(a) Definition.

(1) "Drug precursor" means any substance, material, compound, mixture, or preparation listed in rules and regulations promulgated or adopted pursuant to this section or any of their salts or isomers.

(2) "Drug precursor" specifically excludes those substances, materials, compounds, mixtures, or preparations that:

(A) Are prepared for dispensing pursuant to a prescription or over-the-counter distribution as a substance that is generally recognized as safe and effective within the meaning of the Federal Food, Drug, and Cosmetic Act, 21 U.S.C. § 301 et seq., as amended; or

(B) Have been manufactured, distributed, or possessed in conformance with the provisions of an approved new drug application or an exemption for investigational use within the meaning of § 505 of the Federal Food, Drug, and Cosmetic Act, 21 U.S.C. § 355, as amended.

(b) Authority to Control Drug Precursors by Rule and Regulation. (1) (A) The Department of Health shall promulgate by rule and regulation a list of drug precursors, comprised of any substance, material, compound, mixture, or preparation or any of their salts or isomers that are drug precursors.

(B) The Department of Health may add substances to, delete substances from, and reschedule substances listed in the drug precursors list pursuant to the Arkansas Administrative Procedure Act, § 25-15-201 et seq.

(2) In making a determination regarding a substance to be placed on the drug precursor list, the Department of Health shall consider the following:

(A) Whether the substance is an immediate precursor of a controlled substance;

(B) The actual or relative potential for abuse;

(C) The scientific evidence of the substance's pharmacological effect, if known;

(D) The state of current scientific knowledge regarding the substance or the controlled substance for which it is a precursor;

(E) The history and current pattern of abuse of the controlled substance for which the substance is a precursor;

(F) The scope, duration, and significance of abuse of the controlled substance for which the substance is a precursor;

(G) The risk to the public health; and

(H) The potential of the substance or the controlled substance to produce psychic or physiological dependence liability.

(3) The Department of Health may consider findings of the United States Food and Drug Administration or the United States Drug Enforcement Administration as prima facie evidence relating to one (1) or more of the factors listed in subdivision (b)(2) of this section in connection with the Department of Health's determination.

(4)

(A) After considering the factors enumerated in subdivision (b)(2) of this section, the Department of Health shall make findings with respect to the factors and shall promulgate a rule controlling a substance as a drug precursor upon a finding that the substance has a potential for abuse.

(B) If the Department of Health designates a substance as an immediate drug precursor, a substance that is a precursor of the controlled precursor is not subject to control solely because it is a precursor of the controlled precursor.

(5) Authority to control under this section does not extend to an alcoholic beverage, alcoholic liquor, a fermented malt beverage, or tobacco.

(c) License Required -- Controlled Substances Drug Precursors. (1) (A) The Department of Health may promulgate regulations and charge reasonable fees of not more than twenty-five dollars ($25.00) relating to the licensing and control of the manufacture, possession, transfer, and transportation of a drug precursor.

(B)

(i) There is created on the books of the Treasurer of State, the Auditor of State, and the Chief Fiscal Officer of the State, a cash fund to be known as the "Health Department Drug Precursor Cash Fund".

(ii) The fees established under this subsection shall be collected by the Department of Health and transmitted to the Treasurer of State, who shall credit the fees to the Health Department Drug Precursor Cash Fund.

(iii) The fund shall be administered by the Division of Pharmacy Services and Drug Control of the Department of Health.

(2) Any person that manufactures, possesses, transfers, or transports any drug precursor or that proposes to engage in the manufacture, possession, transfer, or transportation of any drug precursor shall annually obtain a license issued by the Department of Health.

(3) A person licensed by the Department of Health to manufacture, possess, transfer, or transport a drug precursor may manufacture, possess, transfer, or transport the drug precursor to the extent authorized by the person's license and in conformity with any other provision of law.

(4) The following persons are not required to be licensed under this subsection and may lawfully possess a drug precursor:

(A) A physician, dentist, pharmacist, veterinarian, or podiatrist;

(B) An agent of any manufacturer, or wholesaler of any drug precursor if the agent is acting in the usual course of his or her principal's business or employment;

(C) An employee of a licensed common or contract carrier or licensed warehouseman whose possession of any drug precursor is in the usual course of the licensed common or contract carrier or licensed warehouseman's business;

(D) A student enrolled in a college chemistry class for credit if the student's use of the drug precursor is for a bona fide educational purpose and the educational institution otherwise possesses all the necessary licenses required by the Department of Health;

(E) An officer or employee of an appropriate agency of federal, state, or local government and a law enforcement agency acting pursuant to its official duties; and

(F) Any researcher, including an analytical laboratory, experimenting with, studying, or testing any drug analog that is licensed by the Department of Health pursuant to the requirements of this subsection.

(d) Waiver. The Department of Health may waive by regulation the requirement for licensing of certain manufacturers if the waiver is consistent with the public health and safety.

(e) Issuance of License -- Fees. (1) (A) The Department of Health shall license an applicant to manufacture, possess, transfer, or transport a drug precursor unless it determines that the issuance of the license would be inconsistent with the public interest.

(B) In determining the public interest, the Department of Health shall consider the following factors:

(i) Maintenance of effective controls against diversion of a drug precursor other than a legitimate medical, scientific, or industrial channel;

(ii) Compliance with applicable state and local law;

(iii) Any conviction of the applicant under federal or state law relating to any controlled substance or drug precursor;

(iv) Past experience in the manufacture, possession, transfer, or transportation of a drug precursor and the existence in the applicant's establishment of effective controls against diversion;

(v) Furnishing by the applicant of false or fraudulent material in any application filed under subsection (c) of this section;

(vi) Suspension or revocation of the applicant's federal registration to manufacture, distribute, or dispense a controlled substance or drug precursor authorized by federal law; and

(vii) Any other factor relevant to and consistent with the public health and safety.

(2) Licensing under this section does not entitle a licensee to manufacture, possess, transfer, or transport a drug precursor other than a drug precursor allowed in the license.

(f) Denial, Revocation, or Suspension of License. (1) The Department of Health may deny, revoke, or suspend a license issued pursuant to subsection (c) of this section for any of the following reasons:

(A) If a licensee is convicted of, or has accepted by a court a plea of guilty or nolo contendere to a felony under any state or federal law relating to a controlled substance or a drug precursor;

(B)

(i) If a licensee has its federal registration to manufacture, conduct research on, distribute, or dispense a controlled substance or a drug precursor suspended or revoked.

(ii) The Department of Health may limit revocation or suspension of a license to the particular controlled substance or drug precursor that was the basis for revocation or suspension; or

(C) If a licensee commits an unlawful act as enumerated in subsection (g) of this section.

(2) (A) (i) When the Department of Health suspends or revokes a license, any controlled substance or drug precursor owned or possessed by the licensee at the time of the suspension or on the effective date of the revocation order may be placed under seal.

(ii) No disposition may be made of a controlled substance or drug precursor under seal until the time for making an appeal has elapsed or until all appeals have been concluded unless a court orders otherwise or orders the sale of any perishable controlled substance or drug precursor and the deposit of the proceeds with the court.

(B) Upon a revocation order becoming final:

(i) Any controlled substance and any drug precursor may be forfeited to the Department of Health;

(ii) Any expense of disposing of a forfeited controlled substance or drug precursor shall be borne by the licensee;

(iii) The court may order the licensee to pay a reasonable sum of money to the Department of Health to cover the expenses of disposition; and

(iv) The Department of Health may seek enforcement of the order of payment, or reimbursement for any expenses through any lawful means.

(g) Unlawful Acts -- Licenses -- Penalties. (1) It is unlawful to:

(A) Knowingly transfer a drug precursor except to an authorized licensee;

(B) Knowingly use in the course of the manufacture or transfer of a drug precursor a license number which is fictitious, revoked, suspended, or issued to another person;

(C) Knowingly acquire or obtain, or attempt to acquire or obtain, possession of a drug precursor by misrepresentation, fraud, forgery, deception, or subterfuge;

(D) Knowingly furnish false or fraudulent material information in, or omitting any material information from, any application, report, or other document required to be kept or filed under this section or any record required to be kept by this section;

(E) Have knowledge of the manufacture of a drug precursor not authorized by a licensee's license, or have knowledge of the transfer of a drug precursor not authorized by the licensee's license to another licensee or authorized person;

(F) Refuse entry into any premises for any inspection authorized by this section; or

(G) Manufacture, possess, transfer, or transport a drug precursor without the appropriate license or in violation of any rule or regulation of the Department of Health.

(2) Any person who violates a provision of this subsection is guilty of a Class D felony.

(h) Records to be Kept -- Order Forms.

(1) A manufacturer, wholesaler, retailer, or other person that sells, transfers, or otherwise furnishes any drug precursor to a person shall make an accurate and legible record of the transaction and maintain the record for a period of at least two (2) years after the date of the transaction.

(2) Before selling, transferring, or otherwise furnishing to a person in this state a drug precursor, a manufacturer, wholesaler, retailer, or other person shall:

(A) If the recipient does not represent a business, obtain from the recipient:

(i) The recipient's driver's license number or other personal identification certificate number, date of birth, and residential or mailing address, other than a post office box number, from a driver's license or personal identification card issued by the Department of Finance and Administration that contains a photograph of the recipient;

(ii) The year, state, and number of the motor vehicle license of the motor vehicle owned or operated by the recipient;

(iii) A complete description of how the drug precursor is to be used; and

(iv) The recipient's signature;

(B) If the recipient represents a business, obtain from the recipient:

(i) A letter of authorization from the business that includes the business license or comptroller tax identification number, address, area code, and telephone number, and a complete description of how the drug precursor is to be used; and

(ii) The recipient's signature; and

(C) For any recipient, sign as a witness to the signature and identification of the recipient.

(3)

(A) Except as otherwise provided in this section, a manufacturer, wholesaler, retailer, or other person that sells, transfers, or otherwise furnishes to a person in this state a drug precursor shall submit to the Department of Health, at least twenty-one (21) days before the delivery of the drug precursor, a report of the transaction on a form obtained from the Department of Health that includes the information required by subdivision (h)(2)(A) or subdivision (h)(2)(B) of this section.

(B) A copy of this report shall be transmitted to the Department of Arkansas State Police.

(i) Reports of Theft, Loss, Shipping Discrepancies, and Other Transactions.

(1) The theft or loss of any drug precursor discovered by any person regulated by this section shall be reported to the Department of Health and the Department of Arkansas State Police within three (3) days after the discovery.

(2)

(A) Any difference between the quantity of any drug precursor received and the quantity shipped shall be reported to the Department of Health within three (3) days after the receipt of actual knowledge of the discrepancy.

(B) When applicable, any report made pursuant to this subsection shall also include the name of any common carrier or person that transported the substance and the date of shipment of the substance.

(3) Any manufacturer, wholesaler, retailer, or other person subject to any other reporting requirement in this section that receives from a source outside of this state any drug precursor specified in rules and regulations promulgated pursuant to this section shall submit a report of the transaction to the Department of Health in accordance with rules adopted by the Department of Health.

(4) Any person violating any provision of this subsection is guilty of a Class A misdemeanor.

(5) The Department of Health may authorize a manufacturer, wholesaler, retailer, or other person to submit a comprehensive monthly report instead of the report required by subdivision (i)(2)(A) of this section if the Director of the Department of Health determines that:

(A) There is a pattern of regular supply and purchase of the drug precursor between the furnisher and the recipient; or

(B) The recipient has established a record of utilization of the drug precursor solely for a lawful purpose.

(j) Investigations and Inspections.

(1) The Department of Arkansas State Police specifically may investigate any violation of a provision of this section, and enforce its provisions.

(2) Further, the Department of Arkansas State Police and the Department of Health shall exchange information gathered or received by either agency under the provisions of this section.

(3) Any record kept by a licensee pursuant to this section is open to inspection by an authorized investigator of the Department of Arkansas State Police or the Department of Health during normal business hours and at any other reasonable time.

(k) In addition to rules and regulations authorized by a provision of this section, the Department of Health may promulgate necessary rules and regulations to carry out the provisions of this section.