Green Springs Medical, Hot Springs' only licensed medical marijuana dispensary, has been at the center of a court battle between the owners. - Photo by Grace Brown of The Sentinel-Record

A judge ruled Monday that an associate who filed a lawsuit against the CEO of Hot Springs' only licensed purveyor of medical marijuana has a 50% interest in the company, entitling him to half of the profits and an equal say in how the business is run.

Special Judge Ted Capeheart granted Bruce Simpson's request for a preliminary injunction, ruling that Simpson's business interest would be jeopardized absent the court intervening prior to its final ruling on Simpson's claims. The dispensary application filed with the state Medical Marijuana Commission listed Simpson as security manager/vice chairman of Green Springs Medical LLC dispensary. The defendant, Dragan Vicentic, is listed as the CEO/chairman of the board and majority owner.

The complaint Simpson filed in September in Garland County Circuit Court claimed Vicentic has excluded him from profits, business decisions and access to business records.

Vicentic filed a notice Monday appealing Capeheart's order.

Capeheart said in the Oct. 7 hearing on Simpson's injunction petition that Vicentic's attempt to remove Simpson from the company without his consent showed Simpson's interests would be harmed if Vicentic weren't enjoined. The state Department of Finance and Administration confirmed Vicentic contacted it regarding a change of ownership request. Alcoholic Beverage Control Division Director Doralee Chandler told him in an Aug. 6 email that he needed Simpson's consent to change the ownership structure.

DFA said Vicentic subsequently withdrew the request.

"There's no telling what'll happen at the corporation if there's not some supervision over him," Capeheart told Vicentic's attorney, Ryan Culpepper, according to a redacted transcript of the hearing obtained by The Sentinel-Record. "He tried to take the name off of the plaintiff in a surreptitious way and if that doesn't cause irreparable harm, I don't know what would."

Capeheart warned that presenting to a jury the allegations and recriminations detailed during the hearing would be unbecoming for both litigants. The hostility could also affect a lucrative enterprise, he said. A sales report DFA issued Monday showed that Green Springs had accounted for more than a quarter of the 2,491 pounds sold statewide through Sunday. Green Springs opened May 12, making it one of the first locations to sell marijuana legally in Arkansas.

DFA said total weight sold by the 10 dispensaries in operation accounted for $17.5 million in statewide sales.

"I'm gonna give you some advice that neither of you are gonna come off looking very good if this goes in front of a jury of 12 people from Garland County," Capeheart said. "There's no telling what they'll do ... If y'all keep going the way you're going, tattling on each other, the FBI and this and that and the other, the golden calf is going to melt on you. I would suggest y'all keep that in mind as this case progresses."

Capeheart did not grant Simpson physical access to the dispensary for fear of an altercation erupting. He instead ruled Simpson have access through an intermediary to bank statements, sales and payroll reports, purchase orders, invoices and other business records. The order also said Simpson is entitled to half of past and future profits.

"I would say according to (the law), Mr. Simpson should be allowed to go on the premises, but I think I'd just be creating a storm," Capeheart said. "I think there would be a fistfight down there. Even though he's entitled to it under the law, I think he'll have to make the decisions by email or through the lawyers or over the telephone or some way like that."

Capeheart said the 1993 law governing the formation and operations of limited liability companies entitles Simpson to half of the profits despite the dispensary application listing his ownership interest at 40%. The LLC act also requires Vicentic to get Simpson's consent before making decisions about the business, Capeheart ruled.

Simpson argued through pleadings and at last month's hearing that the operating agreement Vicentic said gave him ultimate control over the business was invalid because only he had signed it. Simpson said all members of the corporation, which, according to the dispensary license application, initially comprised six board members, had to sign the agreement for it to be valid.

Simpson argued he had a 50% stake in the profits and decision making without a valid agreement to stipulate otherwise.

Local on 11/06/2019