How to Start a Cannabis Business in Arkansas?

Understand regulatory and legal requirements. Do market research.

Research the laws and regulations governing adult-use or medical-use cannabis for more information about the regulatory requirements for licensure in the city or town you wish to operate in.

Arkansas Cannabis Legalization

The Arkansas Medical Marijuana Amendment, also known as Issue 6, was approved on November 8, 2016. The application period for dispensaries and cultivation facilities began on June 30th, 2017 and ran until September 18th, 2017. The commission has said it will issue 32 licenses for dispensaries and 5 for cultivation facilities.

In 2021, Arkansas medical marijuana program began offering new business licenses: processor and transporter.

Arkansas Cannabis Market

Dispensaries, cultivation facilities, processors and transporters are licensed by the Medical Marijuana Commission.

Decide the type of cannabis business. Choose a location. Check local zoning regulations.

Cannabis Licenses Types Available in Arkansas

Dispensary

A dispensary license allows to acquire, possess, manufacture, process, deliver and dispense medical cannabis. The applicant must provide proof of assets or a surety bond of $200,000 and proof of at least $100,000 in liquid assets.

Application fee: $7,500 (if application is not successful, $3,750 will be refunded to the applicant)
License fee: $15,000
License renewal fee: $22,500
Performance bond: $100,000

Cultivation Facility

A cultivation facility license allows to cultivate, prepare, manufacture, process, package, sell and deliver usable cannabis for medical purposes to a dispensary. The applicant must provide proof of assets or a surety bond of $1,000,000 and proof of at least $500,000 in liquid assets.

Application fee: $15,000 (if application is not successful, $7,500 will be refunded to the applicant)
License fee: $100,000
License renewal fee: $100,000
Performance bond: $500,000

Processor

A processor license allows to acquire, possess, manufacture, process, deliver, transfer and supply medical cannabis to a dispensary or a cultivation facility.

Application fee: $5,000
License fee: $5,000
License renewal fee: $5,000
Performance bond: $100,000

Transporter/Distributor

A transporter license allows to acquire, possess, deliver, transfer or distribute medical cannabis to a licensed dispensary, cultivation facility or processor.

Application fee: $5,000
License fee: $5,000
License renewal fee: $5,000
Performance bond: $100,000

No individual shall have interest in more than one (1) Arkansas cultivation facility and one (1) Arkansas dispensary.

Cannabis Delivery in Arkansas

Qualifying patients and designated caregivers in the state can pick up medical cannabis products at the dispensary or get home delivery. The law also allows dispensaries to serve qualifying patients from other states as long as they provide ID and their medical cannabis card. In Arkansas, medical cannabis can be ordered online and delivered between 9:00 a.m. and 7:00 p.m.

Cannabis Delivery Service by State

Develop a solid cannabis business plan. Secure financing.

Cannabis Business Plan

Application requirements include a business plan showing the expected size of the business; anticipated growth; the methods of record keeping; the knowledge and experience of the applicant and any officer, director, manager, and general partner of the business; and other relevant financial and operational components.

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Submit an application. Pay fees. Prepare and submit the required documents.

How to Get a Cannabis Business License in Arkansas

Applications for new licenses must be submitted 90 days prior to the expected completion date, with a processing time of 60 days and a maximum 30 day lead time. All necessary permits must be obtained from your local jurisdiction before submitting your application.

Requirements to applicants:

Be 21 years old or older.
Be a current resident of the state of Arkansas and have been a resident for 7 consecutive years prior to the date of application.
Have not previously held a license for a licensed facility that has been revoked.
Have no ownership in another medical cannabis facility of the type which they are planning to operate in Arkansas (for instance, an applicant for a dispensary license cannot have ownership in another dispensary).
Have not been convicted of a felony offense.
If the applicant has a professional license, the license must be in good standing.
Have no outstanding tax delinquencies owed to the state of Arkansas or the federal government.
If the applicant is a business entity, there are additional requirements that the individual applicant must meet, outlined in the licensing rules.

Application Process:

Submit the application with all the required information and the relevant application fee.
The Commission will review the application and if approved, the applicant will be notified in writing. If the application is denied, the applicant will also be notified in writing.
Within 7 days of receiving written notice of approval from the Commission, the applicant must pay the relevant license fee and submit to the Commission a performance bond of the required amount. The bond must be maintained until:
1. For a cultivation facility, until it files its first required sales tax report for the sale of usable cannabis.
2. For a dispensary, until it files its first application for renewal of the license.
3. For a processor, until it files its first application for renewal of the license.
4. For a transporter, there is no requirement mentioned about the time period for which the performance bond must be maintained.
After the license fees and the performance bond are received, the applicant will be awarded a license and a registration number.
An inspection will be conducted by the Alcoholic Beverage Control Division Rules. Once the inspection has been completed, the licensee may begin to operate. For transporter license applicants, they can begin operations after their license has been issued: there is no need for an inspection.

Required information to be submitted with the application is not limited to:

Cultivation Facility and Dispensary Licenses
Processor and Transporter Licenses

Cultivation Facility and Dispensary Licenses

The following information that relates to the applicant: Legal name; Date of birth; Legal residence; Social security number or Tax Identification Number (if applying for a dispensary license, the social security number must be provided); Mailing address or principal residence address; Phone number; Email address; Statement of individual’s authority to act on behalf of an entity, if relevant.
At least one source document mentioned in the state’s licensing rules to establish the legal name of the applicant.
At least one source document mentioned in the state’s licensing rules to establish the date of birth of the applicant.
If applying for a cultivation facility license, at least two source documents mentioned in the state’s licensing rules to establish residency of the applicant in Arkansas for no less than 7 years prior to the date of application. If applying for a dispensary license, at least one source document is required.
Provision of consent to a background check, including fingerprinting.
If the applicant is applying on behalf of an entity, then additional information must be provided which can be found in the state’s licensing rules.
Proof that the proposed location of the medical cannabis facility is located a specified distance away from a public or private school, church, or daycare existing before the date of the application:
- At least 3,000 feet for a cultivation facility.
- At least 1,500 feet for a dispensary.
Proof of authorization to occupy the property for the proposed medical cannabis facility.
A sworn statement that the medical cannabis facility will operate in compliance with the zoning restrictions of the city, town or county where the facility will be located.

Processor and Transporter Licenses

Documentation of the entity’s organization and ownership, including proof that the applicant is an entity incorporated in the State of Arkansas.
Evidence that each of the entity’s owners, board members and officers:
- Is over the age of 21.
- Have not previously been an owner of a dispensary, cultivation facility, transporter or processor that had its license revoked.
- Owes no delinquent taxes to the State of Arkansas or the federal government.
Consent for criminal background checks for each owner, board member and officer of the entity as well as the required processing fees.
Operational plan which complies with applicable laws and regulations and demonstrates sufficient planning to prove the applicant’s ability to comply with the Division’s rules, not limited to:
- Security requirements
- Recordkeeping requirements
- Manufacturing and processing
- Personnel requirements
For transporter license applicants, the operational plan must also prove the ability of the applicant to transport cannabis to approved laboratories in accordance with the chain of custody requirements and the rules of the Arkansas Department of Health.
Proof of financial stability and access to financial resources, not limited to:
- Legal sources of finances immediately available to begin operations.
- Financial projections for the next 5 years.
- No history of bankruptcy filings by the applicant or its owners, officers or board of directors for 8 years prior to the date of application.

Final approval. Final fees. Final Inspection.

Final inspections are carried out at the end of the application process before the Division issues a license. Some of the items verified during the inspection include:

The layout of the location matches the submitted floor plan.
There is adequate camera coverage (no blind spots in required areas).
The surveillance system is functioning and properly secured.
The premise is not connected or combined with a residence or another business.
Cannabis product is secure from public/customer access.

Keep track of your ongoing compliance requirements.

Physical security measures, good production practices, packaging, labelling, transport and reporting requirements, taxes and more.

License renewal.

A cultivation facility or a dispensary license expires on June 30 of each calendar year and must be renewed on or before that date. A processor or a transporter license expires one year after the date of issuance.

Renewal process:

Submit a renewal application at least 60 days prior to the expiration date of the license for a dispensary or a cultivation facility, and at least 30 days prior to the expiration date of the license for a processor or a transporter.
The Commission may require further information and may conduct additional background checks.
If the renewal application is approved, within 7 days of receiving written notice of approval from the Commission, the required license renewal fee must be paid.

Arkansas Cannabis Taxes

“Two state taxes apply when a patient makes a purchase at a dispensary. The regular state sales tax of 6.5% applies along with a 4.0% privilege tax (legislature renewed the privilege tax for another two years in the past session). Overall, patients are paying 10.5% in state taxes on each purchase.”

Medical marijuana operators in Arkansas are exempt from applying rules of 280E section rule under state tax law, so the businesses can also deduct business expenses other than cost of goods sold.

Cannabis Advertising Regulations in Arkansas

(A) A cultivation facility or processor may market products directly to a dispensary by any means directed solely to the dispensary and not available to the public.

(B) Advertising and marketing for medical marijuana shall include at least one (1) of the following statements:

“Marijuana is for use by qualified patients only. Keep out of reach of children.”;
“Marijuana use during pregnancy or breastfeeding poses potential harms to an unborn child or child.”;
“Marijuana is not approved by the United States Food and Drug Administration to treat, cure, or prevent any disease.”; or
“Do not operate a vehicle or machinery under the influence of marijuana.”

(C) A dispensary shall not utilize television, radio, print media, or the internet to advertise and market medical marijuana, unless the dispensary has reliable evidence that no more than thirty percent (30%) of the audience for the program, publication, or website in or on which the advertisement is to air or appear is reasonably expected to be under eighteen (18) years of age.

(D) A cultivation facility or dispensary or processor shall not offer any coupons, rebates, or promotions for medical marijuana purchases, unless offered as part of a compassionate care plan presented to the Medical Marijuana Commission as part of the application for licensure.

(Section 20-56-305 – Prohibitions on advertising and use of certain symbols)

Main steps in short

Understand regulatory and legal requirements. Do market research.
Decide the type of cannabis business. Choose a location. Check local zoning regulations.
Develop a solid business plan. Secure financing.
Submit an application. Pay fees. Prepare and submit the required documents.
Final approval. Final fees. Final inspection.
Keep track of your ongoing compliance requirements.
License renewal.