Just in time for the kickoff of the college and NFL football seasons, Simplifya has kicked off brand new cannabis regulatory and compliance content for the Arkansas, North Dakota and Illinois markets. Just as a helmet and pads protect players from injury risks, Simplifya’s compliance software offerings help operators protect their licenses and business from operational and regulatory compliance risks.
While these new legal cannabis markets are medical-only right now, Illinois has passed legalization for adult-use cannabis, which will go into effect in 2020. Additionally, the regulatory landscape of these three states is fairly restrictive, particularly when compared to the lax coverage of other new cannabis markets such as Oklahoma.
Arkansas originally passed medical cannabis in 2016, and their drive down the field toward an open market has been a long one. However, this year Arkansas has finally pushed medical cannabis over the goal line. The first legal crop was planted in January 2019 and the first sales were made in May. Under the Arkansas system, which is governed by three different agencies, up to 40 dispensary licenses and eight cultivation licenses may be made available. At the time of this writing, 32 of the dispensary licenses have been issued and just five of eight cultivation licenses have been issued.
However, only eight dispensary licenses and three cultivation licenses are operational at this time. The primary agency regulating the Arkansas medical cannabis industry is the Alcoholic Beverage Control Division, while the Department of Health oversees all product testing and labeling.
For operators lucky enough to be awarded one of the limited licenses, the rules of the game in Arkansas are slightly different. Unlike in other states, dispensary licensees in Arkansas are allowed to both cultivate and manufacture medical cannabis, although they are limited by a plant cap. Cultivators, on the other hand, are not subject to this plant cap and also are allowed to manufacture. Similar to other states, all cannabis and cannabis products must be sent in for testing to verify their safety before they can be sold to any patient. Additionally, all licensees must use the BioTrackTHC seed to sale system to track cannabis.
Under the current regulations, Arkansas’ 21,000 registered patients are not allowed to cultivate cannabis at home and are required to purchase their medical cannabis from a licensed dispensary. To help with patient access, Arkansas allows dispensaries to deliver cannabis to homes. Additionally, although cities may subject dispensaries to the same zoning requirements as pharmacies, they may not outright ban dispensaries without obtaining approval from the voters via an election.
The big news out of Illinois this offseason was their legalization of adult-use cannabis, becoming the 11th state to do so. Although we will certainly cover these regulations as soon as they are effective, the adult-use game does not kickoff until January 1, 2020, and as such are not covered right now in our offering. Their medical cannabis industry, however, has been active since January 1, 2014 and is covered right now in our regulatory content. Active licensed medical operators will have the first shot at the adult-use industry, as existing dispensaries will be allowed to begin adult-use sales within the first six months of the year.
As with Arkansas, Illinois allows both dispensary licenses and cultivation center licenses. However, due to the population difference and the age of the industry, Illinois has many more licensees than Arkansas. In total, there are 55 dispensaries, 22 cultivation centers, and more than 60,000 patients. Dispensaries are allowed to sell cannabis to patients, while cultivation centers may cultivate, manufacture, and transport medical cannabis. Similar to California, Illinois has split the regulating power between several different commissioners. The Illinois Department of Health is in charge of registering patients and caregivers, the Department of Revenue is in charge of cannabis taxation, the Department of Financial & Professional Regulation is in charge of dispensaries, and the Department of Agriculture is in charge of cultivation centers.
North Dakota has followed a similar path to legalization as Arkansas. In 2016, the voters of the state legalized medical cannabis, and after a long and grinding drive, the first dispensary finally opened in March 2019. As of August 21, 2019, North Dakota has four operational dispensary locations, with four more planned to open by the end of the year to service the 1,002 active patients in the state. In addition to these dispensary locations, there are also three licensed manufacturing facilities now operating; and both dispensary and manufacturing licenses may also transport cannabis. Unlike Arkansas, North Dakota has a single regulatory agency acting as the commissioner in this new market. The North Dakota Department of Health is in charge of setting the rules of the game and licensing businesses and patients. They have not taken this responsibility lightly, passing regulations that strongly restrict the operations and number of businesses.
In establishing the rules, the Department of Health appears to have been motivated primarily by protecting children from accessing cannabis. The first step to achieve this goal was setting the patient age at 19. Although individuals under 19 may be a patient, they can only receive pediatric marijuana, which is defined as non-flower products that contain less than 6% THC. Additionally, primary caregivers must be at least 21 years old. To further protect children and all patients, the Department has taken aggressive steps in banning the use of any pesticides.
This differs from the majority of states that allow at least limited use of pesticides. In a fairly unusual move, the state has also completely banned the sale and production of edible products. Likely, because of the concern that children will be more likely to accidentally consume cannabis if it resembles a food product they are used to, such as a cookie or brownie. As with Arkansas, the state has selected BioTrackTHC as the required inventory tracking system for the market.