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Arkansas Creates Near-Monopoly in New MMJ Program

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This California dispensary (above) follows much more lenient regulations than Arkansas, which has yet to license its dispensaries. Photo Gracie Malley for Cannabis Now.

Cannabis

Arkansas Creates Near-Monopoly in New MMJ Program

The most conservative state to approve legal cannabis in 2016 is already facing problems. Just five growers will produce the marijuana for 32 dispensaries — and it may take another year for the first patient to receive a dose medicine.

Most government meetings don’t attract attention. They certainly don’t attract crowds, not like the gang of people gathered outside the drab government building in Little Rock, Arkansas, which included citizens who stood in line for hours before breathless television-news reporters, broadcasting the proceedings live with an air of excitability like it was the announcement of lottery winners.

Because that’s this government meeting was like a lottery, with the prize being a seat at the table in a state-authorized near-monopoly. On Tuesday, the Arkansas Medical Marijuana Commission doled out permits to five companies — and only five — that will allow them to grow the state’s legal cannabis supply.

A total of ninety-five applicants paid $15,000 apiece for the chance to grow cannabis for the state’s 32 dispensaries. A five-member panel spent months weighing each applicant’s merits before deciding on the top five, as the Arkansas Times reported. They’ll now have to produce within seven days another $100,000 fee, plus evidence of a $500,000 bond, before they can secure a permit.

And the first sale is still a significant stretch of time away. Dispensary licenses have yet to be awarded — that will happen in a similar process in a few months — and it could be as long as a year or more before the first patient receives the first dose of medicine. One license-holder said they plan to have their cultivation operation in business as late as early 2019.

But the green rush is in full swing in the South, hence the crowds and the excitement. The crush of people lining up to almost certainly part with $15,000 with nothing to show for it demonstrates the general attitude towards providing cannabis: Business will be very, very good.

It’s still not known exactly who now has the near-exclusive rights to provide medical cannabis in Arkansas, where voters approved medical-marijuana on Election Night 2016. The identity of the ownership groups has yet to be fully disclosed. Known owners include former state Democratic Party chairs, lawyers, businessmen connected with pharmacy chains and at least one television-news anchor from Little Rock’s Fox affiliate, who announced her stake in the game live on air Tuesday night.

The Arkansas approach follows models set in other states, including Florida, Ohio, New York and Minnesota. There, state and local regulators set strict caps for how many cannabis operations will be allowed within state lines. Initial results have included bidding wars, high prices and low supply for patients.

And this is the only way legal cannabis in Arkansas can be obtained. Medical cannabis patients are not allowed to cultivate their own cannabis in Arkansas as they can in other states, such as California, Colorado and Oregon.

Why is Arkansas doing this? Arkansas’s governor is Asa Hutchinson, a former chief of the Drug Enforcement Administration. As you can imagine, Hutchinson fiercely opposed the ballot measure allowing for legal cannabis, but after its victory, he vowed to “do it right,” which appears to mean restricting it heavily.

“[T]he people of Arkansas expect me to do it right, to do it in a way that protects our children and to do it in a way that minimizes the problems we’ve been very concerned about,” the governor said in a news conference shortly after the measure’s victory. “That’s what the regulations are about.”

But ultimately, it appears that Arkansas’s regulations have the primary effect of creating a system where an elite few have access and control.

TELL US, do you think states should give out such a limited number of licenses?

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