The court order prescribing how the fraught partnership behind Hot Springs' only licensed medical marijuana seller should operate while under a pending lawsuit has failed to address several issues, according to court filings.

Special Judge Ted Capeheart ruled last month that half of Green Springs Medical's profits be set aside for Bruce Simpson while the lawsuit he filed against dispensary partner Dragan Vicentic moves through the courts. The ruling granted Simpson an equal say in how the business is run but barred him from the dispensary.

After listening to four hours of testimony last month detailing the acrimony that ended the partnership within a month of the dispensary's opening, Capeheart said Simpson's presence had the potential to start a "fistfight" between the partners. According to court records and testimony from the hearing, the two parted ways in June. Vicentic has said the split was mutual. Simpson told the court he was forced out.

Vicentic appealed Capeheart's ruling to the state Court of Appeals, where a brief in support of the appeal is due Jan. 13. He has also petitioned the lower court to stay its ruling.

Capeheart called for the partnership to operate through an intermediary, with information on company financials, transactions, contracts, expenditures and other items shared with Simpson through a third party.

Subsequent court filings have shown the arrangement has been complicated by various circumstances, including Green Springs selling a product the federal criminal code classifies as illicit. Capeheart ordered half the monthly profits be set aside for Simpson, but a motion to amend the order said no depository institutions would accept funds generated from the sale of a federally controlled substance.

It's unclear where Capeheart directed the monthly disbursement to be held, as the location is redacted in his initial and amended orders.

Among the state's dispensaries, Green Springs Medical has been a consistent sales leader. It sold its 1,000th pound of cannabis on Monday, the Arkansas Democrat-Gazette reported today (see related story).

Court filings show the numerous violations the state Department of Finance and Administration's Alcoholic Beverage Control Division levied against Green Springs after a July inspection caused the partnership's most profound disagreement. Vicentic declined the state's settlement offer of a $13,500 fine, with $5,875 suspended upon successful completion of a 180-day probation period.

DFA said Monday the administrative hearing Vicentic requested before ABC's director is scheduled Jan. 8. The director could sustain the violations, withdraw or reduce them or lower the penalty, DFA said, noting that Vicentic has the option to appeal the director's decision to the agency's board.

Simpson's attorney has stated in court filings that Vicentic should accept the offer and probationary period, warning that challenging the violations could jeopardize Green Springs' license and the income that proceeds from it. The license expires at the end of June.

"The violations occurred while your client was in possession of the premises, and Bruce Simpson does not consent to Mr. Vicentic's decision to decline the ABC offer," according to an email from Simpson's attorney that Vicentic's counsel included in a motion to suspend the order Capeheart issued in November. "If he goes forward with the hearing and the license is revoked, we will ask that he be found in contempt and we will seek damages based upon the loss of the business.

"We understand that the probationary period is risky, but it is your client that is responsible for bringing this about."

Vicentic's counsel has argued in pleadings that Simpson has overstated the severity of the violations and the consequences of challenging them. He has asked Capeheart to amend his order to give Vicentic sole discretion in handling the ABC matter and to require Simpson to post a bond guarding against damage his conduct could bring to the business.

That conduct included Simpson threatening litigation against a supplier, according to a pleading filed earlier this month that included an email exchange between Simpson and an attorney for Natural State Medicinals.

According to the Nov. 25 exchange, Simpson requested copies of invoices the White Hall cultivation facility sent Green Springs but was told to go through the protocol the court established for sharing information. Doing otherwise would risk sensitive financial information becoming public, Natural State's counsel said.

"All financial records pertaining to Green Springs contain commercially sensitive information," the email response to Simpson said. "Therefore, any requests for records from NSM need to be made through your attorney and the court so that we have an opportunity to motion for a protective order that would seal those records from publication."

Simpson replied, "Suit yourself. I had hoped that this wasn't going to be a lawsuit too."

An affidavit Vicentic filed Dec. 2 said the exchange was an example of Simpson's conduct, which Vicentic described during last month's hearing as ill-suited to the clinical environs of an industry closely scrutinized by state regulators and the public.

"I do not know what other suppliers Simpson may have contacted, what he may have said to them, or how they will react," The sworn statement said. "I fear Green Springs' business relationships will be irreparably harmed by Simpson's actions."

Local on 12/29/2019