Three of the five violations Hot Springs' only medical marijuana dispensary were cited for following a July inspection have been upheld on appeal, the state said earlier this week.

Doralee Chandler, director of the Alcoholic Beverage Control Division of the Department of Finance and Administration, ruled last month that Green Springs Medical should be fined $7,025 and put on 120 days probation. The dispensary received Chandler's ruling Wednesday and has 15 days from then to appeal to the full ABC board.

The offer of settlement the agency tendered in September proposed a $13,500 fine and 180-day probation.

Chandler's order ruled there was insufficient evidence to sustain violations for failing to maintain a video surveillance system and limit access to marijuana storage areas, dismissing both counts. Violations for improper labeling, failing to maintain biometric locks and posting banners outside the dispensary were upheld.

Those rules are part of the regulatory scheme promulgated by the Medical Marijuana Commission in response to the 2016 passage of Amendment 98, which permits medicinal use of the drug. The commission makes the rules, and ABC enforces them.

"All of the violations issued to Green Springs are simply administrative violations and are in no way criminal," Scott Hardin, director of communications for the Arkansas Department of Finance and Administration, said.

Hardin said dispensaries on probation or appealing a probation ruling receive normal compliance checks, explaining that penalties are significantly enhanced for violations occurring during a probation term.

Green Springs had accounted for almost a quarter of the 5,463 pounds of medical marijuana sold statewide through Tuesday, according to a sales report DFA issued. It was the second location to sell the drug legally in Arkansas, making its first sale May 12, and has sold more than twice the weight of the second-leading dispensary, the Releaf Center in Bentonville.

Sixteen of the dispensaries in operation as of Tuesday reported $35.69 million in total sales. Thirty-two locations are licensed statewide, but half have yet to open. DFA said two permittees who hold licenses to operate in Little Rock are seeking approval to open.

Green Springs CEO Dragan Vicentic's decision to appeal the violations was opposed by his business partner, Bruce Simpson, according to court filings and testimony in the lawsuit Simpson filed against Vicentic last year. Simpson argued the appeal could jeopardize renewal of the dispensary's license, which expires at the end of June, and urged Vicentic to accept the settlement offer.

Vicentic prevailed over Simpson despite the court order issued in October that gave Simpson an equal say in how the business is run. An order filed last month continued the trial from the late April date it had been set for. The case won't be reset for trial until the Arkansas Court of Appeals rules on Vicentic's petition to overturn the October injunction that enjoined him from excluding Simpson from making business decisions and accessing business records.

The lower court ruling also ordered half of the profits be set aside for Simpson while his lawsuit proceeds through the court.

Simpson told the court Vicentic forced him out a month after the dispensary opened, and that he ran the business in a haphazard manner that disregarded rules and regulations and jeopardized the dispensary's license. Vicentic testified the parting was mutual, and that Simpson behaved unprofessionally during his brief time at the dispensary.

While granting Simpson an equal say in business matters and profit distributions, the injunction barred him from being at the dispensary. Special Judge Ted Capeheart said during a four-hour hearing in October that barring Simpson was necessary to prevent the litigants from getting into a "fistfight."

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.

Local on 02/01/2020