "appearance of bias legal standard for administrative decision-making."
A 5-2 ruling by the state Supreme Court earlier this year said the state's sovereign immunity could not be waived. Griffen said that, while the amendment legalizing medical marijuana said it did not waive sovereign immunity, the argument can't be used by the state here because the lawsuit alleges illegal action by the state. He declined to dismiss the suit on that ground and the argument that the plaintiff lacked standing.
The judge rejected some of the challenges made by Naturalis, such as lack of specific proof of residency for some owners of applicants; the different score sheet used by one commissioner, and the absence of a markdown for a regulatory fine paid by one applicant of which the commission was not aware. But he found the review hadn't adequately considered whether some applicants were owners of corporations that had not paid franchise taxes.
On the finding that Story and Roman shouldn't have participated, Griffen wrote: "Administrative decisions must not only be unbiased, they must appear to be unbiased." (Critics will undoubtedly find much to say about this portion of Griffen's decision, given the controversy in which he's enmeshed as a personal opponent of the death penalty while sitting on a case that ultimately led to a ruling adverse to the state carrying out an execution.)
The judge rejected an argument that losing applicants were entitled to a hearing before the commission. He said the law clearly provided for an appeal, but to circuit court.
In summary, Griffen said: "To put it bluntly, the Medical Marijuana Commission and Alcoholic Beverage Control Division have proceeded in a manner that denies due process and the rule of law, rather than in a manner that respects it."
He said it was "unpleasant" that the decision means more delay for people hoping to obtain medical marijuana to alleviate suffering. But he said it was the court's duty to uphold the rule of law.
Griffen's ruling "will help convince Arkansans that the process [of selecting medical marijuana cultivators and dispensers] was rolled out in a fair and equitable manner," Storm Nolan, the founder of the Arkansas Cannabis Industry Association and its former president, said.
"The unfortunate part is it's going to take even longer for patients to get medical cannabis," and patients are already frustrated with the amount of time it's taking Arkansas to implement a constitutional amendment voted on by the people in 2016, he said. "It's making people cynical," he said, but the association is trying to educate those who need medical cannabis that the "state is not trying to drag its feet" on the implementation of the industry.
Nolan is also an owner in River Valley Relief Cultivation, which was scored in sixth place by the Medical Marijuana Commission, just out of the running.
After Griffen's ruling, Governor Hutchinson said the commission should have granted licenses to qualified applicants by a lottery system.
The commission now has to decide how to proceed in awarding 32 dispensary permits from among 200 or so applicants.