On Nov. 8, voters passed the Arkansas Medical Marijuana Amendment of 2016 to implement medical marijuana in the state of Arkansas. The floor was open for cultivators and retailers to request a seat at the table. But applications came in at a trickle.
The state began taking medical marijuana patient applications on June 30. Since then, more than 800 patients have requested access to obtain medical cannabis when the program launches “early next year.”
The state received its first cultivator application on Aug. 30. As of Friday, 7 cultivation applications and 13 applications to sell cannabis products had been turned in. Compare that with the state of Ohio, where 185 applicants hope to receive one of the state’s 24 grow licenses; or Minnesota, where more than 200 people showed up to an informational meeting ahead of the state’s Sept. 19 application start date.
David Couch, a Little Rock attorney and acting executive director of the Arkansas Medical Marijuana Association, a trade organization created to represent the interests of the Arkansas medical marijuana community, told Marijuana.com he is not concerned by how long the Arkansas applications are taking to come in. Couch was instrumental in getting the amendment on the ballot.
“There’s no incentive to file the application sooner,” he said. “There are no bonus points for filing early.”
Indeed, applicants must set aside a significant amount of funding and time to even put their name in the hat. The application process is lengthy and detailed. Interested parties must submit proof of $1 million in assets — $500,000 of which must be liquid — and pay a non-refundable application fee of $15,000. The cultivation application itself is 27 pages long and businesses must include detailed plans that outline proposed locations, stakeholders, proof of residency for at least seven years, and more.
Beyond the complexity of the application process, however, lies a greater source of conflict for anyone in the US looking to convert their property to cultivate cannabis. The growing chasm between state cannabis laws and the plant’s federal designation as a Schedule I substance creates a business environment where, for many, the stakes are still too high.
Arkansas lives on agriculture
The Arkansas economy revolves around agriculture; so much so that the average per capita farm income exceeds non-farm per capita income — that means the economic health of the state relies on the agriculture sector. From the small towns and scenic rows of fields that dot Southern and Central Arkansas to the mountainous timberland regions of the north, farming contributes approximately $16 billion to the state’s economy each year on its 14.5 million acres of workable farmland, according to the Arkansas Department of Agriculture.
Arkansas farmers receive subsidies from the federal government — money they can’t afford to suddenly lose. In a state where natural disasters and environmental conditions have the potential to lay waste to a year’s worth of difficult labor, these farm subsidies occasionally serve as a lifeline for many agricultural communities and generations of farming families. Should any form of financial assistance dry up without warning, farmers would have to find a way to close the gap, which could mean making production decisions that alter the available supply of goods.
In 2015, direct farm program payments (subsidies) totaled nearly $10.8 billion, of which, the state of Arkansas received nearly $380 million. That same year, Arkansas crops and livestock brought slightly more than $8.9 billion into the state. While government payments made up only 2.4% of the state’s agricultural income, the loss of that stability has deeper implications for the state and federal economies.
To put it into perspective, take the state’s largest produce crop, rice. According to the USDA, Arkansas was responsible for 43.3% of the country’s rice production in 2015 — bringing in a gross income of more than $2.8 billion in domestic sales and international exports.
The USDA doesn’t have finite data on the percentage of rice crops that receive government payments, but Carrie Litkowski, a senior economist and program leader in the Farm Economy Branch within the Resource and Rural Economics Division, said those payments would be contained in the “general cash grains” category, which paid out nearly $82.4 million in 2015. It should be noted the “general cash grains” category may include government payments to other row crops and rice producers may have also received payments from commodities other than “general cash grains.”
The stability of the agricultural market is important to the United States economy both domestically and internationally. The American agriculture industry employed an estimated 21 million people in 2015 — slightly more than 11% of total employment in the US, according to the Bureau of Economic Analysis, and US agricultural exports accounted for $129.7 billion in 2016.
Per the Drug-Free Workplace Act of 1988, federal funding is at risk if cannabis is found on the property of businesses that receive a significant portion of money from the government. How much constitutes “significant” is vague. And whether the federal government will even intervene depends heavily on the political environment at the federal level. With much at stake, farmers interested in getting involved in cannabis cultivation may find themselves between a rock and a hard place during a time when farm subsidies are facing the chopping block in the latest federal budget proposal.
More applications are expected
The majority of interested parties with whom Couch has spoken have specialties in other industries, he said, which allows for a more qualified applicant pool. The grading system for Arkansas cultivator applications awards points for diversity. Having qualified individuals on your team with proven track records in their respective industries puts applicants ahead of the curve, he said. The rules also require applicants to have established residency in Arkansas, though affiliates may be located elsewhere.
“You get points for having certain positions, employing minorities, veterans, selecting a location in an economically depressed area, [and more]” he said. “And because no one in Arkansas really has any experience growing marijuana that they can put on an application, most everybody [interested in cultivation] has been affiliated with some organization out of state who can demonstrate experience in this industry.”
Couch anticipates the state will receive more than 40 applications for the five cultivation licenses and more than 300 applications for retail licenses. There are no safeguards in place should there be a shortfall in applications. If the number remains low, “they’ll just be a really lucky person,” Couch said.
The Arkansas Medical Marijuana Commission includes five members appointed by the Governor, President Pro Tempore of the Arkansas Senate and the Speaker of the Arkansas House of Representatives. They’re tasked with the administration and regulation of the dispensary and cultivation facility applications in coordination with the Arkansas Alcohol and Beverage Commission.
“The commissioners all have to read and grade the applications,” Couch said. “It’s going to take several months to evaluate those. They’re volunteers with real jobs so the review period might take a while. They also have to do federal background checks, which they can’t do until the applications are submitted.”
Cultivators and retailers have until Monday, Sept. 18 to submit their applications. In the meantime, medical patients can continue to apply for their Registry ID cards by visiting the Arkansas Department of Health website. Patient and caregiver applicants must submit an application form, a completed Physician Written Certification, a photocopy of their Arkansas driver’s license or state ID, and a nonrefundable $50 fee. Caregiver applications are subject to a $37 nonrefundable background check fee.
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