Forget about mom-and-pop operators having a chance to compete in the medical marijuana cultivation arena in Arkansas. It’s a millionaires-only club.
Arkansas voters in November approved Issue 6, an amendment legalizing medical marijuana. But it didn’t take long for state bureaucrats to hastily erect high financial hurdles, preventing the “riff raff” from becoming a part of the potentially lucrative new industry.
State regulators on Tuesday voted unanimously to require any cultivation facility applicant in the state to show either a surety bond worth $1 million, assets of $1 million plus $500,000 in cash on hand, before its application will be accepted.
These steep financial requirements are separate from the initial application fee for growers, reports Benjamin Hardy at the Arkansas Times, which the panel set at $15,000 during its last meeting. Only half of that is refundable if your application fails, so if you can’t afford to throw $7.5K up a razorback’s ass then holler “sooEEE!,” then you can’t afford to even apply.
With that decision, the Arkansas Medical Marijuana Commission went a long way towards ensuring that the kind of medicinal cannabis Golden Age experienced in states like California (where it lasted 20 years) won’t ever have the chance to bloom in Dixie.
Only five cultivation licenses will be issued statewide in Arkansas. At their Tuesday meeting, the Commission reversed a decision they made last month, deciding not to require the cultivators to be geographically distributed across the state, reports the Times.
The new law allows from 20 to 40 dispensaries which will distribute cannabis to patients. Dispensaries will be allowed to grow up to 50 plants themselves; beyond that, they will depend on the five state-licensed millionaire cultivators.
Although dispensaries are the more likely point of entry for entrepreneurs looking to break into the nascent marijuana industry, the cultivation facilities look to be where the big money will be made. ~ Arkansas Times
The commission, before setting the high fees, had requested information from staff about licensing fees in other states. “The numbers are all over the place, as low as $2,500 to as high as $185,000,” Commissioner Ronda Henry-Tillman said after reviewing the information.
Commissioner Carlos Roman, who has advocated making the market more accessible to those who aren’t necessarily already wealthy, proposed setting the cultivation license fee at $15,000. “I would think we’d put them at the same rate as the application fee,” Roman said.
The other commissioners didn’t think that was enough. They claimed to be worried that $15K per license wouldn’t be enough to pay for the bureaucratic “regulation” of medical marijuana through the state Alcoholic Beverage Commission, as specified by the amendment.
“I think it’s got to be higher than $15,000,” said Commissioner James Miller. “$15,000 won’t get us there.”
Commissioner Travis Story proposed setting the license cost at $185,000, equivalent to Connecticut’s, the highest in the nation. “it’s always easier to reduce fees once we figure it out than to increase them later,” he lied. “This is where we want the best of the best, people who are well-capitalized coming in.”
Fortunately, Story’s motion failed to garner a second. Miller, at that point, proposed a $100,000 fee, bad enough on its own, which passed.
The commission had voted on December 20 to require one cultivation center in each of Arkansas’ five geographic regions. Story argued against that, claiming it would hamper the selection of “the most meritorious candidate, while Roman energetically advocated for requiring geographic diversity.
Story’s viewpoint won out among the commissioners. Rather than requiring the grow centers to be spread around the state, he proposed including, instead, consideration of the “economic impact” of the location, among many other criteria the panel will use, when grading applications.
That motion passed unanimously, with even Roman signing on. “If you’re going to put one in an underserved area, it should get the nod about one in a more economically developed area,” he said. Good luck with that, Carlos.
When asked why the fee needed to be so high, Story responded, “Because we can’t afford failure. We’re not saying they have to use all that cash; we’re just saying they have to have the availability to keep going, because the last thing the commission or the state wants is one of these to fail.”
Establishing such high fees, of course, drives up consumer prices, making it harder for legal marijuana providers to compete with the black market — a scenario that has already played out in numerous states.
I asked whether the asset test by definition limited this new industry to the already wealthy. Not necessarily, Story replied. “It limits it to the overall investment group that somebody can put together. So we’re requiring a high barrier to entry, but it doesn’t mean that we’re taking out the average person if they can go raise the funds or pull the investment group together, pull the assets together, then they would be fine. We’re not requiring it to be one person.” ~ Arkansas Times
“It’s a little disheartening,” said Melissa Fults, co-sponsor with her husband, Gary, of Issue 7, the other (and superior) medical marijuana initiative that was struck from the Arkansas ballot just days before election by the Arkansas Supreme Court.
Fults did, however, cheer Roman’s advocacy for lower fees. “As Dr. Roman has pointed out, all these high fees are going to cause the prices for the patients to be astronomical, which is inviting the black market.”