Pulaski County Circuit Judge Wendell Griffen said last week he would likely issue an opinion Wednesday, after the Arkansas Times has gone to press, on whether to grant a preliminary injunction that would delay the awarding of licenses to cultivate medical marijuana.
Griffen held a hearing Friday, March 16, on a complaint filed by Naturalis Health LLC alleging conflicts of interest on the part of commissioners and seeking the injunction. Naturalis was one of 95 applicants competing for just five potentially lucrative cultivation slots awarded in February.
Griffen issued a temporary restraining order March 14 in response to Naturalis' complaint, halting the commission's plans to formally issue licenses that afternoon. At the March 16 hearing, Deputy Attorney General Monty Baugh, representing the commission, the Arkansas Department of Finance and Administration and the DFA's Alcoholic Beverage Control Division, which serves as staff for the commissioners, noted that Naturalis scored 38th out of the many applicants, meaning that even if all five of the winners were somehow disqualified, Baugh said, Naturalis would still "have 37 people in front of them." But Patrick Murphy, a partial owner in the company and in-house counsel for Naturalis, said he believed his company would score in the top five if independent experts graded the applications.
The Naturalis complaint details a variety of alleged problems with how the five-member commission ranked applicants. It alleges undisclosed conflicts of interest between commissioners and two of the winning applicants. Commissioner Travis Story, an attorney, has done legal work for the Trulove family of Berryville, which owns winning applicant Osage Creek Cultivation LLC. Osage received Story's second-highest score. Though ownership was redacted from applications, Story had to know he was reading Osage Creek's application because of mention of "various Trulove related entities," Murphy said. "If you were Story, it would be impossible to get it out of your mind when you see an entity bearing the name of your client, in the same county." On cross-examination, Baugh asked Murphy whether throwing out the Osage Creek application would provide any relief to Naturalis, considering its low ranking. "Our relief is to throw out the entire process and give everybody a fair shake. None of these numbers mean anything," Murphy replied.
Another commissioner, Dr. Carlos Roman, gave his highest score — far higher than any others he awarded — to Natural State Medicinals Cultivation. A partial owner of that company is Dr. Scott Michael Schlesinger. Naturalis' complaint states the two men have an "extremely close personal and professional relationship," with Roman regularly referring patients to Schlesinger's practice. Baugh pointed out that their professional relationship would appear to work to the benefit of Schlesinger, rather than Roman. "I think it's mutually beneficial," Murphy said.
The complaint also lists other alleged problems. Among them:
• Commissioner Dr. Ronda Henry-Tillman used check marks instead of numbers on a part of a score sheet. She later added numbers.
• A search of public records by the plaintiffs found a connection between several individuals associated with the top-scoring applicant, Natural State Medicinals, and "Arkansas corporations with revoked charters, as a result of past due franchise taxes."
• One applicant, Natural State Agronomics, seemingly did not meet the constitutionally mandated requirement to locate the entrance to its facility at least 3,000 feet from a school, daycare or church, which should have disqualified it from consideration.
At the beginning of the hearing, the state asked Griffen to dismiss the suit based on a sovereign immunity defense. A recent ruling by the Arkansas Supreme Court broadly curtailed lawsuits against the state by declaring the legislature may not pass laws that waive sovereign immunity. But Griffen noted that medical marijuana was legalized by a non-legislative process — the passage of an amendment by Arkansas voters in 2016 – and the law "explicitly contains provisions that contemplate that judicial review will occur" if there are issues with the Medical Marijuana Commission.
"The Medical Marijuana Commission is a creature of the people, by a constitutional amendment," Griffen said. "It begs credulity to ask a court to say that the people of Arkansas voted into law ... a provision that allows people to sue and then say the state cannot be sued."
Benji Hardy of the Arkansas Nonprofit News Network filed this report.