Two Arkansas-based medical marijuana processors have been approved to create oils, edibles and other products to be sold at the state’s dispensaries, and another processor could win approval next month.
Shake Brands Corp. of Johnson received the state’s first processor license from the Medical Marijuana Commission last month, and Dark Horse Medicinals of Little Rock was awarded its license April 19. The two companies can now make products with marijuana plants grown by the state’s cultivators and dispensaries.
Ouachita Partners LLC of Garland County went before the commission on April 19 but was not awarded its license because its application was not complete. The application will be considered again at the commission’s meeting May 4.
Processors are not permitted to grow marijuana but can process marijuana grown by cultivators and dispensaries. Cultivators and dispensaries are not required to use processors and can process their marijuana plants themselves if they choose.
While the constitutional amendment that legalized medical marijuana in the state limited the number of cultivators and dispensaries, it did not set a limit on the number of processors. The commission, which accepts processor applications on an ongoing basis, did not set a limit on the number of processors either, according to commission spokesman Scott Hardin.
“It really is going to be just driven totally by the market,” Hardin said.
Shake Brands, Dark Horse and Ouachita Partners are the only companies that have applied to be processors. The commission is also accepting applications for transporters who would be licensed to carry marijuana between cultivators, dispensaries, processors and testing labs, but the commission has received no applications.
All three processor applicants have experience processing hemp into a wide variety of products, and similar techniques will be used to process marijuana plants. Hemp-based products, like CBD oils, do not contain any (or only a very small amount) of the psychoactive THC that is found in the marijuana plant, but techniques for processing the two plants are very similar.
“It’s nearly identical,” said Dark Horse owner Casey Flippo.
Founded by Julie Brents, Brittany Phillips and Tig Davoulas, Shake Brands has been processing hemp since 2018 and has produced a line of CBD products called CBD and Me. The company’s products include oils, balms, roller balls and cosmetic face masks.
Shake began working with hemp in hopes of working with marijuana plants down the line, and Phillips said the company took advantage of an opportunity it saw in the CBD market. Shake uses chemical-free processes at its USDA-certified organic lab in Johnson (Washington County), Phillips said. Nearly all of Shake’s products are USDA-certified organic.
“We really saw a big, empty hole in the local CBD market,” Phillips said. “There was no one bringing the really quality oil that you find in other markets from a sustainability, chemical-free, organic side.”
While Shake has not begun manufacturing marijuana yet, Phillips said the company will bring “new and innovative products” that are not currently offered at the state’s dispensaries. Shake plans to create concentrates, sublingual drops, pet formulas, topical oils and balms, bath soaps and concentrates, the owners said.
Phillips and Brents said they plan to work with both dispensaries and cultivators but the company has not yet announced which ones. Brent said Shake would like to work with some of the cultivators first to create new products that can be distributed to all of the state’s dispensaries.
Shake also hopes to work with individual dispensaries to create unique brands for each dispensary.
“People are starting to call about proprietary endeavors, things that they only can sell and feature for their customers,” said Phillips, who also owns a Fayetteville graphic design company. “That’s going to be the next point of differentiation, we believe.”
Dark Horse Medicinals won approval from the commission April 19 and Flippo anticipates the company’s marijuana operation in West Little Rock to be running by the end of June.
Dark Horse Medicinals is owned by three college friends from the University of Arkansas who in 2018 created the hemp-focused business Natvana that grew into the state’s largest hemp processor, Flippo said. The company planted 40 acres of hemp in its first year of operation, but has since worked exclusively in processing, which Flippo said is very similar to the company’s upcoming work with marijuana.
“It’s literally as close to what we’re going to be doing in the medical marijuana space as you can possibly get without being in the medical marijuana space,” Flippo said.
Natvana performs third-party processing for hemp farms and retailers and creates a variety of CBD products, including tinctures and bath bombs, under the Natvana name.
“We’re pretty much going to run a very similar business model to that that we’ve been running for the past two years,” Flippo said. “We’re just going to integrate it into the medical marijuana market.”
Dark Horse has a two-pronged approach for working with the state’s marijuana producers. First, the company wants to work with dispensaries that are growing their own plants to help them get the most out of the plants and “capitalize on all of the usable material of the cannabis plant,” Flippo said.
Second, Dark Horse hopes to create private label products under the Dark Horse Medicinals name, as well as to create independent product lines of niche specialty products that are unique to individual dispensaries.
Flippo said he hopes to work with both dispensaries and cultivators, although he said he has learned that the cultivators might not be open to using third-party processors at this time.
“Our intent is to play ball with everybody,” Flippo said.
Flippo said both dispensaries and cultivators can benefit from processors. Dispensaries, he said, typically don’t have the infrastructure necessary to process a wide range of products, and cultivators are focused on growing plants, not creating products.
“Their primary business is to grow the plant, and I think that’s been reflected in sales thus far,” Flippo said of the cultivators. “We are an extremely underdeveloped marketplace and that shows whenever you review the numbers and you see how much floral material is going out the market and how little products are going off the shelf. I think we are going to be able to show that, [with] high-quality concentrate products that are affordable for consumers, the market can evolve to that of Colorado and California and these more evolved marketplaces.”
Ouachita Partners LLC, also known as Ouachita Farms, went before the commission on April 19, but its application was tabled until the meeting on May 4 because of problems with the application.
Located outside of Hot Springs Village in Garland County, Ouachita Partners LLC, also known as Ouachita Farms, is owned by brothers David, Marc, Mitchell and Jeff Owen, as well as first cousin Sarah Owen and Caesar Mendoza.
In January 2019, Ouachita Farms was among the first in the state licensed to grow, process and label seeds for hemp, CEO David Owen said. Ouachita Farms, which cultivates and processes hemp in Garland County, uses solventless extraction methods that produce a rosin the owners use to create a wide range of products.
Solventless extraction uses only heat and pressure to process the hemp. David Owen said he learned about the technique while working in the cannabis market in Colorado during the state’s rollout of recreational marijuana and saw it as a long-term trend in the industry.
“That’s 100% the niche that we want to serve on the medical marijuana market,” Owen said.
Ouachita Farms’ method produces a rosin or bubble hash that is used to create a variety of products, including drops, oils, capsules, shots, pet drops and salves. Ouachita Farms also sells edible products, including cookies, brownies, chocolates and gummies that are made by food producers in Garland County.
David Owen anticipates doing similar work with marijuana plants and selling products under the name Ouachita Farms Medical. Owen also plans to work with dispensaries to process their plants into a variety of products that are unique to each dispensary. Ouachita Farms’ extraction method is strain-specific and creates different flavor profiles for different strains that will appeal to both connoisseurs and the general market, Owen said.
“If we’re extracting your material, not only will it be exclusive to them, it will be something that could be a little bit different depending on what they’re growing,” Owen said.
Owen said the Arkansas cannabis market has a lot of room for growth.
“[In] Arkansas, we’re still a few years away from being what I would consider a developed cannabis market where you just see a wide range of every type of product you can think of,” Owen said. “We want to hasten that process along. We want to provide some of these high-end craft extracts to Arkansans. We know they aren’t getting a lot of this yet, but we want to help bring that along.”