Since the state’s first dispensary opened about 16 months ago, Arkansas patients have purchased more than $131 million worth of medical marijuana. These sales have generated more than $13 million in state tax revenue, contributing to the state’s goal of achieving a coveted cancer institute designation for the University of Arkansas for Medical Sciences.
There are 80,000 medical marijuana patients in Arkansas and the number continues to grow. An increase in patients is expected to push associated state revenues higher.
As of Sept. 29, patients have purchased more than 24,000 pounds of medical marijuana.
“As of now, that number [of patients] continues to grow consistently, month by month,” state Medical Marijuana Commission spokesman Scott Hardin said in September. “At this point, there is no indication that that is slowing down anytime soon. We are close to 80,000 today, it certainly looks like 100,000 is going to be here before we know it.”
With each medical marijuana purchase, patients pay a pair of state taxes: the state sales tax of 6.5 percent and a privilege tax of 4 percent. Purchasers also pay all applicable local taxes, such as city and county sales taxes.
The state sales tax of 6.5 percent, which voters approved as part of the Arkansas Medical Marijuana Amendment in 2016, has generated $8.25 million since May 2019. That revenue is divided among the three state agencies that manage the state’s medical marijuana program: The Medical Marijuana Commission, which handles licensing; Alcoholic Beverage Control, which regulates the medical marijuana industry; and the state Department of Health, which issues patient cards.
The privilege tax of 4 percent, passed by the state legislature in 2017, has generated $7.7 million. In addition to the patients who pay the sales and privilege taxes, dispensaries also pay the 4 percent privilege tax when they purchase products from cultivators.
Of the $7.7 million brought in by the privilege tax, $5 million is from patient purchases and $2.7 million is from dispensary purchases from cultivators.
Dispensaries do not pay the 6.5 percent sales tax.
Revenue from the privilege tax goes to the University of Arkansas for Medical Sciences to create the state’s first National Cancer Institute. Originally set to expire in July 2019, the tax has been extended to 2021.
According to the National Cancer Institute, NCI-designated cancer centers are “recognized for their scientific leadership in laboratory and clinical research” and “dedicate significant resources toward developing research programs, faculty and facilities that will lead to better and innovative approaches to cancer prevention, diagnosis and treatment.”
Six of the state’s 29 medical marijuana dispensaries are getting into the delivery business, and several more say they hope to offer the service in the future. Dispensaries around the state have offered the service intermittently, but more are offering it as a regular service as a result of the COVID-19 pandemic, commission spokesman Hardin said.
“Some consistently offer delivery and some offer it for a few weeks or months and then pull it back, only to launch it again,” Hardin said. “That number [offering delivery] increased throughout the pandemic, which was understandable.”
The dispensaries offering delivery are Greenlight Dispensary of Helena-West Helena, Fiddler’s Green in Mountain View, the ReLeaf Center in Bentonville, Purspirit Cannabis Co. in Fayetteville, NEA Full Spectrum in Brookland near Jonesboro and Natural Relief Dispensary in Sherwood. Another dispensary, 420 Dispensary in Russellville, has started delivery to a few customers but hopes to fully launch the service in a couple of weeks.
Purspirit Cannabis has been offering delivery since May 14 to addresses in Fayetteville, and hopes to expand the delivery area. “We deliver to essentially the entire Fayetteville and Farmington area,” said Ben Driver, who handles the dispensary’s delivery operation. “We do plan to expand, but we’re trying to walk before we run.”
The dispensary offers delivery five days a week and, most of the time, it has more customers using the service than it can handle.
“We are seeing as much business as we can handle on 75 percent of the days that we deliver,” Driver said.
The state requires deliveries be made in an unmarked vehicle without logos or indication that the vehicle is carrying medical marijuana. The vehicle must carry two employees during the delivery and the product must be locked down while it is in transit, Hardin said.
“The goal is, one, to ensure that it’s not blatantly obvious that the vehicle is delivering medical marijuana or that there is no indication the vehicle is carrying medical marijuana,” Hardin said. “Two, we want to make sure that the product is safe throughout the process of transport.”
The dispensaries have different requirements for minimum orders to qualify for delivery and charge different delivery fees. Customers also pay local taxes based on the location in which the delivery is made and not based on the location of the dispensary.
Purspirit, for example, requires a minimum order of $100 and charges a delivery fee of $1/mile with a minimum of $5.
Greenlight Dispensary in Helena-West Helena delivers as far away as Little Rock. It posts its full delivery schedule on its website, including the cost. While a delivery in Helena-West Helena requires a $40 minimum order but has no delivery fee, a delivery to Little Rock requires a $200 minimum order and a $29 delivery fee.
The ReLeaf Center in Bentonville requires a $100 minimum order and charges a delivery fee of $5 for the first 10 miles and a $15 flat fee beyond that. The dispensary’s delivery radius is 40 miles, which includes Fayetteville, Springdale, Rogers, Eureka Springs and Siloam Springs. The delivery fee is waived for orders of $300 or more.
420 Dispensary in Russellville has begun delivering on a trial basis to a few customers near the dispensary. The dispensary has not advertised the service yet, but hopes to have it up and running soon.
Purspirit’s Driver says the delivery service has been helpful this year, especially for patients with health issues who are worried about COVID-19.
“I would say it’s been really helpful for immunocompromised patients in the time we live in right now,” Driver said. [It’s been] helpful for those who are a little bit less mobile.”
Hardin said he believes most patients aren’t aware that delivery is an option.
“Giving the patients the ability to go online and click a link and, in a matter of hours, have the product delivered to their door is extremely appealing in the timeframe we are living in right now,” Hardin said.
The price of medical marijuana in Arkansas is too high, according to many patients and elected officials, but there isn’t much the state can do about it.
Arkansas patients frequently complain to the state Medical Marijuana Commission about the high price of cannabis, but the state’s only controls over price are the principles of supply and demand, according to the spokesman for the state commission.
“We receive calls daily about why we don’t do more on the pricing issue and the answer is we simply don’t have that authority,” commission spokesman Hardin said.
In addition to patient complaints, the state commission received many arguments from state legislators related to price as it considered whether to issue additional licenses to cultivators and dispensaries on June 30. The lawmakers cited high prices as one of several reasons for issuing more licenses.
One dispensary owner, Dragan Vicentic of Green Springs Medical in Hot Springs, says many dispensaries are facing a shortage of product, but they fear speaking out due to retaliation from cultivators.
Vicentic says cultivators who have disagreed with his advocacy for additional growing licenses have targeted him.
In June, Vicentic wrote the commission that three of the state’s cultivators were “colluding to put Green Springs out of business because we were honest enough to explain the shortage that every other dispensary has been afraid to voice.”
Vicentic said the lack of availability of product has forced him to raise the price of his most affordable product from around $5 to $10.
“Patients are getting hurt,” Vicentic told the Arkansas Times.
Osage Creek Cultivation of Berryville said in a June letter addressed to Green Springs that it would not supply products to Green Springs due to a number of disagreements with Vicentic and threatened legal action if the dispensary owner continued to share pricing information with their competitors and the public. (The Times reached out to Osage Creek for comment and did not receive a response before press time.)
The commission voted to issue three additional cultivation licenses to increase the number of cultivators to the maximum eight allowed by the Medical Marijuana Amendment passed by voters in 2016. The commission has also licensed five additional dispensaries this year, raising the number of dispensaries to 37 of the maximum 40 allowed by law.
“With competition, the price will drop,” Hardin said. “That’s our hope and remains our hope today.”
The three additional cultivators are not expected to be ready to sell products to the dispensaries until next year. There are 29 dispensaries operating and eight more working toward opening.
Among the lawmakers writing the commission about pricing was state Rep. Jay Richardson (D-Fort Smith), who told the marijuana commission he believed “more cultivators will lead to a greater variety of product at more affordable prices.
“As a legislator whose district borders the State of Oklahoma, I’ve noticed the price for medical marijuana is much lower in Oklahoma where they have more than 3,700 cultivators,” Richardson wrote.
According to industry source weedmaps.com, Oklahoma’s medical marijuana prices are lower than Arkansas. For instance, indica flower sells for $85-$225 an ounce at State Line Dispensary on the Oklahoma/Arkansas line at Arkoma, Okla., according to weedmaps.com; indica flower sells for $75 a quarter ounce or $300 an ounce at Fort Cannabis Co. in Fort Smith. The two dispensaries are 6 miles apart.
Weedmaps shows other dispensaries in Arkansas with a per-ounce price for indica flower between $300 and $400.
Oklahoma also has a smaller ratio of patients to cannabis businesses serving the public with 163 patients for each dispensary. Arkansas, on the other hand, currently has 2,710 patients for each dispensary.
No border state other than Oklahoma has a comparable medical marijuana program to Arkansas’s, although some do allow for the sale of low-THC products in limited capacities.
Dale Worthington, a cancer survivor and disabled veteran in Hot Springs Village, said the high price of medical marijuana has made it difficult for him to meet his health needs with the drug. Between his VA benefits and the money he makes from doing computer work, Worthington says he struggles to buy what he needs at the current prices and welcomes more cannabis businesses in the marketplace.
“My VA disability is the only way I’m surviving,” Worthington said. “They’ve now cut into my grocery money.”