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Hot Springs pot-shop dispute is settled

Ownership fight ended up in court by David Showers | July 26, 2021 at 7:05 a.m.
Medical marijuana is displayed in a glass case for customers at Green Springs Medical Dispensary in Hot Springs on March 26, 2020. - File photo by The Sentinel-Record

HOT SPRINGS -- A dispute over ownership of the only licensed medical marijuana dispensary inside the Hot Springs city limits has been resolved, ending an almost two-year court battle.

An amended operating agreement signed earlier this month listed Dragan Vicentic as having full ownership of Green Springs Medical, a Seneca Street dispensary that's at the heart of an ownership dispute that started shortly after its May 2019 opening.

Bruce Simpson -- who filed suit in Garland County Circuit Court in September 2019, alleging that Vicentic forced him out of the business -- no longer has an ownership interest.

A consent agreement -- included with Special Judge Ted Capeheart's July 9 order authorizing Vicentic and Simpson to negotiate an amended operating agreement -- said Simpson received a lump-sum payment as part of a settlement.

"The parties have reached a confidential settlement that requires Simpson to relinquish any office or position with Green Springs and transfer to Vicentic any and all rights in the permit, Green Springs and its property in exchange for a fully satisfactory one-time payment and other warranties, releases and obligations," the consent agreement said.

Vicentic's and Simpson's attorneys issued a statement last week.

Vicentic and Simpson "have agreed to release the following statement and make no further comment," the email said. "Dragan Vicentic and Bruce Simpson have resolved their differences. Bruce Simpson has been fully and fairly compensated for his participation with Green Springs Medical, LLC, and is moving forward to pursue other opportunities with best wishes for its continued success."

The state Medical Marijuana Commission approved the ownership change last week. According to court records, Vicentic tried to surreptitiously dissolve Simpson's ownership interest in the summer of 2019, submitting a change of ownership request without Simpson's consent.

The maneuver was cited by Capeheart when he granted Simpson's request for an injunction in late 2019. The opinion that state Appeals Court Judge Waymond M. Brown issued in affirmation of the lower court ruling also cited Vicentic's attempt to unilaterally remove Simpson from the ownership structure. Brown said Simpson's interest would be irreparably harmed if Vicentic were not enjoined from excluding Simpson from his share of the profits and in decisions on how the business is run.

The transfer-of-ownership application that the Medical Marijuana Commission provided in response to a records request showed that Simpson conveyed his 40% ownership stake to Vicentic, making Vicentic sole owner. The dispensary's new organizational chart no longer lists Simpson as security manager, a title that's now held by Jerry D. Wheeler.

Vicentic added dispensary manager to his title of CEO/executive director.

He testified that Simpson's interest in Green Springs ended in June 2019, according to the redacted transcript that The Sentinel-Record obtained from an October 2019 hearing. Vicentic told the court that he didn't have anything in writing that dissolved Simpson's ownership interest, explaining that he and Simpson orally agreed that the latter would no longer be a member of the corporation.

Simpson testified that he never surrendered his interest, telling the court that he declined Vicentic's $100,000 buyout offer.

Capeheart ruled that the operating agreement that Vicentic said gave him control of the business was invalid because only Vicentic had signed it. Vicentic testified that there was room for only one signature. The judge said in the absence of a valid operating agreement, the 1993 law governing the formation and operation of limited liability companies entitled Simpson to a 50% interest. The Court of Appeals agreed.

The order Capeheart issued earlier this month said that only Vicentic reviewed the operating agreement that was included with the dispensary application Green Springs submitted in 2017.

"Through lapses attributable to both parties, only Vicentic reviewed and signed [the operating agreement] before the application was submitted," the order said. "The failure to tie off the details of the parties' relationship before the permit was granted allowed them to reach reasonable but conflicting conclusions afterward about the most basic ownership and management rights.

"The parties agree that 100% membership/ownership of Green Springs should be vested in Vicentic in exchange for payment that will fully and satisfactorily compensate Simpson."

The redacted, 173-page transcript that the newspaper obtained from the October 2019 hearing recounted the acrimony that festered between Vicentic and Simpson as Green Springs became one of Arkansas' first legal purveyors of medical marijuana. That acrimony shaped the injunction that Capeheart issued, as his ruling didn't grant Simpson physical access to the business for fear it would spark an altercation.

Simpson was granted access to bank statements, sales and payroll reports, purchase orders, invoices and other business records through an intermediary because allowing Simpson on the property could lead to a "fistfight," Capeheart told the litigants during the hearing.

Capeheart sealed the transcript, but the newspaper -- through its attorney, Alec Gaines of Williams & Anderson PLC -- requested that the court grant access. Gaines cited Arkansas Supreme Court Order No. 19, which provides that once information is "disclosed in open court and is part of a verbatim transcript of court proceedings ... the information is not excluded from public access."

The newspaper requested a copy of the transcript almost two weeks before Vicentic's attorney filed a motion to seal. Capeheart's amended order unsealed most of the transcript, but information presented at subsequent hearings was mostly shielded from public view.

Capeheart sealed testimony and evidence presented at an April 22 motion hearing. His order said confidential information was presented that should not be publicly disclosed and that Vicentic's attorney requested that the courtroom be closed to the public.

Green Springs' sales during the 33-day reporting period that ended July 18 ranked ninth out of the 36 dispensaries in operation, according to a report that the state revenue agency released Friday. It ranked second in total sales, reporting sales of more than 4,400 pounds of medical cannabis since opening more than two years ago.

The Tax Procedure Act prohibits the state from releasing revenue figures for individual dispensaries. In aggregate, the three dozen locations reported sales of more than $365 million since the first legal sale of marijuana in Arkansas in May 2019.

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