ALC-Medical Marijuana Oversight Subcommittee

Representation Fite do you have anything you no comments. A real yeah I need to do I we do have Some guest. Back. Carter. Would you take an innovation discarded Milligan for the state governor's office if you would encourage your guests today. If you all would stand up so we can. All. Okay and you are entertaining today with the governor's office or correct we'll welcome. And thank you for attending. Okay I think we're ready for. Mr come to the. Members this is for those it. I don't know this mystery general she's Director of Arkansas beverage control So the story if you would introduce yourself please. Doorly Taylor director of alcoholic beverage control and I also oversee the imminence medical marijuana. Okay it we were we have had many many questions about. The price structure for the American medical marijuana and there's been issues people or have questions about this is their price fixing because of the prices that are out there and so would you give us a little bit of enlightenment on how the prices are set. So this is a standard industry just like alcohol they set their own prices the commission or the ABC have any oversight or control over the pricing that is set by the industry so the cultivator set the price that they are going to distribute their flour product and they're prepared products to the dispensaries and they then in turn do a price setting of we provided a document a few weeks ago back to BLR and regarding a question setting forth kind of the surrounding states of the price of Lauer and flowers is the primary product to do price comparisons on because when you get into the prepared products it those prices are very difficult to do a comparison because it depends on for example the bait products the heating devices that those are put in and the teamsters the as additional products come in different forms fashions and prices from the general market so those are not a good basis to do a price comparison on and so we do most prosecute persons are done on the flower product itself and so we provided that showing Arkansas is running in a range of retail range costs for per gram on flowers of eight dollars and forty six cents to fifteen seventy one per gram as obviously as everyone is hard Oklahoma's is cheaper and there are a range of three dollars and forty six cents to ten dollars and eighty one cents in that range varies based upon the strange that there are pricing some strains are more expensive than other strains as in any product that you can raise. So since the federal government considers this. Is a illegal products. The. Apparently they're not under the interstate commerce act were which would control price fixing is that correct right so they are the federal government does not recognize the medical marijuana so they're not going to apply any of the federal laws to the oversight of medical marijuana. Okay. Members of. Senator Chesterfield. On your go ahead take a. All right. Thank you Mr thank you for being here this morning and welcome to our interns we will talk about how long ago I was a Hendrix but was there. has the increased number of dispensaries and or cultivators. Because the decrease in the in the price for the patient. So at this point in time while we hope is that the commission license the additional cultivators those cultivators have not come on line and providing product yet so we're not being able to do a comparison yet as to the impact of those cultivations to the pricing they are working on getting their facilities up and running so as of right now we still have only the five cultivators in place that we had when the initial complaint started on the pricing do they basically charge the same thing to the dispenser yes across the board we are saying pretty consistent prices of what is that from a well and that is the of. I don't have the cultivator proselyte have is a dispensary what we are able to view online from the different of organizations that provide pricing out there in from our this came from our bio track data and it is the eight dollars and forty six cents to fifteen seventy one program. Why do we not have a better handle on what that is the cultivator chart I don't I just don't have that data with me. Can we get that I can pull data based upon the transfer of the of the docu of the products to the dispensary yes and what is the particular time frame for those other cultivators besides the five that we have with the time frame for getting them up and running one is a state say you've had enough time and we need to move on to someone else okay so they have that we have in place rules that allow them one year from the time they were license they can then petition for may to grant them a sixty day extension they have all petition for that sixty day extension this point time they have been granted so they are we are looking at them being up and running in the September time frame August September October in that that time frame I'd have to pull each individual one to look at the actual date they were all came on board licensing the cultivation units in the June July time frame of last year. Thank you thank you Mr. Representative Payton. Thank you Mr chair so that your understanding that as far as state law we don't have any anti trust laws. I'm not saying that I am saying that and I have not looked into the state antitrust laws as as the ABC MMC we do not have a regulatory scheme set in place like they have it tobacco with minimum pricing. Well I'd be interested in knowing if the state has any antitrust laws because if if so and there's collusion going on on the price fixing then we have a leg. The to go on and I know the state has some price gouging laws is being a medical product. I would think they would apply so you said we have five cultivators what do you know about the ownership of those five entities is our cross participation as ownership from of from the five cultivators were there to be collusion going on there so they can only one one cultivator and we have not seen in the ownership presentations that provide us and our investigations any cross overs in the cultivation ownerships okay and if they have board of directors or anything like that do we have of rules regarding whether or not somebody could sit on multiple boards for the cultivators so we have if we do not have. Operation rules in place that would prohibit one consulting with hand having consultants that are shared we do have roles are for ownership interest okay. Thank you Mr chair for good maybe have a bill are investigate whether or not the state as in the antitrust laws and what price gouging laws might apply. John is taking note of that we will have the alarm taken. I move that thank you of representative makes your question yes Mr so question is is the price comparison that you offered was between Arkansas and Oklahoma that's a very small sample size have you compared with other states besides Oklahoma to see or at or is that just the. The closest comparison now we provided a document that has Missouri Texas Texas does not have power right now is where does Louisiana so we do not have a comparison ma'am but we price compares to Connecticut which is a very similar industry standard is Arkansas we process compared to Illinois. And then the Missouri Oklahoma Illinois and Connecticut are the ones that we did so we still high compared all those as well because only one in your testimony you would give it was Oklahoma Senate Missouri has a retail cost of flowers fourteen dollars to fifteen forty two program that we have a comparison kinetic it is seven dollars and fourteen cents to thirteen dollars and fourteen cents per gram and Illinois's medical is fourteen dollars and sixty cents to seventeen dollars and fifty cents they're recreational is twelve dollars and eighty five cents to eighteen dollars and fifty seven cents program so when you look at all those we may be a bit on the high side on song but it sounds like. Overall were. Fairly close to being in the middle that was that is that correct characterization correct okay and then a follow up Mr sure so what of course whenever you start a new business there's a lot of startup costs that are involved in that how much of the increased price is from the start up and as competition and free marketing and and you may even like me even how much free market competitions involved here as we start adding new cultivators. Looking for do you see these items will drive the price down once we get past the startup costs and start we have these new cultivators and getting to a more competitive market that the price will work itself down through free market or is limited or is their limited free market competition going to allow for the prices to stay more born in. As far as the star cost I really think that's a better question that could be addressed by the cultivators they do have extensive startup costs with the equipment that goes into these facilities and so the desire and the hope of the ABC and the commission is that as as we get down the road we start seeing a competition with the three additional cultivators coming on board that will drive a lower price as well as the fact that at as time goes on though startup costs will have been absorbed and recouped by the industry. And and and Mister I don't know if there's any plans but maybe it and future meetings that it might be beneficial to us if we had some of cultivators or you know some some industry folks are actually doing this to try to give us their side of of what's going on as well thank you. That is our intention of. Who's in state seventy. I need. Okay. Speaker. Thanks for. Representative first. Thank you Mr chair of the Director channel that just stepped in you may have already answered this question but following up something that represented Payton said of a cultivators allow to have interest and dispensaries let the they are yes so a member of the cultivate a board of directors can be also on the board of directors of the dispensary yes. Okay thank you thank you Mr. Senator arrest. Thank you Mr up. Mr. I don't think it's anything in a press but as security regarding Product growing in all it we had any problem across the state. And also with any of the cash funds is that. Man any issue across the state we've we've not seen any issues with the cash funds we have had a handful of staffs that have occurred within the do a dispensary or cultivation unit that has been reported to us I have employees staffed and but it's been very small in incidents care of somebody touchtone Oklahoma I'm Clerk up missed a stat it is their cost. Considerably lower. I'm is or is in a range of three dollars and forty six cents a gram to ten dollars and eighty one cents. And I mean days from what I hear I deal in Oklahoma and I have a business over before what I hear they a they've set up a no chicken houses and then a lot of things that didn't have security and all I wondered if it. is there any bleed over. In Arkansas is or any control on the border. Been a problem or R. A. R. any actions been done. So we've not heard of any issues I mean we are aware that some patient card holders are going across state lines I mean they contact us and and are aware of the price differences and so we do know that some people are crossing over to the state lines and purchasing and in other states as far as any issues that we have heard that would be local law enforcement has not and advised us of any that is that is legal. Usurpation card to go out of state that it is not okay when you say that you've been notified so they've been turned down supposedly. So any patient card issues ABC does not issue those cards the department of health issues the patient card so any report that we have of any patient issues we would turn it over to a their local law enforcement to handle if they're transporting the marijuana back into the state or we would turn it over to the department of health if they are not a patient card holder here. Okay. any anything such as people using a relative's address in another state Would that the back come to. The commission if there if there was a charge or something. It would not it would come back to local law enforcement local okay thank you thank you Mr. Representative Payton. Thank you Mr of. Want to cultivators established we have restrictions on which dispensaries they can sell to or can they market their product to all licensed dispensaries ins in state we encourage them to market their product all the licensed dispensaries in the state thank you thank you Mr. Secretary Chesterfield you have a question yes thank you Mr chair how old since at the federal level this is still illegal. In most of our banks are federally insured. How. Is the money being stored are their project where you're laughing are there particular. Banks of a certain kind that have been set up in order to handle the proceeds of a multi million dollar industry says they can't they are supposed to go directly into federally insured banks my understanding is that they do have a banking system in place that most if not all of the entities are using and when they deal with us they are bringing in certified funds to pay for their cards and so they have a banking establishment in place we as A. B. C. do not oversee that aspects we have not delved into the intricate details of their banking systems in you don't ask don't ask don't tell feelings at we have not asked we've not had a concern at this level of the of the handling of funds to do any in kind of inquires into it. You know you don't even know what the bank use or is it a physical structure or is there some way we do this via. internet how how's that work you know we were not aware of it. So we have not where we have not Senator just bill done and investigations into we know that they do have their connected with a baka and they have overs have the industry oversight into the banking of and the rules and regulations and I know that they are on most of them have safe that they maintain some funding in there they have ATMs in their facilities to allow cast a debit cards to be used to withdraw for the patients to use and but as far as the increased details we have not investigated into the the business some concern that if they had it someplace and this person decided that was running their bank decided to a scam with the money. Then we have no way of knowing that the person who was absconding S. count it. Is that right that would be correct and there would be the same as any any other industry private industry that is regulated by the states such as of alcohol industry we don't go in and investigate their banking systems and so we have not done that with the marijuana either I think there's a distinction though because alcohol is legal sure. Federally but this is not. And so without that federal oversight then we have a more difficult task of making sure that our cultivators dispensers and patience. Have someplace safe to store their money thank you very much. Senator Irvin. Thank you I looking back at you know all of the different pieces of legislation that we have to go through and pass to set up the regulatory structure around what the people voted for on medical marijuana. And other you know at the time I've I worked on that with several others and particularly representative Doug House in the House but you know there's just so many moving parts and I think that we were doing our very best to try to cover and make sure that everything was in place. What from your perspective is there anything that needs to be looked at again reviewed again or changed statutorily to meet where we are today. Setting here today I can't say that there's anything specific that I would point to at this point we have modified the rules as we see changes the industry in the manner that we are allowed to modify but as far as the overall structure I can't provide you something right off the top of my head as I say here today okay and then the second question maybe more for the department of health that and I'll just say this and it could be for future meeting Mister chair something that in reviewing the state medical board meetings there have been some instances where if you'll recall physicians do not prescribe this they certified the condition and then it's up to the department of health to issue the cards I'm I'm a little concerned however because there have been cards that have been issued to children and. And done so in a way that and this is public information because I watch the state medical board meetings online but in a way that's done in my opinion a little haphazardly with appointments that have been made and they're spending you know less than ten minutes with this person and then certifying the condition based on a. No short interaction with that patient and so I think that's something that we probably need to look at and that's again more probably for the from the department of health perspective and not necessarily ABC but it is a big part of the since on the nights I think it's concerning because if you go that path I think no the legislature was pretty clear on making sure that the products are not tailored or could be marketed towards children and reflect to resemble candy and things like that so that that's just something that we think are going to have to look at because it's popped up recently at the state medical board meetings. And that's really more for the chair in the department of health and I was here today. I can address it like Senator Irvin would you like for us to have the department of health here to next meeting. Hi Salim back there but. Yes. Okay they are here I'm not sure if they could answer that question now or that they needed to kind of look at that and that might be a topic for the next meeting but I'll defer to you is the chair of the members of the committee it's an issue that I'm concerned about waking column up if you so choose. They they can that just say a knowledge and look into it and get this information the next meeting I think that's probably more appropriate and the better use of our time today. Mr Gilmore SO you shake your head come on that where you're coming up I've got a question for the director of I keep hearing about foreign ownership. In some of the dispensary so I thought that that was. Strictly Illegal for the for a. The dispensary of analytical fighters have formed ownership so forty percent of the ownership can be from out of state entities or individuals and so sixty percent is Arkansas owned of those entities what about. Ownership from Canada. So I am not aware of one specific one that would have an ownership from Canada but there is I mean it is states that the only sixty percent ownership mandate in Arkansas there's no other prohibition on there's no conversation of. For foreign ownership of any can. I have not seen foreign ownership on ours. I keep hearing the. Hey company talking on CNBC about the tell you have. Ownership in companies and they've mentioned that the the state of Arkansas is one of their locations and I was just wondering if there was any prohibition to that fact. I we do not have a probation that fact we have seen what we have seen is that there are some entities that own management companies that come in and assist in the set up that are from out of state an aloe in Canada or the. Mr first representative first. Thank you Mr chair a quick question director the previous question representative Payton ask you your response was you in carriage of cultivation facilities to market their products to all dispensaries. So they don't have to. Correct correct we do not have any rules or the constitutional did amended provide us with the authority to mandate who they sell to us for license dispensaries we have one cultivation plant in Jefferson County and three dispensaries so so my cultivation plant in Jefferson County it actually on a portion I guess a portion or all wanted to dispensaries and only market most of the products that dispensaries they can that they can do that right they could do that okay thank you. Thank you Mr. Senator English. Thank you very much so it seems to be when we were discussing marijuana a little early on maybe when we're doing legislation that we have some folks talk to us about banks I don't know who that was but they did come and talk to us about banks the other thing is is that obviously they have to pay taxes so is the FNA of. Group of people that might know something about the process go someplace if somebody's got to keep records so they know how many how much taxes they're paying. I don't know who who's doing that what that process is. Do you happen a ought to have some idea and I know we had somebody talking to us about bases that are banking department. But they don't making done can't collect sales tax. But the but may I get the money from banking they could tell us rules if they're brought in violation of federal law. Because we've had these conversations along the way but I think we've all forgotten what we heard it's been. I think those are things we need to kind of bring back up again so we can refresh our memories. Director general. So we they do report and to the Arkansas stem system there. Funds that they receive and they we also have the FAA's tax auditors have access to the bio tracks Arkansas stem system and so they do can perform audits on them on their figures and their tax payments. Enter your question. Yeah this is the kind of of. Records and things like that the people that isn't the same as every other business has to do it the same kinds of records since we're since they're not a legal product as far as the federal government's concerned that they are as far but this is a very tenuous situation I don't know what what all the record keeping is that's not your fault because that's not part of what you do with their number of different agencies I think that are. R. should be involved in in in this whole process. Represented by. Thank you Mr chair some curious you may mention that when a. Pay their dues to the beverage control board they do or certified funds are you talking about cashier's checks that the ringer or what type entity or they. Are they paying with they're bringing in cashier's checks and or cash and if they bring cast we send them directly over to the DFA's department and we do not handle the cast in the office only if they come in in a cashier's check do we handle it so basically from your view it seems that they're not using a regular checking account at a federal federally regulated by I have not seen any paying the renewal fees come in with regular tax okay thank you thank you Mr. Thank you. I have one question about how many or what how many dispensaries to have now. Issued licenses to thirty eight dispensaries we have thirty six of those and operation right now thirty six more progression in there was what forty dispensaries that the cost is minimal allows up to forty dispensaries do you have applications for the the others. We do not have application the others the applications were scored and per the commission's rules they were maintained in a reserve pool as and selected for twenty four months since the issuance of the initial licenses that time period expired in January of this year okay or. Members of the other questions. Senator Irvin we got up Mr Gilmore appear would you like to answer questions of them sorry I mean you you are the questions if you'd care to respond and then perhaps one of the nation by introduce yourself first please Matt Gilmore departmental thank you senator and as you said the the board doesn't Westgate those complaints or situations with children all you know they. I think they taken pretty seriously that's part of their of part of the process department health we we just verify the you know we issued a card to verify that you know it was filled out by a physician for one of the qualifying you know conditions and then we issue cards but as far as any kind of enforcement on the physicians that would be a medical board which is under us right. Yes no I I know and they are taking it seriously and I do appreciate the members of the medical board for doing that is there an age limit on if on a who can receive a card. I don't know that out of my head I think I can't remember I can't remember either to be honest with you I know that there has been a couple situations over they brought you know a physician in where they have there's been some questionable you know as best as to how the child got it and what the conditions were that sort of thing in the. But I'm not sure if operated with the ages there probably I should know that I don't yeah I mean I think that's probably a policy discussion that we probably need to have about around that maybe set forth in the law not sure yeah and I can't remember if it is or not but that's something we probably should discuss. Working nights you know I know there's there's abilities for your physicians to prescribe medications and things like that for children particularly if they're going through cancer treatments and things like that but I think it's probably a broader conversation that the legislature needs to have with the department of health and with probably the State Medical Board as to you know what this is this a policy that we want to. Do or not I'm personally questionable if a seven year old is getting a medical marijuana card I think that's something we should really kind of look at closely so anyway I think it's. I will address that thank you. C. seventy three. Thank you Mr a Director Chandler of the big exhibit CD was passed out is a directory of the dispensary user spends reason the cultivation side some of these are highlighted in yellow summer highlighted in blue can you. Share with the designation of those are yes the ones that are highlighted in yellow or the dispensaries that also have a roll of facility at their location they are entitled to grow up to fifty mature plants and so they are the ones that are actually growing and processing and their own some of their own product the entities that are involucrados ones that we have issued a license to but that is not operational yet they've not had their final inspection. Sure. in parentheses out beside each one was a designation that number doesn't permit number thank you thank you Mr. Represented by you have a question thank you Mr chairman were not mobile button that the. If I may make a request to the department of health to be prepared for future meeting do you live thank you well he's gone he's back there. Okay so in particular I'm I'm curious all the money in years that we've spent educating the public about smoking tobacco being causing cancer and what we spent billions of dollars in in trying to. reduce. The smoking of tobacco because it causes cancer does the Department of Health or could you for future meeting be prepared to share studies that the smoking of marijuana is different somehow that it does not cause cancer. At the at the same rate or level or how it compares to tobacco. We can look and see what's available and try to provide that yes Sir okay thank you thank you Mr. While you're still there got a question for you hi D.. The health department is in charge of of inspection and quality control is that correct. As to the facility for marijuana products such as the brownies and. Those products I think that came up in the last not this last session the session before I can't member how it all shook out but I think I think we do have some of the re there I think so yes Sir and and the next family made I'd like for you to bring in a report on own it how many inspections you made those facilities and the outcomes of if there's any. Any problems that you've had or any. Any corrective actions that you've taken you know it's probably Okay I'm not sure I think a baby complaint base will so we can pull and get that for you and not also like to know about if if you're checking to dispensaries. Of. In other states a big problem is is. Any pesticides it's been applied to. And how you're checking that. to the marijuana products is a marijuana products that's in the cultivation which okay I'm not sure where are where are authorities on that but I can we can see we can find out. Okay our mission or you won't. So the Department health oversees the laboratories that do perform the testing if they have a pesticide test that is outside of that range it then kicks back to the ABC to oversee and required destruction of products that are high in the pesticides outside the range it's been set by the health department I know in other states. And I don't know a lot about marijuana but I I have sure didn't know follows test facility and and that's something and take tests for only ever batch that comes in and I tested two nine nine nine cents which is brilliant and so I'd like to know if we're testing it for testing is that strenuous this testing. All right. Senator Chesterfield yes thank you Mr just to follow up to Senator of samples questions concerning making sure the product is safe. How many entities are involved in. In testing the product. Senator I don't know that off the top of my head is there a particular company that comes in and says that it's safe. We don't have the pesticides any of that who who does that. Well as director trailer so we have some involvement with it but I don't I think it's I don't know to be honest with you I'll get back with their private entity. I want to for entertainment the health department licenses laboratories to conduct that testing they are then go into the facilities collect samples before products or prepared to be sent to the public for consent laboratories do we have testing currently. The last I heard they had license to bid I don't know if they have a third licensed yet we can we talk about being used to only one. As my Senate primarily is only one is being used. I think we need to to look at that because we only have one entity saying it's okay. Yet we have allowed you to come in sometimes we need somebody to look at who's looking at and that's what's of concern to me that's one of the issues that I've heard raised is there really is only one laboratory and if that is the case why is that the case. Thank you. I. Representive Ladyman you have a question thank you Mr chair have a comment and I appreciate you letting me talking on the committee but this subject about quality control of marijuana product has been discussed and I actually have an I. S. P. in public health to study that and it's based on a law that was passed in Oklahoma where they actually had that improve quality checks on that in a right now we we basically only have one laboratory that does that analysis and there's really no oversight of that laboratory here in Arkansas so it's it's we don't have a very good quality control. Assess and that I. S. P. is for that purpose to look at that process and see if we can prove that okay in a in. I'm really interested I mean about the this quality control because I mean we've got. Brownies and then just the fact that that were. okay we've got questions about pesticides and everything else and so Just be aware that probably that's going to be requested of you the next meeting that we have. Yes Sir. Okay saying no other questions were adjourned. Thank you.