MMC rules violated state Constitution

LITTLE ROCK – Ruling that the Medical Marijuana Commission violated the Arkansas Constitution and its own rules, a circuit judge has declared null and void the Commission’s decisions to award five applicants with licenses to cultivate marijuana.

The judge ruled in an appeal filed by an unsuccessful applicant. Although the judge failed to agree with the plaintiff on a couple of issues, his ruling was clear and to the point on the major matters in dispute.

The judge ruled that two Commissioners had an appearance of bias because they had monetary relationships with applicants who were to receive licenses.

The Constitution and the Commission’s own rules state that a cultivation facility shall not be located within 3,000 feet of a church, school or day care. The judge found that the Commission had failed to verify whether any of the winning applicants met that requirement. In fact, the Commission did not verify the distance requirement for any of the 95 applicants.

The Commission is supposed to consider the financial background of people applying for a license to cultivate medical marijuana.

Two of the applicants are partly owned by people who have been officers in defunct corporations, or corporations whose charters have been revoked, because of past due franchise taxes owed to the state.

However, the Commission did not evaluate applications with an eye to the applicants’ experience in managing a business that has not had its license revoked, the judge wrote. He called that a “blatant irregularity in the Commission’s evaluation process.”

The judge cited a well-established axiom in legal cases, that “an agency is bound by its own regulations.” In this case the Commission failed to follow its own rules.

The Commissioners scored applicants. An attorney and a physician on the Commission gave higher scores to entities with which they had a business relationship.

The attorney’s law firm represented the applicants in several corporate filings, a dispute over land use and business matters. The physician referred patients to a specialist who applied for a license to cultivate medical marijuana. The applicants were on the verge of being granted licenses, but the judge issued a restraining order.

Every applicant is entitled to a fair selection process, the judge wrote. The monetary relationships of two applicants with the attorney and physician on the Commission are shown by “proof that is not nebulous, hypothetical or fancily,” the judge wrote.

That proof is “certainly enough to create a reasonable suspicion of unfairness,” the judge ruled. Therefore, the licensing decisions in which the attorney and the physician participated “cannot stand,” he ruled.

The defendants said that the applicants’ names and other information that would identify them were kept hidden from commissioners.

The judge ruled that the Medical Marijuana Commission and the agency in which it operates, the Alcoholic Beverage Control Division, “proceeded in a manner that defies due process and the rule of law, rather than in a manner that respects it.”

Arkansas voters approved an amendment to the state Constitution in the general election of November, 2016. The amendment created the Commission within the Alcoholic Beverage Control Division and authorized to accept applications for medical marijuana growers and retailers.