The Arkansas Medical Marijuana Commission has again held off approving an ownership change for a West Memphis dispensary, now that it's become embroiled in a lawsuit.
With the owners of the dispensary filing a lawsuit against a Nevada-based group that sought a stake in the business, the commission voted 3-2 to table a proposed ownership change.
Comprehensive Care Group -- owners of the West Memphis dispensary Body and Mind LLC, a public company based in Nevada -- filed a lawsuit in Pulaski County Circuit Court on Tuesday asking the judge to terminate Body and Mind's claims of ownership. Nevada Medical Group LLC, DEP Nevada and Big Stone Farms AR1 LLC were also named as defendants in the lawsuit.
The new name for the West Memphis dispensary is Comprehensive Care Group, which took effect Thursday. It was formerly known as Body and Mind.
A majority of the commission voted to table the proposal, citing precedent where it doesn't vote on ownership changes when there is ongoing litigation.
Abtin Mehdizadegan, an attorney from Hall Booth Smith representing the proposed ownership change, said Comprehensive Care Group -- knowing the commission's stance on not approving ownership changes that are involved in legal disputes -- filed the lawsuit Tuesday to scuttle the transfer.
"That rule can be appropriate in certain instances, but that rule can also be abused, and that's what we think this is here," Mehdizadegan said.
In its lawsuit, Comprehensive Care Group alleges Body and Mind has "illegitimate claims" on its business.
In 2019, DEP Nevada, a subsidiary of Body and Mind, loaned the Comprehensive Care Group $1.25 million that could be repaid through equity in the business. Instead, Comprehensive Care Group paid back the loan in full via a cashier's check, which ended the conversion rights for DEP Nevada, according to the lawsuit.
At last month's meeting, commissioners tabled a proposed ownership change that would have Big Stone Farms take a 40% stake in the dispensary, which would include 66.67% in voting shares and 66.67% of distributions. The commission tabled the March 15 deal, saying it needed more time to review supplemental documents associated with the ownership change.
Big Stone Farms is owned in part by Stephen "Trip" Hoffman of Nevada, according to a document provided by the Department of Finance and Administration. Hoffman is also an executive with Body and Mind.
Attorneys for Big Stone Farms said that if the commission did not approve the deal by March 15, it would fall through, and that the dispensary may close.