As Arkansas Medical Marijuana Program Hits Record Sales, Litigation And Ballot Measure Could Expand Access Even More

“Patients have spent more than $1 billion in Arkansas since the first dispensary opened in May 2019.”

By Hunter Field, Arkansas Advocate

Arkansas’s medical marijuana industry continued to reach new heights in both sales and patients last year, and pending litigation has cannabis primed for even more explosive growth in 2024.

For now, a host of restrictions state lawmakers placed on the medical marijuana market after voters approved the controversial drug for medical use in 2016 have been struck down as unconstitutional, though the Arkansas Supreme Court will have the final say on a promised appeal.

A rollback of those regulations would open a new world to patients and cannabis businesses, including pre-rolled joints, high-THC edibles and the convenience of telemedicine for new marijuana patients.

A judge is also considering striking down restrictions on marijuana business advertising, opening a new avenue for dispensaries to communicate with current and prospective patients.

But even if the litigation isn’t completed in 2024, regulators and industry leaders expect growth to continue as it has since the first sale five years ago.

Arkansans also might be voting on a ballot initiative in November that would increase patient access to the drug, allow patients to grow their own cannabis at home and trigger the legalization of recreational marijuana if it becomes legal under federal law.

“We expect sales will continue to increase as they have each year since the program launched in 2019. Although Missouri had the recreational option in place last year, Arkansas had another record year in 2023…” said Scott Hardin, a spokesman for the Arkansas Department of Finance and Administration. “Patients have spent more than $1 billion in Arkansas since the first dispensary opened in May 2019.”

Medical marijuana purchases totaled a record $283 million in 2023. The previous record was $276 million in 2022.

Since 2019, the state has also collected more than $120 million from sales and privilege taxes on medical cannabis.

More than 97,300 patients have registered with the state Department of Health, up from 89,855 in January 2023.

Those figures exceed some of the most optimistic projections of supporters during the 2018 legalization campaign.

The industry has also created thousands of jobs. As of last week, more than 3,000 cultivation or dispensary employees held Registry Identification Cards, according to the state Alcoholic Beverage Control Division, which regulates the industry.

Those working in marijuana facilities must obtain RIC cards, and companies must inform the state when an employee leaves or is terminated, meaning RIC data gives a real-time picture of industry employment.

“Based on RIC cards, we know the state’s medical marijuana industry directly employs more than 3,000 people,” Hardin said. “Good Day Farm Cultivation is the largest with 366 active cards.”

Constitutional challenge

In June, a Pulaski County circuit judge struck down 27 laws the Arkansas Legislature passed to regulate medical marijuana after the 2016 passage of Amendment 98 to the Arkansas Constitution.

Essentially, Judge Chip Welch ruled that the Generally Assembly overstepped. The Legislature can’t unilaterally alter an amendment enacted by the people, he found.

Attorney General Tim Griffin (R) has said he’ll appeal Welch’s ruling, but he can’t file the appeal until Welch rules on the rest of the case.

The plaintiffs—Good Day Farms and Capital City Medicinals—have also challenged restrictions on cannabis advertising by lawmakers and regulators. Welch has yet to rule on the advertising challenge. A hearing is scheduled in May.

Welch’s ruling and Griffin’s promised appeal have left the medical marijuana industry in a legal gray area.

While dozens of laws restricting them from selling popular products have been struck, marijuana companies, so far, have continued to operate as if the laws are still in place.

They’ve maintained the status quo for two main reasons:

First, the Arkansas Supreme Court is likely to stay Welch’s ruling once Griffin is able to appeal, according to the Arkansas Cannabis Industry Association.

Second, many of the restrictions enacted through the stricken laws are also in force through state rules, which remain in place, said Casey Castleberry, an attorney for an Arkansas cultivation company that isn’t a plaintiff in the lawsuit.

It’s likely some of those rules will be removed if the Supreme Court upholds Welch, but not necessarily all of them.

The industry and patients are most excited about the repeal of two restrictions: pre-rolled joints and telemedicine patient certification.

In other states with medical marijuana, pre-rolls are typically the top sellers, according to Arkansas Cannabis Industry Association Executive Director Bill Paschall.

“It will be a big deal for older patients who want to smoke their medical marijuana but don’t want to roll their own and for those who may have physical conditions that make it difficult to roll one,” Paschall said.

The litigation also has wider implications for how other industries created by amendments to the state Constitution can be regulated, like casinos.

“I think anyone who is in an industry that was created by constitutional amendment is watching this case pretty closely,” Castleberry said.

Advertising

The state’s dispensaries would also be happy to see many of the advertising restrictions released, but even if that occurs, there may not be a rush of advertising, industry insiders said.

The state has restricted dispensaries to only advertising in places where they can ensure 70 percent of the audience are adults, aren’t near schools or daycares, among other prohibitions.

But private companies also heavily restrict the type of cannabis ads they accept, said Elizabeth Michael, co-founder of the Little Rock cannabis ad firm, the Bud Agency.

“Not only do companies have to worry about state regulations, they have to worry about these companies’ regulations as well,” she said.

“No matter what happens [with the lawsuit], they’ll still have to deal with these companies’ restrictions.”

Last year, the Alcoholic Beverage Control Division cited one dispensary for an advertising violation and issued two verbal warnings, according to state records.

Arkansas cannabis companies, though, would likely feel much more comfortable advertising if the prohibitions are struck from state law. Many have elected not to advertise at all, Michael said, fearing that they could put their licenses in jeopardy.

Michael said that additional advertising could benefit patients and nonpatients alike.

“I think we would see not only a higher level of education among registered patients, but we’d see an increase in patient count because we’d have a lot more folks realize that medical cannabis is a great alternative or additional treatment to an ongoing treatment plan,” she said.

This story was first published by Arkansas Advocate.

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Photo courtesy of Mike Latimer.