The Arkansas Medical Marijuana Commission issued draft rules this week that outline the process and particulars for obtaining a cultivation or dispensary license. The rules dictate the number of licenses of each type issued and set the criteria for obtaining a license.
What are the new rules? Arkansas’ medical marijuana program is just starting to get off the ground and, accordingly, many of the draft rules issued this week are familiar variations on the basic rules that underpin other states’ mature medical and recreational cannabis markets. Some features of the AMMC’s proposed rules do stand out, however.
License Cap. The draft rules mandate that a minimum of four cultivation licenses be approved, but limit the initial total number of cultivation licenses to eight. For dispensaries, the minimum number of license approvals is 20, not to exceed 40.
Dispensary licenses are to be allocated across eight geographic zones within the state, per the draft rules. This distribution, according to the AMMC, is to ensure patient access in regions throughout the state.
Transfer, Board, and Management Restrictions. The draft rules include tight restrictions on transfers of ownership interest in medical marijuana businesses. Licensees will be required to obtain permission from the AMMC before any transfer of ownership interest. Even more constraining is that licensees must get AMMC approval before making changes to their board of directors or to their officers. Together these aspects of the draft rules represent an extraordinary limitation on a medical marijuana business’s business judgment and corporate governance.
Ownership Restrictions. No one may have an ownership interest in more than one cultivation and one dispensary medical marijuana license. This rule precludes much horizontal expansion for medical marijuana businesses, but leaves open the possibility of at least some vertical integration.
What happens next? The AMMC’s proposed rules remain draft rules, and they will be open to a public comment period before anything becomes final. There is slated to be a public hearing on March 31 at the University of Arkansas – Little Rock law school campus where stakeholders and other members of the community can share their input. Then the rules, pending any modifications, go to the state legislature for ultimate approval.
What else is going on with medical marijuana in Arkansas? While the AMMC is busy with its rulemaking process, other Arkansas state agencies are formulating rules of their own to govern other aspects of the state’s new medical marijuana program. Medical marijuana also remains a hot topic in the state legislature. Medical marijuana-related legislation on the docket includes, among other bills, the following:
- House Bill 1392, which would prohibit edibles as part of the medical marijuana program.
- Senate Bill 238, which would delay implementation of the medical marijuana amendment to the Arkansas constitution until medical marijuana is federally legal.
- Senate Bill 357, which prohibits smoking medical marijuana – a bill in slight tension with HB 1392 should both pass.
- Other bills are also in the hopper that would increase license fees, force medical marijuana facilities farther away from schools, churches, and other designated locations, as well as impose a smattering of other restrictions on the fledgling program.
For more on medical marijuana in Arkansas, see the following:
- Arkansas Medical Marijuana: Insights for Entrepreneurs and Investors
- Arkansas as a Cannabis Tipping Point
- State of Cannabis: Arkansas Has Un-Natural Marijuana Laws