Arkansas medical marijuana regulators sued over license sale

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An Arkansas mayor and several other entities are suing state medical marijuana regulators and an MMJ company in connection with the sale and transfer of a license in November 2020.

The suit, filed this week in Jackson County Circuit Court, alleges fraud, conspiracy and breach of contract related to the sale of Natural State Wellness Enterprises Cultivation to Good Day Farm as well as a relocation of the growing facility from Newport to Pine Bluff, according to the Arkansas Democrat-Gazette.

Newport Mayor David Stewart and three other plaintiffs allege in the lawsuit that the Arkansas Medical Marijuana Commission didn’t provide proper notice that the license transfer would be considered at a meeting last fall.

The suit further claims Good Day Farm wasn’t a properly registered entity at the time the transaction was approved.

Regulators approved the sale on Nov. 10, 2020, according to Jonesboro TV station KAIT.

State corporation records show that Little Rock-based Good Day Farm registered as a limited liability company on Nov. 12.

One of the plaintiffs, the Northeast Arkansas Charitable Foundation, also argues that the foundation was owed $2 million from the sale, money that would go to nonprofit organizations in Jackson County.

Multistate operator Harvest Health & Recreation sold Natural State Wellness, a vertical operation, for $25 million to focus on Arizona’s new adult-use market.

Alex Gray, a Little Rock-based attorney for Good Day Farm, told the Democrat-Gazette that the company would “vigorously defend” the lawsuit.

“I believe in the integrity of the manner in which Good Day Farm obtained both the license and the approval of the relocation of the cultivation facility to Pine Bluff,” Gray wrote in a text to the newspaper.

Arkansas Medical Marijuana Commission spokesman Scott Hardin said the commission doesn’t comment on active litigation.

But Hardin did say the commission doesn’t have a rule requiring notification to communities when approving ownership changes.