Petitions law ends marijuana act, lawyer argues

Ads support amendment as governor cites study on cost

By Brian Fanney

A lawyer in the lawsuit that disqualified the Arkansas Medical Cannabis Act from the ballot asked the Arkansas Supreme Court on Tuesday to reject a request by supporters to reconsider the case.

Meanwhile, David Couch, the Little Rock-based lawyer supporting the competing Arkansas Medical Marijuana Amendment, said amendment backers have begun airing additional advertisements focusing on the act's disqualification.

"There are a lot of people who have heard that medical marijuana has been taken off the ballot," Couch said. "It was designed to let people know that medical marijuana is on the ballot, and Issue 6 is the one your vote actually counts for."

Gov. Asa Hutchinson also focused on the act's competitor in a news conference Tuesday.

With less than a week to go until next Tuesday's general election, Couch said voters are confused about the competing ballot proposals on medical marijuana.

Issue 6 is the Arkansas Medical Marijuana Amendment. Its main sponsor is Couch. Issue 7 is the Arkansas Medical Cannabis Act. It is supported by Arkansans for Compassionate Care. Both were offered to allow Arkansans the use of marijuana to treat some medical conditions. Voters see both proposals when they cast ballots, but only the votes for the amendment will be counted.

Petition for rehearing
Arkansans for Compassionate Care on Monday asked the Arkansas Supreme Court to rule on the constitutionality of state signature-gathering laws in the wake of a decision that disqualified the group's proposed initiated act.

The high court issued an opinion Thursday that invalidated some of the signatures gathered in support of the Arkansas Medical Cannabis Act, leaving it with too few to qualify it for the ballot. The ruling mandated that votes for and against the act not be counted. The court's decision came on the fourth day of early voting. More than 144,000 people had already voted -- more than 8 percent of registered voters.

On Tuesday, Patrick Benca, the lawyer in the lawsuit against the act, wrote that the court had already addressed the constitutionality of the paid canvassers statute and found it to be constitutional.

"Nothing obligated or mandated that the Intervenor use paid canvassers -- that was a choice of the Intervenor," he wrote. "Once the choice was made, the Intervenor agreed to be obligated to follow the paid canvasser rules -- rules that every other sponsor is required to follow when they elect to use paid canvassers."

He also said Arkansans for Compassionate Care should have raised the issue in a prior filing and collected more signatures instead of turning in petitions early. He noted that "only those individuals listed on the financial reports as paid canvassers were the ones whose signatures were disqualified."

Arkansans for Compassionate Care said the court erred when it disqualified Issue 7, saying the court's application of the law stripped nonwealthy Arkansans of their right to propose laws and amendments to the state constitution.

According to the group's petition, Act 1413 of 2013 is unconstitutional because a "grassroots organization without money to pay for review of the petitions in advance is thus effectively unable to meet the requirements of the Act. Thus, Act 1413 results in an unconstitutional interference with the [initiatives and referendums] power of 'the people.'"

Section 21 of Act 1413 set standards for paid canvassers. Under that section, sponsors cannot provide money or "anything of value" to a canvasser unless he meets the requirements, which include providing his full name, current home address and a photograph. That section ultimately doomed Arkansans for Compassionate Care.

Cost of enforcement
Hutchinson on Tuesday touted a state study of the Arkansas Medical Marijuana Amendment that estimated losses to the state after spending money for regulating the industry. Couch said the results were flawed.

According to the study, about $2.5 million is likely to be raised in tax revenue per year if voters approve Issue 6, but costs to the Department of Finance and Administration and the Arkansas Department of Health could total from $4.2 million to $5.9 million annually.

"There's some complexities here -- some are unknown, some are estimated with the best analysis possible -- and there's probably some consequences that we're not even aware of today," Hutchinson said. "This is not to cause fear, but it is simply to bring awareness as to the regulatory cost and the budget impact in the event that this amendment would pass."

The governor said the expense has a lot to do with marijuana remaining illegal on the federal level.

Banks are unlikely to provide accounts to the industry and, as a result, transactions would be largely cash-based, he said.

That would make for more work for state regulators, Hutchinson said.

The estimate does not include additional expenses incurred by Arkansas State Police or the state Crime Laboratory, he said.

Paul Gehring, Department of Finance and Administration assistant revenue commissioner for policy and legal, said the department contacted every state allowing medical marijuana. Twenty-five states, the District of Columbia, Guam and Puerto Rico either allow medical marijuana use or are in the process of allowing it, according to the National Conference of State Legislatures.

Gehring said only six responded. The department's estimate of tax revenue -- $12.85 per capita -- averaged the marijuana revenue per capita for the respondents.

Couch, the Little Rock-based lawyer who backs Issue 6, said the survey was flawed because it included some states just starting their medical marijuana programs as well as others that have vastly different programs.

The proposed Arkansas amendment is most similar to the programs in New Mexico and Arizona, he said, which have revenue per capita of about $22 and $32, respectively.

Couch said the study also ignored other revenue sources, such as fees and the economic impact of several hundred new dispensary and cultivation facility jobs.

"At no cost to Arkansas taxpayers, you'll have 500 to 1,000 new jobs, all of which will pay income taxes," he said. "All the dispensaries and cultivation facilities will pay property taxes with no rebates."

Couch referred to a deal announced by Hutchinson in which the state agreed to more than $2.7 million worth of economic development incentives, and Little Rock and Pulaski County agreed not to charge Suzhou Tianyuan Garments Co. up to 65 percent of its property tax obligations to build a clothing factory and employ 400 people in central Arkansas.

The governor said he would support increased taxes on medical marijuana sales to deal with a shortfall.