OWNERSHIP DISPUTE: An ownership dispute in West Memphis is heading to court.
A dispute over the ownership of a West Memphis dispensary is headed to court after a rocky management transition last month resulted in the store’s brief closure and the previous management chopping down the dispensary’s cannabis plants.
Comprehensive Care Group, the limited liability company that owns the dispensary, filed a lawsuit Tuesday against Body and Mind, a public company based in Nevada. (The dispensary is also called Body and Mind, though a name change is expected this week.) The case was filed in Pulaski County Circuit Court and has been assigned to Judge Mackie Pierce.
Comprehensive Care Group is asking Pierce to terminate Body and Mind’s claims to ownership of the dispensary.
Typically, the state Medical Marijuana Commission must approve changes of ownership for marijuana-related businesses. But the plaintiffs say this matter is “beyond the authority and competence of the MMC to decide.”
The ownership transfer of the West Memphis dispensary has proven tricky. The arrangement between Comprehensive Care Group and Body and Mind involves a loan of $1.25 million from a Body and Mind subsidiary named DEP Nevada. The loan, known as a convertible loan agreement, could be paid back in cash or through equity in the business. Comprehensive Care Group argues in its lawsuit that it paid back the loan in a cashier’s check on March 15, so the equity option is off the table.
The lawsuit also says Body and Mind has taken two-thirds of the company’s net profits as its payment in the operating agreement. It says Body and Mind is proposing to take over 40% ownership of the company but wants to take on two-thirds of voting rights in the company.
The transfer of ownership was on the commission’s agenda last month but the board voted to table it until this month because it needed more time to review the related documents.
Since that time, the dispensary has undergone a management transition, with Robert deBin, CEO of White Hall cultivator Natural State Medicinals, leading a new operating group. The store closed for several days last month and commission spokesman Scott Hardin confirmed a rumor that the previous management had cut down the store’s cannabis plants.
A message Comprehensive Care Group posted on Facebook March 24 referenced the rocky transition:
