Every January, this newspaper selects an Arkansan of the Year — a resident of the state who has had an unmatched impact on Arkansas and its people. But as 2016 smoldered its way to a close, we realized the most interesting player in the Natural State these last 12 months was a member of the vegetable kingdom. In approving Issue 6, the Arkansas Medical Marijuana Amendment, voters made Arkansas the first of two states in the South to legalize the therapeutic use of weed (a distinction it shares with Florida, which passed its own measure on Election Day). That’s why we’re naming Cannabis sativa our first — and, OK, probably our only — Plant of the Year.
We know what you’re thinking: This is denial at work. Surely the most important event of the wretched year-that-was could only be the election of Donald Trump as president of the United States. Given that Trump beat Hillary Clinton by a 27 percentage point margin in Arkansas, and given the election left the Democratic Party of Arkansas in tatters, and given that the state’s demographics — predominately white, disproportionately poor, lacking a college education — are the bedrock of the coalition that handed Trump his national victory, surely the Arkansan of the Year could only be the Trump Voter. Right?
The thing is, Trump’s win here surprised exactly no one, given the state’s recent electoral trends. Even back in October, when polls showed the Republican tanking nationally (cue bitter laughter) and the Clinton campaign was salivating over the prospect of competing in places like Georgia and Arizona, Hillary’s chances of carrying her husband’s home state were still considered to be nil. Donald Trump always had Arkansas in the bag.
In contrast, the outcome of Issue 6 remained in doubt until the ballots were counted. Polls had showed the measure stood a decent shot at passage, and the surprisingly narrow defeat of a similar proposal in 2012 gave marijuana advocates hope that 2016 would be their year. But Issue 6 also faced two challenges the 2012 measure did not: a rival initiative in the form of Issue 7, the Arkansas Medical Cannabis Act, and a concerted effort to defeat both ballot measures on the part of Governor Hutchinson (who was director of the U.S. Drug Enforcement Administration under President George W. Bush) and a bevy of powerful interest groups.
And therein lies the real reason why medical marijuana legalization is the biggest Arkansas story of 2016. The same electorate that handed smashing victories to the Republican Party in November disregarded the united front against cannabis presented by the GOP, social conservatives, the business establishment, law enforcement groups and even one of the state’s leading progressive policy shops, Arkansas Advocates for Children and Families. The well-funded opposition by the Farm Bureau and Chamber of Commerce went unheeded and the Family Council’s warnings of moral decay fell on deaf ears. Many backers of Issue 7 who voted early supported it but not Issue 6, only to see the Arkansas Supreme Court unexpectedly disqualify Issue 7 from the ballot on Oct. 27 due to technical deficiencies in the signature gathering process. Some feared the split vote and acrimony between the two camps would spell doom for Issue 6, but this was not the case. As for Hutchinson, his PR campaign to defeat Issue 6 was about as effective as, well, his attempt to derail Trump in Arkansas’s Republican primary.
On Feb. 27, three days before that contest, the governor told voters, “It is up to Arkansas to stop the Donald Trump show. The next generation of conservatives cannot allow Donald Trump to take everything we stand for and throw it away.” Hutchinson, along with most of the state’s leading Republicans, urged the rank-and-file to nominate Florida Sen. Marco Rubio for the presidency. On March 1, Rubio won two of Arkansas’s 75 counties; Trump took 57 (the rest went to Texas Sen. Ted Cruz). Eight months later, in the general election, out of the 67 counties that supported Trump, 32 of them — almost half — also supported Issue 6. In many places, the Trump Voter was the Weed Voter as well.
Nor was Arkansas alone. Along with Florida, which Trump also captured, dead-red North Dakota legalized medical marijuana on Nov. 8. To be clear, such measures could never have passed without Democrats and independents, who remain more likely than Republicans to support decriminalization. (Of the eight Arkansas counties that broke for Clinton, only one voted against Issue 6, and Connor Eldridge, the Democratic candidate for U.S. Senate, backed the proposal.) But if the rise of Trump signals the eclipse of the party of Ronald Reagan — who once declared marijuana “probably the most dangerous drug in America” — then the median Republican voter’s shifting attitude toward pot is a potent symbol of that change. Perhaps it’s not too surprising that many of the same folks who extended a middle finger to “the establishment” by embracing a philandering, aging playboy as presidential material also ignored the chorus of establishment and conservative voices opposing marijuana — especially in Arkansas, whose electorate shades a bit more libertarian than other Southern states.
In any case, the fact that Arkansans endorsed both medical cannabis and Donald Trump over the strenuous objections of Republican leaders indicates an underlying weakness in the position of Hutchinson and his party: Even as the GOP finds itself in total control of the state, its base is restive, fickle and evolving in directions still unknown.
A month after the election, as required by the amendment, Hutchinson and Republican legislative leaders duly appointed five citizens to a newly created Arkansas Medical Marijuana Commission, which is tasked with licensing dispensaries and cultivation facilities. The governor told reporters that although implementing Issue 6 “was a position I hoped I would never be in,” he was dedicated to rolling out the new law “fairly and responsibly.” He added that federal action could change things: “What we are doing in terms of implementing the people’s will in medical marijuana, it remains a violation of federal law. It remains to be seen as to what the Trump administration will do in this regard. … But until we get a change of policy from Washington, we proceed on with the will of the people.”
Now, with medical marijuana the law of the land, Arkansas is scrambling to meet the strict deadlines established by the amendment. Along with the Medical Marijuana Commission, two other state agencies are tasked with making rules to govern the new industry: the Department of Health and the Alcoholic Beverage Control Division. By March 9, the three entities must have regulations in place concerning the licensing of businesses, the registration of patients, the testing and packaging of marijuana products and much more — a jigsaw puzzle of new rules that must add up to a coherent whole. By June, the commission is required to begin accepting license applications for dispensaries and cultivators. However, a bill by state Rep. Doug House (R-North Little Rock) could push those timelines back by 60 days (perhaps not a bad thing, given the complexity of the task at hand). Although language in the amendment ensures the General Assembly can’t undo the legalization of medical marijuana itself, it can modify other parts of the law — for good or ill — if it can muster a two-thirds supermajority.
David Couch, the Little Rock lawyer behind Issue 6, said he’s not concerned about legislative meddling. “The Republican leadership has kept me informed of potential bills and the bills that they have filed,” he told the Times. “They’ve asked for my input or comments — not that I have any big stick or anything like that — but they’ve kept me advised of things they’re going to do. When I hear crazy rumors, I’ll talk to some of them, and they’ll be like: ‘We heard that rumor and it’s nothing but a rumor.’ ” Still, marijuana advocates are keeping a close eye on the Capitol.
Birth of an industry
Meanwhile, the work of the Medical Marijuana Commission has attracted intense public interest, with standing room only at each of the six meetings the panel has held since its creation just over a month ago.
The five commissioners, some of whom are medical professionals with no past experience in state government, have faced a steep learning curve while under the spotlight. As it develops rules for licensing the large cultivation facilities that will grow most of the marijuana in Arkansas and the dispensaries that will sell it to patients, the commission is shaping a market that does not yet exist but which everyone expects to be highly lucrative. A trade publication of the national pot industry, Marijuana Business Daily, estimated after the election that Arkansas dispensary sales could total $30 million to $60 million within a few years.
The commission has determined it will initially license five cultivation facilities in the state (the amendment requires four to eight) with steep financial barriers to entry. To be in the running, an applicant must show $1 million in assets or a $1 million surety bond, plus another $500,000 in cash; the application fee alone will be $15,000, half of which will be returned if the application was unsuccessful. If successful, the applicant will pay an annual license fee of $100,000. The five cultivator licenses will be awarded on a merit-based system according to a rubric that has yet to be finalized by the commission.
Commissioner Travis Story, a Fayetteville attorney, pushed for an even steeper license fee on growers — he proposed $185,000 — saying the high sums were justified by the business’s “incredible economic potential.” He encountered some pushback from Dr. Carlos Roman, an anesthesiologist and pain management specialist from Little Rock who’s argued for the need to make the new industry as accessible to new entrepreneurs as possible. Roman said he felt a fee of that magnitude could “price people out” and benefit the existing, unregulated black market. “If we fee this thing to death … we can screw this up,” he said.
After the Jan. 3 meeting at which the cultivator fees were established, Story told the Arkansas Times that it was necessary for growers to be “well-capitalized” partly to combat the black market. “We don’t know what demand’s going to be, so we don’t know how long they have to sustain themselves before they can make a profit,” he said. “We’re not saying they have to use all that cash; we’re just saying they have to have the availability to keep going, because the last thing the commission or the state wants is one of these to fail … [and] decide they’re going to have to go a different route to finance this, whether that be through the backdoor [or] finding investors that are less than reputable.” Story also noted that a large amount of cash on hand is necessary for growing operations because the federal prohibition on marijuana prevents those in the marijuana business from accessing credit through banks.
Couch said he’s been pleased with the commission’s work so far and has found most of the appointees to be “more open and progressive than I would have ever anticipated.” He said the cultivator fees are not unreasonable. “I always kind of look at New Mexico as my guideline, because it’s about the same size as Arkansas. They’ve got a little over 2 million people, we’ve got close to 3 [million], but if you look at all the economic indicators, we’re always 45, they’re 46. We’re 42, they’re 41. … They limit their plants in their nonprofit dispensaries, and it costs $90,000 to grow 450 plants. They have 20 cultivation facilities or something like that. So I don’t think $100,000 is an unreasonable fee. $250,000 would have been too much.”
On Jan. 10, the commissioners agreed by a 4-1 vote to initially certify 32 medical marijuana dispensaries across Arkansas — significantly more than the minimum of 20 required by the amendment, which allows up to 40. (The dissenting vote was Story’s, who said he preferred that the state begin by authorizing a smaller number.) However, the panel also instituted a licensing fee structure that will make it more difficult for dispensaries themselves to cultivate marijuana.
The amendment allows for individual dispensaries to grow up to 50 “mature plants” at any one time, along with seedlings. That’s a quantity far smaller than the thousands of plants that a cultivation facility would presumably be producing, but it could allow dispensaries some degree of autonomy from the big cultivators. However, though the commission will impose a relatively modest initial license fee of $2,500 on dispensaries that don’t cultivate marijuana, the fee grows tenfold for those that do — to $25,000. A grower-dispensary would also be subject to an annual license renewal fee of $32,500, as compared to $10,000 for a store-only dispensary. Both will be subject to the same $7,500 initial application fee, half of which will be refundable for unsuccessful applications.
In creating a two-tiered system for dispensaries, the commission was following the lead of the Alcoholic Beverage Control, which is hurrying to create rules of its own. State Department of Finance and Administration attorney Joel DiPippa told the commission at the Jan. 10 meeting that the ABC decided to ask dispensaries “if they want regulatorily to make the election” to cultivate. (The ABC is a part of the finance department.) Cultivation requires its own set of rules distinct from retail sales, DiPippa explained, including details such as security requirements and product testing; therefore, dispensaries that want to grow pot will have to meet some of the same the regulations placed on large cultivation facilities. ABC’s logic is that a store-only dispensary that simply sells marijuana — but doesn’t grow it — shouldn’t be asked to face the same regulatory burden as a grower-dispensary.
But some medical marijuana activists feel the commission’s decision will benefit the big cultivators, ultimately at the expense of patients. Supporters of Issue 7 warned last year that Issue 6 would create “a monopoly” by concentrating economic power in the hands of a few growers (Issue 7 envisioned a model in which nonprofit dispensaries themselves produced the bulk of the state’s cannabis, with some patients also growing their own). Jennifer Lewis, who was an Issue 7 organizer, told the Arkansas Times after the Jan. 10 meeting that “$2,500 on a dispensary … is reasonable, [but] I think $25,000 on cultivating 50 plants is completely crazy, and a great way to make all these dispensaries go out of business.
“What’s going to happen is that all of these dispensaries that choose to cultivate aren’t going to make their money back and are going to have to stop cultivating,” she continued. “These 50 plants are supposed to be giving the little guy, the small business owner, a leg up — and serving patients in the community. Now, all of these dispensaries are going to have to go to these big cultivation centers to get their product. It’s going to be the Big Five, and they’re going to be like freaking Walmart or Tyson.”
The price of pot
Melissa Fults, the sponsor of Issue 7, worries that the commission’s hefty fees for grower-dispensaries could undermine the marijuana program. “I don’t think they’re doing it purposefully,” she said. “But if [dispensaries] grow their own, that allows them to keep costs down low. If they’re selling it at a lower price, the cultivation centers will be forced to keep their prices down. My biggest fear at this point is that they are going to price themselves so high that the black market is going to run rampant, because nobody is going to be able to afford it. … You can get medical grade right now on the streets between $250-$300 an ounce. By the time dispensaries get it — with even a small mark-up — it’ll throw the prices up … [to] between $400 and $500 an ounce.”
Fults said she’s asking the legislature to double the amount of plants that dispensaries are allowed grow, to 100. There’s also rumors of legislation cooking that would do just the opposite: prohibit dispensaries from growing plants altogether.
Nate Bradley, the executive director of the California Cannabis Industry Association, said Fults’ concern is legitimate. “The issue is that when you put caps on the number of licenses for anything, you do create price issues,” Bradley said. “What you’ll see in Arkansas with only five cultivation sites is that prices will go through the roof.”
Bradley said he’s seen similar effects in other markets, including in California. “I remember in San Francisco — the dispensaries there, they used to call them the San Francisco cartel, because you couldn’t get a new dispensary open to save your life. All the dispensaries had it on lock, had a price agreement. It was known that everyone sold the stuff for $50 eighths [eighth of an ounce]. One dispensary finally fought through all the red tape, was able to open up, came into the market at a third of everybody else, and it forced everybody to drop their prices. … In Washington, D.C., cannabis was going for upwards $500 to $900 an ounce, because they had very limited cultivation sites and restrictions on the dispensaries as well. So that’s what you typically see in other states that just cap the amounts [of licenses] — the prices tend to be higher.
“If you’re on Social Security and have cancer, then that’s going to make it pretty hard for you, if you’ve got to spend $900 a month to get medicine,” Bradley said. “And cancer patients might go through a couple ounces a month. Some people can afford that, but most people can’t.”
Still, not everyone thinks lower marijuana prices are a good idea. Mark Kleiman, a professor of public policy at New York University and consultant on drug policy, notes that cheaper, more potent weed has caused “the price of a stoned hour” to collapse in places like Washington state, which hired Kleiman to help set up its commercial marijuana economy after voters there approved full legalization in 2012.
“The price of an ounce hasn’t changed much in 25 years, but the value of a dollar has gone down some, and the THC content of the pot has gone up by maybe a factor of four,” he told the Times. “[There are] discount outlets in Seattle offering 18 percent THC weed for $95 an ounce. Now if you’ll pardon my French, that is dirt fuckin’ cheap. I did the arithmetic. That works out to about 15 cents a stoned hour.”
While such developments may be good for the cancer patient suffering from pain and nausea, Kleiman argues that it’s not great for society as a whole. “There are people who are going to get cannabis or cannabinoids prescribed as medicine, and that’s fine. But a very large fraction of people in the places where it’s relatively easy to get medical marijuana have been using marijuana a long time before they had any diagnosis. You’re basically taking a big chunk of the illicit drug market and putting it through the medical system,” he said. Nonetheless, Kleiman supports the full decriminalization of marijuana: “My view is that prohibition is broken. Give up, legalize the stuff, do it in a way that’s sufficiently restrictive, so you don’t get a big increase in consumption.”
As for why increased consumption is a problem, Kleiman sees the answer as self-evident. “The main risk of selling cannabis is that people get habituated to cannabis and find themselves with a drug problem. In 1992, of the people surveyed who said, ‘Yes, I used sometime in the last month,’ 9 percent said they used 25 days or more in the last month. That same number — heavy users as a fraction of all users — is now 40 percent. … Eight million people in the surveys say ‘Daily or near daily use.’ I don’t want that number going up. About half of them meet criteria for substance abuse disorder. They say it’s taking a lot of time in their lives, interfering with other responsibilities, causing conflict with people they care about, and that they’ve tried to cut back and failed. Now, maybe with a more careful diagnostic screen rather than just a survey, maybe some of those people turn out not to have much of a problem, but still — that’s a lot of people being stoned all the time.”
Ironically, although the public widely saw Issue 7 as more permissive than the marijuana amendment that ultimately passed, its production and distribution model — nonprofit dispensaries, a grow-your-own provision — is somewhat closer to what Kleiman believes states should adopt when legalizing medical cannabis. Establishing for-profit dispensaries, he argues, “makes it convenient, makes it available, and creates an industry that’s out there searching for customers. … It seems like the big difference between big medical marijuana and small medical marijuana is stores.” (As for cultivation facilities, Kleiman said, Arkansas should set its fees high: “These are licenses to print money you’re talking about; the taxpayers ought to get it.”)
To some, Kleiman’s concerns will sound like moralizing. But as more red states like Arkansas legalize medical cannabis, as the commercial market continues to grow, and as the failed U.S. war on pot slowly winds down, they’ll only grow more relevant. “This is the weird thing about this country,” Kleiman said. “We’ve had complete prohibition for almost 80 years. And now we’re going to swing all the way to full, uncontrolled legalization at low taxes. We’re allergic to moderation.”