Arkansas Cannabis Legal Victory: MSO Lawsuit Paved the Way

Arkansas Cannabis Legal Victory: MSO Lawsuit Paved the Way

In an explosive ruling that sent shockwaves through the Arkansas legislature, Pulaski County Circuit Judge Morgan "Chip" Welch catapulted 27 medical marijuana laws into constitutional oblivion. Judge Welch declared that the General Assembly had brazenly trespassed its constitutional boundaries when they passed legislation that altered the amendment that had decriminalized the drug.

The laws that dictated the permissible THC content - marijuana's potent psychoactive component - in edibles, how dispensaries and cultivators marketed their merchandise, and how the state extracted taxes from medical marijuana have now been branded "void" and "unconstitutional." The ruling delivered a veritable seismic shock to the legislation landscape in the state.

Judge Welch's order courageously voided more than two dozen laws enacted by the General Assembly across 2017, 2019, and 2021 legislative sessions. According to the ruling, the Assembly had usurped its constitutional limitations by modifying Amendment 98 of the Arkansas Constitution - the amendment legalizing medical marijuana—without giving the people their rightful say.

The brave plaintiffs, Good Day Farm Arkansas, LLC, a cultivator hailing from Pine Bluff, and Capital City Medicinal, LLC, a dispensary operating from Little Rock, had filed a lawsuit against the state in 2022. They argued that the Legislature had done an end-run around the constitutional amendment process and unconstitutionally disguised constitutional changes as mundane laws.

Erika Gee, the stalwart attorney representing the plaintiffs, expressed gratitude for the court's verdict via email but refrained from further commentary.

In a dramatic twist, the state countered that a segment of the medical marijuana amendment endowed the General Assembly with the authority to pass laws governing the drug. The state's constitution permitted lawmakers to execute constitutional changes with a two-thirds majority in each chamber.

The ruling drew the disappointment of Attorney General Tim Griffin, who insisted it contradicted the law and the process for amending the Arkansas Constitution for people-initiated measures like Amendment 98. He vowed to appeal against the ruling to the Arkansas Supreme Court posthaste.

The Department of Finance and Administration's spokesman, Scott Hardin, disclosed in a statement, "We are assessing today's verdict with our counsel and the Attorney General's Office to plan our subsequent moves."

Judge Welch underscored that lawmakers had exceeded the mandate in the amendment, referring to the Supreme Court verdict in the 1951 Arkansas Game and Fish v. Edgmon case. This case established that the General Assembly couldn't alter constitutional amendments approved by voters. Instead, Welch stressed, the 27 laws that fundamentally changed the medical marijuana amendment should have been proposed to voters as constitutional amendments.

Among the now-dissolved laws was Act 1023 of 2017, which stipulated that marijuana-infused foods and beverages must not exceed 10 milligrams of THC per serving and mandated that medical marijuana products be sold in child-resistant packaging.

However, this ruling doesn't imply that state officials have been stripped of all authority to regulate THC content in medical marijuana. David Couch, a Little Rock attorney and the architect of the medical marijuana amendment, clarified that the amendment vests regulatory powers in the Department of Health, not the General Assembly, regarding matters such as THC content in edibles.

"The General Assembly has attempted to regulate the business of medical marijuana, and that's beyond their purview," Couch asserted in an interview.

Laws governing cultivation facility security, the prescription of medical marijuana cards following telemedicine appointments, the Medical Marijuana Commission's ability to issue temporary dispensary licenses, and the state's authority to oversee advertising have all been overruled.

The Bottom Line from Mike Robinson, CBGa Crumble:

This news, although good, is seemingly part of a war between a large Multi-State Operator (MSO) and the state of Arkansas that's been going on for quite some time. It was bold to push this hard, but what could come next is a who knows the situation in which some of the regulations will be revisited in new laws that could become even more detrimental than the last.

Typing from the West Coast, we know all about temporary wins in the industry and how sometimes they can backfire, let's cross our fingers that a big corporation allowed victory for the little entity. But I'll admit that I'm always hesitant to feel that way; it's hard to trust the corporate giants, but this time we've got to say a big Good Day Thank You to their legal counsel!

In conclusion to a lengthy legal saga, the Newport Economic Development Commission (NEDC) secured over $2 million in a settlement linked to two separate lawsuits involving the controversial transfer of licenses, based on a case against the MSO Good Day Farm, dating back several years. The lawsuit likely caused their counsel to closely examine what Arkansas was up to, as even that settlement could now be subject to review based on this drastic slate cleaning of regulatory law there. 

It's very possible Good Day Farm paid a big settlement on a lawsuit that may not have had legal merit under today's new Arkansas Medical Marijuana regulations, which have been radically thinned down. 

So, while Good Day Farm has paved the way for a far less regulated Industry in Arkansas that allows them and others to have far more freedom, which I stand up and applaud them for, the future will tell us how those in Arkansas fair after the dust settles from this, and new regulations are proposed.

What many don't stop and consider is that without these big entities and their legal teams, the balance of industry players in Arkansas was stuck in the mud due to unfair regulations created like many are - piled on top of voter-approved initiatives without voters approving the changes made to what they voted on. 

There's been a movement in California for the past two years, including a lawsuit, to attempt to do the same thing and reverse many of the Proposition 64 regulations - which powers the largest Cannabis State, or Nation, in the world. 

While they were successful in Arkansas, the movement in California will not be as the MSOs are not behind it. Large Scale operations benefit from the small farm struggling to make ends meet - this is just a fact. 

We applaud Good Day Farms for now but do so with cautious excitement for those who are only in the state and will be stuck with what comes next, where the big MSO is in several states and can do well with or without Arkansas. 

The Heart and Soul of the Good Day Farm’s 2022 Lawsuit

As it stood, amendment 7 to the state constitution states that measures can only be amended by a two-thirds vote of the General Assembly, defining “measure” as a “law, bill, resolution, charter, ordinance, constitutional amendment, or legislative proposal of any character.”

 However, a State Supreme Court Ruling from 1951 under Chief Justice Griffin Smith ruled that if an amendment of any weight were to be passed, the people it would affect would have a say, not just their representatives alone.

This ruling was at the heart of Good Day Farm’s lawsuit. Although Supreme Court rulings can be reversed, it was the backbone of GDF’s case that legislators changed the structure of the medical marijuana program illegally, and they were right.
Mike Robinson CBGa Crumble
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