BUSINESS MATTERS

State's legal, business minds abuzz preparing for medical marijuana

What the legalization of medical marijuana means for human resource departments or business owners who want to invest in the emerging industry is unclear.

Regulations are being written and must be approved by the state Legislature.

Questions about the voter-approved constitutional amendment to legalize medical marijuana are plentiful.

Federal law restricts where money made on medical marijuana can be deposited, which means security will be of utmost importance for what will likely be all-cash operations. FDIC-insured banks are wary of accepting deposits from marijuana-related businesses for fear of violating federal money-laundering laws.

There are concerns related to workers' compensation and drug testing for companies dealing with employees who might have conditions that allow for medical marijuana use. Zoning will present challenges for local agencies and commercial real estate firms.

Arkansas joins 28 states that have legalized medical marijuana and another 16 allowing limited medical use. ArcView Market Research estimates the legal market for marijuana will eclipse $22 billion by 2020.

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Wright Lindsey Jennings attorney Erika Gee, who spent eight years working in the state attorney general's office, has devoted much of her career to regulatory and licensing issues. She has been regularly fielding calls from state agencies and business owners from as far away as California since the measure passed.

"There are people I've talked to four or five times, and every time we talk, there's a new thing that suddenly occurs to them. There are so many different aspects that no one has ever dealt with," said Gee, who has done legal work for the Arkansas State Board of Pharmacy, Health Services Permit Agency, Board of Podiatric Medicine, Arkansas Insurance Department and the State Board of Nursing, among others.

Gee recently took time for a conversation regarding the regulatory and business implications of medical marijuana in the state of Arkansas. Below is a transcript of the conversation edited for space and clarity.

Do business owners and potential businesses seem to be panicking?

I don't think people are panicked, at least I haven't gotten that sense. There is uncertainty. Some of the people I have talked to in health care who are licensed by one state agency or another, they have questions about how is this going to work with their professional license. There are all kinds of existing laws, especially ones that interface with some degree to federal laws, and nobody is sure how that is going to work. Workers' comp, drug testing -- how is that all going to be handled? I don't think there is any answer, really. It's just a matter of working through it.

There are an awful lot of situations that no one has anticipated, and I'll include myself in that. I think you would have to go through all of the state laws and look for the places it is going to be an issue in order to really anticipate what's coming. As a business owner, I'd be asking, "What are we just not thinking about that might cause a problem for our employees?"

Having 120 to 180 days doesn't seem to be a lot of time to put all the regulations together. And these aren't just rewrites of existing laws, you're starting from scratch.

Just your average rules take every bit of six months to write. Because this is something that has never been done before ... and you have three separate agencies promulgating rules. That adds another layer of complication.

As businesses servicing the medical marijuana industry open, do you think we'll see a mix of in-state and out-of-state owners/operators?

I think that it will be a mix because you will need to have familiarity and expertise with the Arkansas state government and the Arkansas political culture to effectively assist with some aspects of applying for these permits and getting businesses up and running. Somebody from out of state is not going to have the familiarity with the way things are done in Arkansas to really be able to help very much in that regard, but people who have a lot of experience in marijuana businesses in other states I'm sure will have a lot to offer. Nobody here as ever done it.

What sort of questions are you fielding most often?

The question that everybody has is how are they going to decide who gets the permits. It's a very difficult position to be in, whether you're an established medical marijuana person somewhere else or you're just looking to get into it here, because we don't know yet. It's hard to make a decision about whether you want to try to invest.

Anything we're missing in this way-too-early conversation?

It's not too early. Unless you want actual answers (laughing). The biggest thing people want to talk to me about is how they are going to do the permitting process. I think it's fair to say there will be far more interest in getting a permit than there will be in permits available. It will be really interesting to see what the Legislature does with the zoning issue. That is one aspect the Legislature can change -- trying to limit where people are able to be located. Currently, you can be zoned as long as it applies equally to retail pharmacies. I don't anticipate it will stay that way. I wouldn't be surprised if the Legislature pursued something that would be sort of the equivalent to wet-dry counties. Authorizing counties to vote themselves smoke-free, or however you would phrase it.

If you have a tip, call Chris Bahn at (501) 378-3518 or email him at [email protected]

SundayMonday Business on 12/04/2016

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