Barely one week after Arkansas' medical marijuana dispensary licensing machinery was turned off due to a judge's order, it can now be switched on again. A halt in mandatory licensing activity ordered by Pulaski County Circuit Judge Wendell Griffen is over, after Griffen dismissed a lawsuit over the process.

Last month one applicant in the program, privately held Medicanna, filed a lawsuit against the Arkansas Medical Marijuana Commission and a pair of other state agencies. The company claimed that Nature's Herbs and Wellness, a rival, was less qualified for a license than itself, but nevertheless was granted a permit by the state. Griffen subsequently imposed a temporary stoppage to the licensing program.

Gavel with marijuana leaf

Image source: Getty Images.

In dismissing the lawsuit, the judge ruled that Medicanna does not have any grounds to challenge the process by which applicants receive licenses. The state's lawyers successfully argued that, since Medicanna requested and obtained a refund of its application fee, it disqualified itself from receiving a permit.

"Once you step out of the competition," the judge said, "you are no longer entitled to complain whether other people are more worthy competitors."

Medicanna's lawyer said the company will soon decide whether to appeal the decision.

Arkansas residents elected to legalize medical marijuana in a 2016 ballot vote. The sale and consumption of recreational cannabis remains illegal.

The first medical marijuana dispensaries opened for business in mid-2019; at present there are 32 of them scattered throughout the state. One is operated by Grassroots, which last year agreed to be acquired by publicly traded marijuana company Curaleaf (CURLF -2.20%). The Curaleaf transaction has still not closed.

Curaleaf has not commented publicly on the recent developments in Arkansas. Its stock closed down marginally on Wednesday.