Arkansas Sees Record-Breaking Medical Cannabis Sales in 2023, Poised for Continued Growth in 2024

Recently, Arkansas’ medical cannabis industry has experienced a significant increase in sales and patient registrations, reaching new highs last year. This upward trend in the sector’s growth is expected to accelerate even further in 2024, influenced by ongoing legal proceedings.

The state’s medical cannabis market, established after voters approved its use for health purposes in 2016, has encountered various restrictive measures from state legislators. However, a notable shift occurred when many of these limitations were deemed unconstitutional. The Arkansas Supreme Court’s impending decision on an expected appeal will significantly impact the industry’s future direction.

If the court overturned these regulations, it would mark the beginning of a new phase for both patients and cannabis enterprises in Arkansas. Such a development might introduce a range of new products and services, including pre-rolled products, high-THC edibles, and the use of telemedicine for new patients.

There’s also an ongoing legal examination into removing current restrictions on business advertising in this sector. Lifting these constraints could create new ways for dispensaries to reach out to both existing and potential patients, potentially spurring more growth.

Despite the uncertainty of these legal issues, Arkansas’ regulators and industry leaders are optimistic about the continued expansion of the sector. This positive outlook is based on the steady increase in activity since the market’s inception five years ago.

Arkansas residents might also get to vote on a significant ballot initiative this November. This proposal seeks to expand patient access, allow personal cultivation, and pave the way for the potential legalization of recreational use, depending on federal law changes.

Scott Hardin, representing the Arkansas Department of Finance and Administration, spoke about the robust performance of the industry. “The trend of increasing sales year over year since 2019 is expected to continue. Even with Missouri introducing recreational use last year, Arkansas experienced a record-setting year in 2023,” Hardin stated. He further highlighted the significant financial contribution of the industry, stating, “Since the first dispensary opened its doors in May 2019, patients in Arkansas have expended more than $1 billion.”

In summary, Arkansas’ medical cannabis sector is at a crucial turning point, with prospects for significant developments and growth in the next year. The combination of legal progress, regulatory shifts, and growing patient involvement suggests a dynamic and flourishing future for the industry.

In the year 2023, the medical cannabis sector in Arkansas achieved an unprecedented level of sales, totaling a remarkable $283 million. This figure not only set a new record but also surpassed the previous high of $276 million recorded in 2022, indicating a consistent upward trajectory in the industry’s financial performance.

Since the inauguration of the medical cannabis program in 2019, the state of Arkansas has witnessed a substantial accumulation of revenue from this sector. Over $120 million has been collected from both sales and privilege taxes imposed on medical cannabis. This substantial fiscal contribution underscores the economic significance of the medical cannabis industry within the state.

The patient base for medical cannabis in Arkansas has also seen a significant increase. As of the latest data, more than 97,300 patients are registered with the state Department of Health, a notable rise from 89,855 registered in January 2023. This growth in patient numbers not only reflects the increasing acceptance and utilization of medical cannabis but also surpasses some of the most optimistic forecasts made by proponents during the legalization campaign in 2018.

The burgeoning medical cannabis industry in Arkansas has also been a notable source of job creation. According to recent information from the state Alcoholic Beverage Control Division, which oversees the regulation of this industry, there are currently over 3,000 individuals employed in cultivation or dispensary roles who possess Registry Identification Cards (RIC). These RIC cards are a mandatory requirement for all employees working in cannabis facilities, ensuring regulatory compliance and providing a real-time snapshot of employment within the industry.

The data on RIC cards is particularly telling of the industry’s employment landscape. “Based on RIC cards, we know the state’s medical cannabis industry directly employs more than 3,000 people,” commented Scott Hardin from the Arkansas Department of Finance and Administration. He further highlighted the scale of employment within individual companies, noting, “Good Day Farm Cultivation is the largest with 366 active cards.” This statement not only illustrates the direct employment impact of the medical cannabis sector but also sheds light on the significant role individual companies play in job creation within this burgeoning industry.

In summary, the medical cannabis industry in Arkansas has demonstrated robust growth and a significant economic impact since its establishment. The record sales figures, increasing patient registrations, substantial tax revenue contributions, and the creation of thousands of jobs collectively paint a picture of a thriving sector that continues to expand and positively influence the state’s economy and employment landscape.

Challenge to the Constitution

In June, a significant legal development occurred when a circuit judge in Pulaski County, Arkansas, invalidated a total of 27 statutes that the Arkansas Legislature had enacted to regulate the medical cannabis industry following the 2016 passage of Amendment 98 to the Arkansas Constitution. This judicial action by Judge Chip Welch represents a pivotal moment in the legal framework governing medical cannabis in Arkansas.

Judge Welch’s ruling essentially concluded that the Arkansas General Assembly had overreached its authority. His judgment was based on the principle that the Legislature does not possess the unilateral power to modify or alter a constitutional amendment that has been enacted directly by the people. This finding underscores the tension between legislative actions and voter-approved amendments.

Arkansas Attorney General Tim Griffin has publicly expressed his intention to challenge Judge Welch’s ruling. However, the process for filing this appeal is contingent on Judge Welch issuing a decision on the remaining aspects of the case.

The plaintiffs in this case, Good Day Farms, and Capital City Medicinals, have extended their legal challenge to include restrictions imposed by lawmakers and regulators on cannabis advertising. Currently, Judge Welch has yet to issue a decision on this particular element of the legal challenge, with a hearing set to occur in May.

The implications of Judge Welch’s ruling, coupled with the anticipated appeal by Attorney General Griffin, have plunged the medical cannabis industry into a state of legal ambiguity. Although numerous laws restricting the sale of popular cannabis products have been invalidated, companies in the industry have largely continued to operate as though these laws are still in effect. This cautious approach is driven by two primary considerations.

Firstly, the Arkansas Supreme Court is expected to issue a stay on Judge Welch’s ruling once an appeal is filed by Attorney General Griffin, a prediction echoed by the Arkansas Cannabis Industry Association. Secondly, many of the restrictions nullified by the judge’s decision are also embodied in state regulations, which currently remain in force. According to Casey Castleberry, an attorney representing an Arkansas cultivation company not involved in the lawsuit, some of these rules might be rescinded if the Supreme Court upholds Judge Welch’s decision, though not necessarily all.

Two particular restrictions whose repeal has generated significant excitement within the industry and among patients are the ban on pre-rolled joints and the restrictions on telemedicine patient certification.

In regions where the use of medical cannabis is sanctioned, pre-rolled products frequently become bestsellers. Bill Paschall, the Executive Director of the Arkansas Cannabis Industry Association, has observed that offering pre-rolled joints would greatly aid elderly patients who desire to use cannabis but might find it challenging or prefer not to roll their own, as well as individuals with physical conditions that hinder their ability to roll.

Beyond the immediate impact on the cannabis industry, this litigation holds broader implications for the regulation of other industries established through constitutional amendments in Arkansas, such as the casino industry. As Casey Castleberry observed, the outcome of this case is being closely monitored by stakeholders in any industry that originated from a constitutional amendment, indicating the far-reaching consequences of this legal battle.

In conclusion, the ongoing legal dispute surrounding the regulation of medical cannabis in Arkansas represents a critical juncture, not only for the cannabis industry but also for the broader legal landscape related to industries established by constitutional amendments. The decisions made in this case will likely have enduring impacts on regulatory practices, industry operations, and the rights of patients and consumers.

Marketing and Promotion

The prospect of eased advertising restrictions is a matter of considerable interest to dispensaries within the state, but industry experts suggest that even if such restrictions are lifted, it might not immediately lead to a surge in advertising activities. The current state regulations impose stringent controls on where dispensaries can advertise, including a requirement that the audience for any such advertising must be at least 70% adults. Additional prohibitions include restrictions on advertising near schools or daycare centers, among other limitations.

Elizabeth Michael, co-founder of the Bud Agency, a Little Rock-based cannabis advertising firm, points out that beyond state regulations, dispensaries also face significant constraints imposed by private companies regarding the type of cannabis advertisements they are willing to host. “Not only do companies have to worry about state regulations, but they also have to worry about these companies’ regulations as well,” Michael explained. She emphasized that regardless of the outcome of the ongoing lawsuit, the dispensaries will continue to face these private company restrictions.

In the previous year, the Alcoholic Beverage Control Division, which oversees the enforcement of these regulations, took action against one dispensary for an advertising violation, issuing a citation and two verbal warnings as recorded in state documents.

Despite the existing hurdles, the possible elimination of state-imposed advertising restrictions might boost the confidence of cannabis companies in Arkansas in terms of promoting their products. Many have chosen to abstain from advertising entirely, according to Michael, out of concern that it could endanger their licenses.

Michael also highlights the broader benefits that could arise from increased advertising in the cannabis sector. She believes that more extensive advertising could lead to better education among both registered patients and the general public. “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 noted.

In summary, the relaxation of advertising restrictions holds the potential to transform the landscape of cannabis marketing in the state. While dispensaries may still face limitations from private companies, the easing of state regulations could encourage more widespread and effective advertising strategies. These modifications could be advantageous not only for the dispensaries but also in fostering wider public comprehension and endorsement of medical cannabis as a legitimate treatment alternative.