ARKANSAS DEPARTMENT OF FINANCE AND ADMINISTRATION ARKANSAS ALCOHOLIC BEVERAGE CONTROL DIVISION AND ARKANSAS MEDICAL MARIJUANA COMMISSION v. CARPENTER FARMS MEDICAL GROUP, LLC ( 2020 )

Cite as 2020 Ark. 213
SUPREME COURT OF ARKANSAS
No. CV-19-739
Opinion Delivered: May 28, 2020
ARKANSAS DEPARTMENT OF
FINANCE AND ADMINISTRATION; APPEAL FROM THE PULASKI
ARKANSAS ALCOHOLIC BEVERAGE COUNTY CIRCUIT COURT
CONTROL DIVISION; AND ARKANSAS [NO. 60CV-18-8555]
MEDICAL MARIJUANA COMMISSION
APPELLANTS HONORABLE WENDELL GRIFFEN,
JUDGE
V.
AFFIRMED IN PART; REVERSED AND
CARPENTER FARMS MEDICAL DISMISSED IN PART; REMANDED.
GROUP, LLC
APPELLEE
RHONDA K. WOOD, Associate Justice
The Arkansas Medical Marijuana Commission disqualified Carpenter Farms
Medical Group, LLC’s application for a marijuana-cultivation facility. Carpenter Farms
sued and asserted it was the only 100 percent minority-owned applicant and that the
Commission violated equal protection by singling out its application for disparate
treatment. Carpenter Farms also alleged that the Commission violated the Administrative
Procedure Act by failing to adopt certain rules and improperly applying the rules it did
adopt. The State moved to dismiss based on sovereign immunity, but the circuit court
denied the motion. The State filed this interlocutory appeal.
We affirm in part; reverse and dismiss in part; and remand. Carpenter Farms can
proceed with its claim that the Commission failed to adopt model rules. It can also
proceed with its declaratory-judgment action alleging an equal-protection violation. But the
lawsuit cannot go forward regarding the Commission’s application of its own rules or as an
administrative appeal.
Part I. Procedural Background and Relevant Facts
A. Factual Allegations
The people of Arkansas legalized medical marijuana by constitutional amendment.
Ark. Const. amend. 98. Amendment 98 established the Arkansas Medical Marijuana
Commission “to determine the qualifications for receiving . . . a license to operate a
cultivation facility.” Id. § 19(a)(1). The Commission consists of five members. Id. § 19(a)(3).
Amendment 98 instructed the Commission to adopt certain rules to “carry out the
purposes of this amendment” and to “perform its duties”; such rules were to be “rules as
defined in the Arkansas Administrative Procedure Act [APA].” Id. § 8(b)(1), (2). The
Commission accordingly adopted governing rules and regulations. See Ark. Admin. Rule
006.28.17-001 (MMC Rules).
Carpenter Farms sued the Commission, the Arkansas Department of Finance and
Administration (DFA), and the Arkansas Alcoholic Beverage Control Division (ABC)
(collectively, the “State”). The facts as alleged in the complaint are as follows. Carpenter
Farms applied for a medical-marijuana cultivation license. Carpenter Farms contended it
was the only 100 percent minority-owned applicant. After Carpenter Farms submitted its
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application, ABC staff concluded that Carpenter Farms’ application was “complete and . . .
contain[ed] requisite supporting documentation.”
A second, substantive review then took place. The Commission sent Carpenter
Farms an email stating that “[t]he application you submitted has now been verified.” ABC
staff sent Carpenter Farms a follow-up email stating that “[o]ur office now considers your
application complete and it will go before the Commission for scoring.” Four of the five
commissioners later returned their scores for all the cultivation-facility applications,
including Carpenter Farms’.
But before the Commission released scores for all cultivation-licensing applications,
ABC staff member Mary Robin Casteel again reviewed Carpenter Farms’ application. (At
this point, Carpenter Farms alleged it was ranked fifth or higher by the four commissioners
who had submitted their scores, with the five highest-scored applicants receiving licenses.)
Upon this review, Casteel unilaterally disqualified Carpenter Farms and removed it from
the list of scored applicants. The stated reason for the disqualification was a discrepancy in
Carpenter Farms’ ownership structure, which purportedly violated Amendment 98’s
ownership requirements. (Carpenter Farms maintained that this discrepancy was a
scrivener’s error.)
Casteel communicated her decision to disqualify Carpenter Farms to Travis Story,
the sole commission member whose scores remained outstanding. She also specifically
identified Carpenter Farms as the applicant, thus breaking “confidentiality on the blind
scoring.” Carpenter Farms alleged that Story scored its application last and gave it “the
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exact score needed to ensure [Carpenter Farms’] aggregate score put it in sixth place instead
of fifth place.”
After all the commissioners returned their scores, the Commission released the raw
scores publicly and awarded five tentative cultivation-facility licenses. Carpenter Farms was
not among the scored applications––its first notice that its application was disqualified.
Carpenter Farms alleged it was the only applicant with a verified application that did not
receive a public score. It also alleged that its was the only application that was disqualified
after being scored. Carpenter Farms also maintained that its disqualification occurred
without the Commission being notified. Counsel for DFA initially agreed to present
Carpenter Farms’ motion for reinstatement to the Commission. But the Commission later
obtained its own counsel and, upon her advice, denied Carpenter Farms an opportunity to
be heard at two Commission meetings.
The Commission ratified Carpenter Farms’ disqualification at its July 2018
meeting. Carpenter Farms then submitted a motion for reconsideration and a request for a
hearing. The Commission denied the motion and issued a formal letter to Carpenter
Farms disqualifying its application for a license.
B. Legal Allegations
Carpenter Farms’ complaint rests mainly on two legal theories: (1) the Commission
violated the APA and MMC Rules and (2) the Commission violated equal protection by
subjecting Carpenter Farms’ application to disparate treatment.
4
Under its APA legal theory, Carpenter Farms maintained that the Commission
failed to adopt model rules as required by Arkansas Code Annotated section 25-15-215.
Had the Commission adopted the model rules, Carpenter Farms argues, it would have had
an opportunity for notice and a hearing following the disqualification. Carpenter Farms
also asserted that the Commission violated MMC Rules when it refused to score Carpenter
Farms’ verified application.
Under its disparate-treatment theory, Carpenter Farms alleged that the Commission
and Casteel permitted scoring of other applicants and issued licenses despite their
applications containing similar errors that should have barred their scores under
Amendment 98 or MMC Rules. For example, it maintains that some applicants failed to
submit adequate documentation proving residency; had outstanding tax liabilities in
violation of Commission rules; and would have placed a facility impermissibly close to a
church. Carpenter Farms also maintained that Casteel’s heightened review of its
application was “arbitrary, capricious, biased and lawless,” violated the MMC Rules, and
violated the U.S. and Arkansas Constitutions’ due-process and equal-protection clauses.
Carpenter Farms requested that the circuit court reinstate its application; allow its
score to stand; declare that its disqualification was ultra vires, arbitrary, capricious, and
contrary to law; declare that the Commission’s failure to adopt model rules was improper;
and reject Story’s score and recalculate Carpenter Farms’ score “to be five times the average
of the other four scores.” If the court denied its request to reinstate its score, Carpenter
Farms asked the court to vacate the disqualification; order a hearing under Arkansas Code
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Annotated sections 25-15-207 and 25-15-212(B) (Repl. 2014 & Supp. 2019); and disqualify
Casteel and Story from further participation. It also asked for an injunction prohibiting
the granting of additional cultivation licenses.
The State moved to dismiss based on sovereign immunity. It argued that Carpenter
Farms’ complaint impermissibly sought to control the lawful action of the State. It also
argued that appeals under the APA are limited to agency “adjudications” and no
adjudication had taken place.
The circuit court held a hearing and denied the motion by written order. The court
found that Carpenter Farms’ complaint contained detailed allegations that the
Commission violated equal protection. The court reasoned that the complaint sufficiently
alleged the “illegal-act” or “ultra vires” exception to sovereign immunity. The State appeals
this order. The State also alleges that the circuit court displayed injudicious conduct at the
hearing and should be barred from considering any case involving the Attorney General.
C. Standard of Review and Sovereign Immunity
In reviewing a circuit court’s decision on a motion to dismiss, “we treat the facts
alleged in the complaint as true and view them in the light most favorable to the plaintiff.”
McGhee v. Ark. State Bd. of Collection Agencies, 360 Ark. 363, 368, 201 S.W.3d 375, 377
(2005). We focus “only to the allegations in the complaint and not to matters outside the
complaint.” Id., 201 S.W.3d at 378. We will resolve all reasonable inferences in the
complaint’s favor and construe the pleadings liberally. Monsanto Co. v. Ark. State Plant Bd.,
2019 Ark. 194, at 8, 576 S.W.3d 8, 13. The State here asserts that sovereign immunity bars
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Carpenter Farms’ complaint. We review this issue de novo. Ark. Cmty. Corr. v. Barnes, 2018
Ark. 122, at 2, 542 S.W.3d 841, 842.
The State’s sovereign immunity originates in Article 5, section 20 of the Arkansas
Constitution, which provides “[t]he State of Arkansas shall never be made defendant in
any of her courts.” The sovereign-immunity doctrine bars suit “if a judgment for the
plaintiff will operate to control the action of the State or subject it to liability.” Bd. of
Trustees of Univ. of Ark. v. Andrews, 2018 Ark. 12, at 5, 535 S.W.3d 616, 619. In Andrews, we
held that the General Assembly’s waiver of sovereign immunity in cases involving the
minimum-wage act were “repugnant” to the Arkansas Constitution’s mandate that the
State not be made a defendant in any court. Id. at 10, 535 S.W.3d at 622.
But when a party appeals from an agency adjudication, the sovereign-immunity
doctrine does not apply. Ark. Oil & Gas Comm’n v. Hurd, 2018 Ark. 397, at 11, 564 S.W.3d
248, 255. In these appeals, the State’s role is that of a “quasi-judicial decision-maker rather
than a real party in interest.” Id. at 10, 564 S.W.3d at 255. Further, in Martin v. Haas, a
post-Andrews case, we reiterated that “our sovereign immunity cases allow actions that are
illegal, unconstitutional or ultra vires to be enjoined.” 2018 Ark. 283, at 7, 556 S.W.3d
509, 514 (cleaned up). Thus, an allegation of “ultra vires” or “illegal” acts by the State
remains an exception to sovereign immunity that even following Andrews is “alive and
well.” See Monsanto, 2019 Ark. 194, at 9, 576 S.W.3d at 13; see also Ark. Game & Fish
Comm’n v. Heslep, 2019 Ark. 226, at 6, 577 S.W.3d 1, 5 (noting exception to sovereign
immunity for state’s illegal acts); Ark. State Plant Bd. v. McCarty, 2019 Ark. 214, at 7, 576
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S.W.3d 473, 477 (same). Even so, a plaintiff must still comply with our fact-pleading rules
when alleging an exception to sovereign immunity. See Williams v. McCoy, 2018 Ark. 17, at
3, 535 S.W.3d 266, 268.
Part II. Administrative Procedure Act (Section 212)
Section 212 of the APA permits judicial review of agency adjudications. Ark. Code
Ann. § 25-15-212(a). But an adjudication takes place only following “the final
disposition . . . in which the agency is required by law to make its determination after
notice and hearing.” Ark. Code Ann. § 25-15-202(1), (6) (Supp. 2019). Thus, only “quasi-
judicial” agency functions support further judicial review. Tripcony v. Ark. Sch. for the Deaf,
2012 Ark. 188, at 7, 403 S.W.3d 559, 562. These functions will generally include hearing
testimony, making findings of fact, rendering legal conclusions, and recording the
proceedings. See Sikes v. Gen. Publ’g Co., 264 Ark. 1, 7, 568 S.W.2d 33, 36 (1978).
We addressed a similar challenge to the Commission’s licensing decision in
Arkansas Department of Finance and Administration v. Naturalis Health, LLC, 2018 Ark. 224,
549 S.W.3d 901. There, a failed cultivation-facility applicant sued to enjoin the
Commission; it alleged the Commission’s application process was flawed, biased, and
arbitrary. The circuit court agreed and declared the Commission’s licensing decision void
and enjoined the Commission from issuing further licenses.
We reversed and dismissed, concluding that the circuit court lacked subject-matter
jurisdiction. We noted that courts lack “jurisdiction to examine administrative decisions of
state agencies.” Id. at 6, 549 S.W.3d at 906. We explained that the courts have limited
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review under APA section 212 only for quasi-judicial “adjudications”; if there is no agency
adjudication, then there is no action for a court to review. Id. at 7, 549 S.W.3d at 906. We
held that the Commission’s decision to grant cultivation licenses to certain applicants was
not an adjudication and that as a result, the circuit court lacked subject-matter jurisdiction
under section 212. Id. at 7–8, 549 S.W.3d at 906.
Naturalis controls here to the extent Carpenter Farms’ complaint rests on section
212. Indeed, all agree that the Commission’s decision to disqualify Carpenter Farms took
place without notice or a hearing. Nor did the Commission hear testimony, make factual
findings, or render legal conclusions. The Commission issued a disqualification letter and
never acted quasi-judicially. Indeed, the Commission’s decision to disqualify Carpenter
Farms took place administratively, and no party suggests that the Commission must make
this “determination [disqualification] after notice and hearing,” the statutory definition of
an adjudication.1 We therefore reverse and dismiss Carpenter Farms’ complaint to the
extent it rests on section 212 as a jurisdictional basis.
Part III. Administrative Procedure Act (Section 207)
A. Application Challenge
1
Notably, the model rules, which Carpenter Farms urges the Commission to adopt,
do not define denials or disqualifications of licenses as adjudications. The comment to the
model rules states that “[h]earings to revoke a license or permit or to impose a civil penalty
are adjudicative hearings” and that “[a]n agency acts in a quasi-judicial capacity when it
conducts an adjudicative hearing.” Model Rules of Procedure for Regulatory and Licensing
Agencies, § (VII), cmt. (2015). The model rules provide for judicial review when a license is
revoked; but the model rules do not provide for review when the agency disqualifies or
denies an application.
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Section 207 permits an injured party to bring a declaratory-judgment action
challenging a rule’s “validity or applicability.” Ark. Code Ann. § 25-15-207(a). Carpenter
Farms maintains that the MMC Rules require the Commission to acknowledge its score,
despite the Casteel disqualification. But this is an unauthorized challenge to an agency’s
application of a rule. Naturalis prohibits Carpenter Farms’ complaint to the extent that it
challenges under section 207 the Commission’s application of its own rules.
We held in Naturalis that an agency’s case-specific “application” of its rules was not
subject to judicial review under section 207. 2018 Ark. 224, at 9, 549 S.W.3d at 907. A
court cannot review “how the rule should be applied given a particular set of facts or
circumstances.” Id. Carpenter Farms here alleges, in part, that the Commission should
have acted differently—that is, scored the application per MMC Rules—given the set of
circumstances surrounding the submission. Naturalis prohibits this type of challenge.
B. Applicability or Validity Challenge
Carpenter Farms makes another allegation absent from Naturalis: the Commission
failed to adopt model rules promulgated by the Attorney General under section 215 of the
APA. Unlike the above challenge to a rule’s application, this is a permissible challenge to
the validity of the MMC Rules. Under section 215, the Attorney General should publish
model rules, and the agency “shall adopt . . . those model rules that are practicable.” Ark.
Code Ann. § 25-15-215(b)(1) (emphasis added). If the agency adopts different rules, it “shall
state the reason why the relevant portions of the model rules are impracticable.” Ark. Code
Ann. § 25-15-215(b)(2) (emphasis added). Carpenter Farms asserts that the Attorney
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General has indeed promulgated model rules that the Commission both failed to adopt
and failed to explain why that decision was impracticable.
In Naturalis, this court did not address a challenge involving section 215. And
Carpenter Farms’ claim that the Commission failed to follow a mandatory provision of the
APA is an allegation of ultra vires or illegal action, an exception to sovereign immunity. See
Monsanto, supra; Heslep, supra; and McCarty, supra. Carpenter Farms maintains that the
MMC Rules were invalid because (i) they are not the ones promulgated by the Attorney
General and (ii) the Commission failed to explain why it adopted rules different from the
model. We agree that this particular claim can proceed under section 207 because it
involves the applicability or validity of the Commission’s rules, rather than the
Commission’s application of those rules to Carpenter Farms’ set of circumstances.
The State challenges this in several ways. First, it argues that Carpenter Farms’
application was “disqualified” not “denied.” This distinction is semantic. From Carpenter
Farms’ perspective, a denial and disqualification are substantively the same thing—
Carpenter Farms cannot obtain a cultivation license. This argument lacks merit.
Second, the State argues that Carpenter Farms lacks standing and failed to exhaust
its administrative remedies. But these issues are not ripe in an interlocutory appeal
regarding sovereign immunity. Only sovereign immunity is properly before this court
under Arkansas Rule of Appellate Procedure–Civil 2(a)(10). Ark. Dep’t of Human Servs. v.
Fort Smith Sch. Dist., 2015 Ark. 81, at 10, 455 S.W.3d 294, 301; Williams, 2018 Ark. 17, at
5, 535 S.W.3d at 269; (“[W]e do not hear on interlocutory appeal any issue other than
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whether the circuit court erred . . . on the issue of sovereign immunity.”); see also Ark. St.
Bd. of Ed. v. Magnolia Sch. Dist., 298 Ark. 603, 604, 769 S.W.2d 419, 420 (1989) (holding
party cannot challenge standing in an interlocutory appeal regarding class certification);
Searcy Healthcare Ctr., LLC v. Murphy, 2013 Ark. 463, at 6–7 (holding party cannot
challenge standing in an interlocutory appeal from the denial of a motion to compel
arbitration).
Finally, the State asserts that the Commission’s rule-making authority pronounced
in Amendment 98 abrogated section 215’s requirement to adopt model rules. But the
Amendment lacks such broad language. It states merely that “the commission . . . shall
adopt rules necessary to . . . [c]arry out the purposes of . . . and perform its duties under
this amendment.” Ark. Const. amend. 98, § 8(b)(1). Indeed, this provision even goes
further and provides that “rules adopted under this section are rules as defined in the
[APA].” Id. § 8(b)(2). If anything, the Commission’s rules should be in concord with the
APA.
In conclusion, the circuit court lacked subject-matter jurisdiction over Carpenter
Farms’ challenge to the Commission’s application of its own rules pursuant to Naturalis.
But Carpenter Farms’ allegation that the Commission failed to adopt model rules as
required by law, or give a reason for not doing so, can proceed in the face of sovereign
immunity under the “ultra vires” or “illegal acts” exception.
Part IV. MMC Rule 19
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Carpenter Farms also asserts that the Commission’s own internal rule established
an independent basis for the circuit court’s subject-matter jurisdiction. We disagree. Under
MMC Rule 19, the Commission provides that if it “denies an application for a cultivation
license, the commission’s decision may be appealed to . . . circuit court.” The Naturalis
court did not review this issue because, there, the Commission had not yet issued denial
letters. Naturalis, 2018 Ark. 224, at 10, 549 S.W.3d at 908. But here, Carpenter Farms
received a disqualification letter. The issue is live, despite the State’s contention that
Carpenter Farms cannot oblige itself of this rule because its application was “disqualified”
rather than “denied.”
Even so, the Commission’s rule violates our holding in Andrews that the legislature’s
waiver of sovereign immunity in cases involving the minimum-wage act violated the
Arkansas Constitution. 2018 Ark. 12, at 10, 535 S.W.3d at 622. If the legislature cannot
create a waiver by statute, then neither can the executive branch (here, the Commission) by
its own internal rule.
Indeed, a court obtains subject-matter jurisdiction through the Arkansas
Constitution or by constitutionally authorized statutes or court rules. Edwards v. Edwards,
2009 Ark. 580, at 4, 357 S.W.3d 445, 448. A state agency’s internal rule cannot
independently establish subject-matter jurisdiction in the judicial branch. MMC Rule 19
cannot and does not create an independent basis for the circuit court’s jurisdiction that
does not otherwise exist under the APA. And because MMC Rule 19 would expand
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judicial review from that authorized under the APA, the lawsuit cannot go forward with
Rule 19 as the jurisdictional hook.
Part V. Declaratory Judgment (Equal Protection)
Carpenter Farms titled its complaint, in part, as one seeking declaratory judgment.
It pled specifically that the Commission violated the Equal Protection Clauses of the U.S.
and the Arkansas Constitutions. Its prayer for relief requests a declaratory judgment that
the Commission’s disqualification was contrary to law. “Pleadings are to be liberally
construed and are sufficient if they advise a defendant of his obligations and allege a
breach of them.” Rabalaias v. Barnett, 284 Ark. 527, 528, 683 S.W.2d 919, 921 (1985).
The circuit court has subject-matter jurisdiction to determine whether the
Commission violated Carpenter Farms’ constitutional rights in this regard. See Ark. Code
Ann. §§ 16-111-101 et seq. (Repl. 2016). Carpenter Farms may pursue relief under the
declaratory-judgment cause of action against the State. See, e.g., McGhee v. Ark. State Bd. of
Collection Agencies, 375 Ark. 52, 289 S.W.3d 18 (2008) (striking down check-cashers act in
declaratory-judgment action); Dep’t of Human Servs. v. Howard, 367 Ark. 55, 238 S.W.3d 1
(2006) (striking down a DHS regulation in a declaratory-judgment action); Jegley v. Picado,
349 Ark. 600, 80 S.W.3d 332 (2002) (striking down anti-sodomy statute in declaratory-
judgment action).
As explained above, our sovereign-immunity doctrine allows this claim because it is
premised on the State’s unconstitutional actions. See Martin, 2018 Ark. 283, at 7, 556
S.W.3d at 514. One caveat is that a complaint alleging illegal and unconstitutional acts
14
must comply with our fact-pleading rules. See Williams, 2018 Ark. 17, at 3, 535 S.W.3d at
268. At the interlocutory stage, Carpenter Farms meets this initial threshold. An equal-
protection claim must first show that there is state action that differentiates among
individuals. Ghegan & Ghegan, Inc. v. Barclay, 345 Ark. 514, 521, 49 S.W.3d 652, 656
(2001). Carpenter Farms has at least made a plausible case that there is state action (by the
Commission) that differentiates among individuals (the 100 percent minority-owned
applicants and everyone else).
Carpenter Farms alleged specific facts absent from other cases in which we have
dismissed at the complaint stage. See Ark. State Claims Comm’n v. Duit Constr. Co., 2014 Ark.
432, 445 S.W.3d 496. There, the plaintiff asserted, without factual support, that the claims
commission recommended higher damages awards to resident contractors than to
nonresident contractors. Id. at 8, 445 S.W.3d at 503. In contrast, Carpenter Farms here
highlighted multiple, similar defects in other applications that did not result in
disqualification.
Whether this allegation can be proved and the appropriate remedy are questions
left for another day. For now, Carpenter Farms has alleged a plausible equal-protection
violation. Liberally construing the allegations of disparate treatment in its complaint, we
hold that Carpenter Farms may proceed with a declaratory-judgment action that the
Commission violated equal protection.2
2
The State argues for the first time in its reply brief that all claims should be
dismissed against DFA and ABC. But a new issue may not be raised for the first time in the
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Part VI. Reassignment
The State also argues that if the case can proceed, we should reassign this matter to
a different circuit judge. The State maintains that this judge should be prohibited from all
cases involving the Attorney General’s Office. The State complains that the judge exhibited
injudicious behavior. It highlights specifically what it characterizes as the judge’s
demeaning behavior during a hearing in this case.
The legal basis for removing the judge, the State argues, rests with Amendment 80.
Amendment 80 establishes this court’s general superintending control over all the courts
of the state. Ark. Const. amend. 80, § 4. “Superintending control is an extraordinary
power that is hampered by no specific rules or means.” Parker v. Crow, 2010 Ark. 371, at 5,
368 S.W.3d 902, 906. “By virtue of the jurisdiction, the court may invent, frame, and
formulate new and additional means, writs, and processes.” Id. (cleaned up). Though we
have the power to do so, we reject the State’s plea to order reassignment because that
remedy is not warranted on this record.
Part VII. Conclusion
To conclude: we affirm on the limited basis of Carpenter Farms’ section 207
challenge to the validity and applicability of the Commission’s own rules. But any claims
arising from section 212 or MMC Rule 19 are reversed and dismissed. We remand with
appellant’s reply brief. JurisDictionUSA, Inc. v. Loislaw.com, Inc., 357 Ark. 403, 409, 183
S.W.3d 560, 564 (2004). We therefore need not parse our holding among the different
defendants.
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instructions to permit the complaint to go forward only under section 207 and the
declaratory-judgment action alleging an equal-protection violation.
Affirmed in part; reversed and dismissed in part; remanded.
BAKER, HUDSON, HART, WYNNE, and WOMACK, JJ., concur in part; dissent in part.
KAREN R. BAKER, Justice, concurring in part and dissenting in part. While I
concur in the result reached by the majority in Parts II, III(A), IV, and VI, I dissent from
the remainder of the opinion. Because I cannot agree with the majority’s interpretation of
the precedent established in Board of Trustees of the University of Arkansas v. Andrews, 2018
Ark. 12, 535 S.W.3d 616, I would also reverse and dismiss Part III(B) and Part V for the
reasons explained below.
This majority is inconsistent with Andrews. As I explained in my dissent in Arkansas
Oil & Gas Comm’n v. Hurd, 2018 Ark. 397, at 1, 564 S.W.3d 248, 249, Andrews does not
provide for exceptions to its broad language barring suit against the State. In Andrews, the
court held that “never means never,” and did not identify exceptions. Accordingly, despite
the majority’s attempt to narrow Andrews, the broad language of Andrews does not permit
such suit. Here, like Hurd, Carpenter Farms alleges that the appellants’ actions were
beyond the appellants’ authority as a state board and acted in an ultra vires manner.
Therefore, state conduct is at issue, and Andrews bars suit.
Accordingly, I concur in part and dissent in part.
ROBIN F. WYNNE, Justice, concurring in part and dissenting in part. I join Part III
of the majority opinion allowing Carpenter Farms to challenge the validity and
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applicability of the Medical Marijuana Commission’s rules under Arkansas Code
Annotated section 25-15-207. I also join Part VI on the reassignment issue. But I
respectfully dissent from the majority’s holding in Part II because I would hold that the
circuit court has jurisdiction under Arkansas Code Annotated section 25-15-212 to review
the MMC’s denial of Carpenter Farms’ application for a cultivation license.
Arkansas Code Annotated section 25-15-212 vests circuit courts with jurisdiction to
review agency actions, providing that “[i]n cases of adjudication, any person . . . who
considers himself or herself injured in his or her person, business, or property by final
agency action shall be entitled to judicial review of the action under this subchapter.” Ark.
Code Ann. § 25-15-212(a). “‘Adjudication’ means an agency process for the formulation of
an order.” Ark. Code Ann. § 25-15-202(1)(A). “‘Order’ means the final disposition of an
agency in any matter other than rulemaking, including licensing and rate making, in which
the agency is required by law to make its determination after notice and hearing.” Ark.
Code Ann. § 25-15-202(6).
In Arkansas Department of Finance & Administration v. Naturalis Health, LLC, 2018
Ark. 224, 549 S.W.3d 90, this court examined whether section 25-15-212 allows judicial
review of MMC licensing decisions. In Naturalis, we explained that judicial review under
the Administrative Procedure Act is limited to agencies’ judicial functions, which are
basically adjudicatory or quasi-judicial in nature. Id. at 6–7, 549 S.W.3d at 906. In the case
of an applicant who did not receive a cultivation license, but was not formally denied one
either, we identified no adjudicatory or quasi-judicial action on the part of the MMC. We
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concluded that because no adjudication occurred at the agency level, judicial review was
not available under section 25-15-212. Id. at 8, 549 S.W.3d at 906.
Relying on Naturalis, the majority concludes that the MMC’s decision on Carpenter
Farms’ license application is not an adjudication subject to judicial review. But Naturalis
can be distinguished. The plaintiff in Naturalis had not been denied a license; rather, it
simply had not been granted one. There was no final agency decision to review. In contrast,
the MMC issued a formal letter denying Carpenter Farms’ license application.
The MMC denied Carpenter Farms’ application without providing notice and a
hearing and now argues that the circuit court cannot review that decision because it did
not provide notice and a hearing. I disagree. An agency cannot evade judicial review of its
licensing decisions simply by adopting rules that do not allow for notice and a hearing. In
my view, the MMC’s decision to deny Carpenter Farms’ application for a cultivation
license is an order subject to judicial review. It is a final determination. It is not legislative,
such as rulemaking, or administrative, such as terminating an employee. I would conclude
that the MMC’s denial of Carpenter Farms’ license application is a final agency decision
subject to judicial review, so sovereign immunity would not bar Carpenter Farms’ action
under section 25-15-212. See Ark. Oil & Gas Comm’n v. Hurd, 2018 Ark. 397, at 11, 564
S.W.3d 248, 255.
Because I would conclude that the circuit court has jurisdiction under section 25-15-
212, I would decline to consider whether MMC Rule 19 independently confers
jurisdiction. And while I agree with the majority that Carpenter Farms may proceed with
19
its equal protection claim, I think judicial review of this claim is available under section 25-
15-212. Therefore, I do not join Parts IV and V of the majority opinion.
HUDSON and HART, JJ., join.
SHAWN A. WOMACK, Justice, concurring in part and dissenting in part. I
respectfully disagree with the majority’s conclusion that Carpenter Farms may pursue
declaratory judgment for MMC’s alleged failure to comply with the model rule
requirement under Arkansas Code Annotated section 25-15-215. Because the circuit court
does not have jurisdiction over this claim, it should be reversed and dismissed. I join the
remainder of the majority’s opinion in full.
Under Amendment 98 to the Arkansas Constitution, the MMC is vested with
broad discretion to adopt any rules necessary to carry out the purposes of the amendment
and to perform its duty to issue cultivation licenses. See Ark. Const., amend. 98, § 8(b).
This discretion is guided by the extensive requirements established by the amendment.
Most relevant here, Amendment 98 commands the commission to adopt rules governing
“[t]he manner in which the commission considers applications for and renewals of licenses
for dispensaries and cultivation facilities.” Ark. Const., amend. 98, § 8(d). It also requires
that the MMC adopt rules governing “[a]ny other matters necessary for the commission’s
fair, impartial, stringent, and comprehensive administration of this amendment.” Id.
Because the MMC’s creation and procedural rulemaking authority expressly derives from
the constitution, it is not subject to the APA’s model rules of procedure provision.
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The APA does, however, have limited applicability to the MMC. Rules adopted by
the MMC under Amendment 98 are “rules as defined in the [APA].” Ark. Const., amend.
98, § 8(b)(2); see also Ark. Code Ann. § 25-15-202(9)(a) (APA definition of “rule”). To the
limited extent the APA applies to MMC rules, it provides a process for the formulation,
amendment, or repeal of the agency’s rules. See, e.g., Ark. Code Ann. § 25-15-204 (“Rules--
Procedure for Adoption”). It does not, however, impose requirements as to the actual
rules the agency must adopt. Accordingly, to the extent Carpenter Farms disagrees with an
MMC rule or believes additional rulemaking is required, it is not without a remedy. It may
petition MMC for the “issuance, amendment, or repeal of a rule.” Ark. Code Ann. § 25-
15-204(d)(1). Should the agency refuse to act, judicial review is available under section 25-
15-214. Because Carpenter Farms did not avail themselves to this procedure prior to
bringing this action, the circuit court does not have jurisdiction to consider the claim.
Leslie Rutledge, Att’y Gen., by: Jennifer L. Merritt, Sr. Att’y Gen., for appellants.
Law Offices of Matt Simmons, Esq., by: Matt Simmons, pro hac vice; and R. Victor
Harper, P.A., by: R. Victor Harper, for appellee.
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