NEWPORT — Local leaders have filed suit to stop the transfer of a medical marijuana cultivation center in Newport to Pine Bluff.
The lawsuit said Natural State Wellness Enterprises, the original owner of the permit in 2018, took advantage of hundreds of thousands of dollars in financial incentives in deciding to locate the cultivation facility in Newport.
The complaint was filed Monday in Jackson County Circuit Court by Newport Mayor David Stewart on behalf of the people of the city. Other plaintiffs are Jon Chadwell, director of the Newport Economic Development Commission; the Northeast Arkansas Charitable Foundation; and the Newport-Jackson County Industrial Development Bond Board.
The Arkansas Medical Marijuana Commission approved the sale of Jonesboro-based Natural State Wellness Enterprises to Good Day Farm LLC and transfer of the cultivation facility to Pine Bluff on Nov. 10.
Little Rock attorney David A. Couch said in the complaint that the plaintiffs “had no knowledge that the sale and transfer of the cultivation facility was even being contemplated or considered.”
Newport leaders only learned of the sale when it was announced Nov. 16 to the employees, Couch said.
“Good Day and Natural State took active steps to conceal from the plaintiffs the potential sale and transfer of the licenses and the applications for approval of those actions,” Couch wrote. “In conversations with representatives of Good Day and Natural State, both indicated that each other had required that the transaction not be disclosed to Newport.”
On the other hand, the planned sale was common knowledge among community leaders in Pine Bluff, according to the complaint. In fact, Rep. Vivian Flowers wrote a letter of support to commissioners on Oct. 8.
Couch also said Good Day Farm wasn't even incorporated under Arkansas law when the commission approved the sale.
“It is the unwritten policy of the MMC (not a rule) that once an application for the transfer of a license or location is made, the MMC does not have the authority to reverse that decision,” Couch wrote. “The unwritten policy is contrary to Amendment 98, which gives the MMC the sole authority over the licensing of facilities.”
Couch wrote Amendment 98 and help organize the petition drive in 1996 to get the proposal on the 2016 general election ballot.
The complaint contends Natural State and Good Day conspired to make the sale after Natural State faced sanctions and potential loss of license, for numerous violations, including failing to disclose that a Phoenix-based publicly traded company had an ownership interest. That company, Harvest Health & Recreation, had only been identified publicly as a contractor.
However, because the commission has only released redacted versions of what Natural State promised to do as a condition for gaining the original license, Newport leaders said in the complaint they have no way of knowing what was promised to the commission.
One thing they do know is that Natural State promised to donate 10% of its profits to Jackson County charities. Since the company and facility sold for an estimated $20 million, the lawsuit contends those charities should get 10% of the profit from the sale and future profits from the future operation.
In addition to the promise of 10% of the profits, the complaint said the Newport-Jackson County Industrial Development Bond Board sold 20 acres to Natural State Wellness, believed to be valued at $870,000, for just $20. The city also provided an estimated $75,000 worth of easements for streets, natural gas, electrical, sewer and water at no charge and installed a water and wastewater line at no charge. That work was worth more than $90,000, according to the complaint. The local leaders also provided more than 700 hours of staff time to support the original application. Also, the plaintiffs provided free solid waste services for the first operation and a 50% discount on wastewater services for two years.
In addition to 10% of the profits for the local charities, the lawsuit wants a judge to award the other plaintiffs “the market value of all land, easements, services, staff time and other consideration of value provided by Plaintiffs to Defendants less the amount paid to Plaintiffs by Defendants.” Pursuant to Amendment 98, which authorized medical marijuana in Arkansas, the court should declare that all information in Natural State's original application be made binding on Good Day and all future license holders.
The plaintiffs want the court to declare that the commission does have authority to revoke a license and location under Amendment 98, stop the transfer of the facility to Pine Bluff and compel the commission and Alcoholic Beverage Control Division to investigate “false and material statements made by Good Day and its representatives in the application and conduct a hearing to review and impose appropriate sanctions.”