‘Unusual alliance’ of opponents jeopardizes Arkansas marijuana legalization measure

(This story is part of a series examining state ballot initiatives as well as key issues and races that voters will consider on Nov. 8.)

A motley coalition of religious leaders, pro-Trump politicians and donors as well as progressive cannabis advocates is opposing a uniquely pro-law-enforcement legalization measure in Arkansas that would give existing medical marijuana operators first crack at a new adult-use market.

This rare alliance – and Arkansas’s morality-driven politics – is leading observers to predict that this effort to create what would be the first adult-use cannabis market in a deep-red, conservative Southern state might fail.

That would be welcome news for pro-cannabis critics, who say the measure gives the state’s existing medical marijuana industry – which is the legalization campaign’s chief bankroller – early and unfair dominance over a future adult-use market projected to exceed $500 million in sales within three years.

Though Issue 4 would legalize cannabis for adults 21 and older, the measure bucks a social justice-centered trend: Instead of expunging past cannabis crimes, the measure’s backers tout how much tax money it would funnel to police.

And it lacks social equity provisions intended to ensure people of color and without access to capital can participate in the legal cannabis space.

It would also reward the industry backers who are pouring millions of dollars behind the measure with limits on how many new competitors could enter adult-use cannabis in Arkansas as well as how large they could be.

All of this is fueling accusations from pro-cannabis critics that the measure is deliberately crafted to guarantee existing MMJ players a lion’s share of the adult-use market, which MJBizDaily projects could generate as much as $400 million in sales in the first year, despite cannabis-usage rates much lower than the national average.

Their voices, added to conservative fears over youth use and drugged driving – amplified by a million-dollar donation from a prominent right-wing billionaire and 2020 election denier – helps explain flagging support in recent polls and is leading observers to predict Arkansas will preserve the status quo.

“I suspect this particular measure will be defeated,” said Karen Sebold, an assistant professor of political science at the University of Arkansas.

Limits on licenses, plants

Should Issue 4 pass, the state constitution would be amended to allow adults 21 and older to possess up to an ounce of cannabis, though there would be no allowance for home growing.

Recreational sales could begin as early as March 8, 2023, at the state’s existing 40 licensed medical marijuana dispensaries.

Sales would be subject to a 16% state tax – much lower than tax rates in existing adult-use states such as California, Colorado and Washington.

MMJ cardholders would still be able to purchase medical cannabis tax-free.

Each existing MMJ dispensary would receive an additional adult-use sales license, for a total of 80 initial sales licenses doled out to current retailers.

Another 40 retail licenses would be awarded to new entrants via a lottery no later than July 2023.

An existing residency requirement would be repealed, thus opening up the industry to multistate operators mostly shut out from the state’s medical marijuana market.

The state’s existing eight licensed cultivators would also get first dibs at supplying adult-use retailers.

A maximum of 12 new cultivation licenses would be issued, also via a lottery, no later than November 2023.

But these so-called Tier 2 licenses would be capped at no more than 250 plants.

By contrast, the state’s original eight cultivators would not be subject to a plant count.

Initiative backers say the measure could raise as much as $460 million in tax revenue over the next five years, with 10% of that dedicated to research and law enforcement – although the measure’s pro-police component is front and center in campaign ads.

“You can vote to support our law enforcement by voting for Issue 4 this election,” a television ad released in August proclaims.

“A vote for Issue 4 is a vote to support our police.”

‘Never a perfect fit’

Issue 4’s peculiarities are tailored to the political realities in Arkansas, said Eddie Armstrong III, a former Arkansas state legislator serving as the campaign chair for Responsible Growth Arkansas, the organization behind the measure.

These include satisfying a conservative voting base concerned about public safety as well as officials leery about the laissez-faire approach to cannabis seen next door in Oklahoma.

“There’s never a perfect fit,” Armstrong told MJBizDaily in a phone interview. “It wasn’t perfect in Cali; it wasn’t perfect in Colorado.

“I think Arkansas took a little bit of each one and said, ‘How do we make this work?’”

As for what’s missing: Legal counsel told organizers that ambitious criminal-justice reform and social equity measures wouldn’t survive a court challenge, Armstrong said.

As it is, backers had to go to the state Supreme Court just to stay on the ballot with what they had.

And pre-campaign polling emphasized the need to address voters’ public-safety fears and attempt to neutralize opponents’ messaging over drugged driving and youth use.

It has been shown that recreational marijuana leads to increased drug use among minors & more dangerous roadways. Early voting in Arkansas starts tomorrow, and I plan to vote NO on ISSUE 4. I encourage all Arkansans to do the same.

LEARN MORE HERE: https://t.co/T5Wqxs48F5

— Bruce Westerman (@WestermanAR) October 23, 2022

Though free-market advocates will likely chafe at the license caps, they’re still an expansion and thus an improvement over the state’s existing caps established in 2016’s successful MMJ measure, Amendment 98, Armstrong added.

“We’ve been raked over the coals over every nuance of this amendment,” he said.

There’s also a sense of urgency, he added. Under existing state law, ballot initiatives can pass with a simple majority.

That threshold would increase to a 60% supermajority if voters approved another initiative on the November ballot, Issue 2 – a complication that could thwart future legalization efforts before they begin.

“If we don’t thread this needle right now, we may not get another shot to do it,” Armstrong said. “That’s the reality: We have the opportunity to take some bold strokes and legalize recreational cannabis in the buckle of the Bible Belt.”

As for future social justice measures, those could be addressed later on by either lawmakers or another ballot initiative.

As of now, nobody has made a solid commitment to do so, he said.

Support from industry, not activists

Through the end of September, supporters raised $4.8 million – with most of the funding coming directly from the medical cannabis industry, according to the most recent campaign finance data available.

Supporters have spent $3.9 million, mostly on television advertising.

Cannabis grower Bold Cultivation and dispensary operator Good Day Farm of Arkansas have both contributed $1 million, with another $800,000 coming from Osage Creek Cultivation.

Social justice and legalization organizations such as the Washington DC-based Marijuana Policy Project (MPP), which funded Colorado’s measure in 2012, and the New York-headquartered Drug Policy Alliance, which provided significant funding and support in California as well as New Jersey and New York, are steering clear of Arkansas.

The MPP, for example, has taken no position on the measure, Campaigns Manager Jared Moffat said.

 ‘They deserve to lose’

The license caps, lack of social justice components and massive industry spending mean Issue 4 is a crass “monopoly play” from the existing industry, said David Couch, a Little Rock attorney, co-sponsor of Amendment 98 and opponent of Issue 4.

“It’s shady,” he said, pointing to the strict plant counts imposed on industry newcomers and the limited number of newcomers allowed.

Couch also believes that by defining the object regulated under the law as “cannabis sativa,” a botanical classification that also includes hemp, Issue 4 would gift the state’s nascent hemp industry to the existing medical players.

“I will tell you that if they had written a fair amendment, it will pass in Arkansas with 60% plus,” he said. “Why would you not pardon past marijuana offenses? That’s just ridiculous.

“If this loses, it’s their fault for being greedy – and they deserve to lose.”

Hey, #Arkansas:

Issue 1: No
Issue 2: No
Issue 3: No
Issue 4: No

With respect to Issue 4: I support legalization, but this ain’t it. The measure hands a small number of companies full control of the industry, guaranteeing they’ll never face competition.

We need better.#ARpx

— Greg Leding (@GregLeding) October 24, 2022

In addition to Couch and religious activist Jerry Cox, law-enforcement groups and prominent politicians including Gov. Asa Hutchinson, Republican gubernatorial nominee Sarah Huckabee Sanders and U.S. Sen. Tom Cotton all oppose the measure.

Early voting in Arkansas starts today.

I encourage every Arkansan to vote YES on issue 2 to protect our Constitution, and NO on issue 4 to stop California’s drug laws from coming to our state.

And vote Republican, up and down the ballot.

— Tom Cotton (@TomCottonAR) October 24, 2022

The campaign has also been dinged for pushing the envelope with its TV advertising campaign.

Responsible Growth Arkansas received a cease-and-desist letter from the Little Rock officials after depicting uniformed city police in an ad, though the campaign didn’t pull the spot, Armstrong said.

Opposition campaign Safe and Secure Communities reported raising a little over $2 million through the end of September, with two big donors plunking down $1 million each.

They are poultry baron Ron Cameron, CEO of Mountaire Farms, a major employer in Arkansas; and right-wing activist billionaire Richard Uihlein, who is pouring money behind candidates nationwide who attended the Jan. 6 Capitol rally and who are repeating former President Donald Trump’s lie that the 2020 election was stolen.

Though early polling pegged Amendment 4 at 58% support, a more recent poll released Sunday showed the measure at 51% in support to 43% opposed.

Political observers believe the tide might be turning against the measure, and the “unusual alliance against it” is a major reason why, said the University of Arkansas’ Sebold.

“Conservatives don’t appear persuaded by the nods to policing/lack of amnesty for past infractions,” she said. “And liberals object to those same nods.

“Libertarians – here, usually liberals or conservatives with libertarian streaks – seem offended by either the stiff penalty for growing your own plants or the expanded monopoly by existing license holders over other forms of cannabis like CBD.”

Chris Roberts can be reached at chris.roberts@mjbizdaily.com.