Arkansas Pot Firms Feud, Pass Around The Blame

Arkansas Pot Firms Feud, Pass Around The Blame
Robert Lercher, customer relations chief for Bold Team of Cotton Plant, said the Woodruff County medicinal marijuana cultivator has ramped up production and is now drying its biggest harvest yet. He says Arkansas doesn't have a cannabis supply shortage. “There just wasn't a surplus,” he said. (Kerry Prichard)

The state’s largest medical marijuana merchant says Arkansas cultivators have blackballed his business, and he’s planning to sue, alleging they cut off sales after he lobbied for the state to license more growers.

Dragan Vicentic, owner of Green Springs Medical in Hot Springs, says his goal was to ease a supply shortage and keep prices low. But two cultivators no longer selling to Green Springs said Vicentic’s bid for more cultivation competition didn’t influence them; one of them, Bold Team LLC of Cotton Plant, said it dropped Vicentic more than a year ago, long before he went public with supply complaints.

Vicentic said his overall sales fell by more than half after he was left with only one wholesale supplier among the state’s five legal marijuana cultivators. That cultivator is Natural State Medicinals of Jefferson County. “I am being punished for speaking out for patients and their access to affordable relief,” Vicentic said in a telephone interview.

“It’s absolutely not fair, and the next step is going to be legal action.”

Vicentic told Arkansas Business last week that Bold Team and Osage Creek Cultivation of Berryville have refused to sell to him, and that they’ve been joined by Delta Medical Cannabis in Newport. But Robert Lercher, director of customer relations for Bold Team, called Vicentic’s stated reason for the cutoff “nothing more than a lie.” Vicentic is simply hard to do business with, Lercher and several other industry figures said.

“We haven’t sold anything to him since October of 2019,” Lercher said, adding that Vicentic didn’t go public with his supply complaints until June of this year. “Did I cut him off months before he made those statements? Did I have a crystal ball? He was not an easy customer, and I’m using that wording because I don’t want to be hateful.”

In a statement, Osage Creek said Vicentic had revealed private pricing information about the cultivator in meetings with state lawmakers in June. It was that breach, rather than the suggestion of new cultivation licenses, that shattered the business relationship with Green Springs, Osage Creek co-owner Matthew Trulove said.

Trulove, who provided Arkansas Business with a copy of a June 23 letter to Green Springs outlining his position, said Vicentic had shared private and proprietary information with the public and Osage Creek’s competitors, then refused to sign a nondisclosure agreement. “This would have allowed us to continue doing business with Mr. Vicentic, however, he has continually refused to sign,” Trulove said. “We sell to every other store in the state, and have had a non-interrupted relationship” with all but Green Springs.

Scott Hardin, a spokesman for the Alcoholic Beverage Control Division, which enforces medical marijuana rules, said the state is well aware of Vicentic’s situation, but said “neither ABC or the MMC have any oversight or authority to compel the cultivators to do business with him.” Green Springs, which opened as the state’s second dispensary in May 2019, had sold 3,300 pounds as of Nov. 8, 12% of the total Arkansas market.

Vicentic, who trumpets his dispensary’s “daily lowest prices,” calculates that Arkansas has three times the number of marijuana patients it expected and should have at least three times the five cultivator licenses it originally granted.

Carroll County Lawsuit

Bold, Osage Creek, Delta, Natural State Medicinals and the renamed Good Day Farms, the state’s original cultivation licensees, argue that the state failed to demonstrate a short supply before granting new grow licenses this summer to three upstart cultivators. Those are River Valley Relief Cultivation LLC, owned by Fort Smith hotel entrepreneur Storm Nolan; Carpenter Farms Medical Group LLC of Grady, led by Abraham Carpenter Jr.; and New Day Cultivation of Hot Springs, owned by Carla McCord with junior partners Nick Landers, Sherman Tate and Charles Singleton.

The new cultivators are moving forward, but their licenses remain under challenge by the original cultivators, who filed their lawsuit filed in July in Carroll County Circuit Court.

Bill Paschall, executive director of the Arkansas Cannabis Industry Association, told Arkansas Business the state should wait for all eight licensed growers to join the market before determining whether there’s a supply shortage.

“We now have 31 dispensaries that are operating, but only four cultivators, and one of those just started operating a couple of months ago,” Paschall said in a phone interview. “Now the fifth that is just creeping into operation and was sold this last week. So we’re anxious to see what that means in terms of output.” [See Whispers, Page 3.]

Vicentic said he went public with his complaints about the wholesale cannabis supply because low-income patients were being priced out of the market. “The cultivators took it personally, behaving like children,” Vicentic said. “It’s very sad. This is an adult business world, and it should be about patients, not the almighty dollar. The cultivators were just thinking they would make less money, but if you help people, you’ll make money.”

Low-Price Magnet

Vicentic said he built Green Springs into a statewide magnet for marijuana patients by offering one strain at no markup in a compassionate-care program. Until June, Vicentic was selling 350 pounds of cannabis buds per month. “Then in June until now I have been able to only acquire about 100 pounds per month,” he said. “My sales have dropped to less than half.”

Vicentic said he has asked his attorneys, Byrum Hurst and Ryan Culpepper, both of Hot Springs, to prepare a lawsuit.

Lercher said, however, that Vicentic did not complain about Bold’s position until Osage Creek cut him off months later. Lercher, like Trulove at Osage Creek, said that his relationships with all of the state’s other dispensaries were fine.

Randi Hernandez, CEO of Acanza, a dispensary in Fayetteville, believes there is a real shortage of cannabis flower, so her dispensary just this month began selling dispensary-grown marijuana. Arkansas law allows each dispensary to grow 50 or fewer plants at any one time.

“We’ve had experiences where the cultivators limit how much they’ll allow us to purchase, but I think that over time, things have gotten a little bit better,” Hernandez said. “And I think processing our own material will give us the cushion we need to ride out the shortage.”

What patients really want is a greater selection of products, she said, noting that consistency and location were keys to Acanza’s rise into the top tier of Arkansas dispensaries. “We have a consistent price point and consistent service, and consistent availability,” she said. “Thank goodness we have yet to run out of product, while some of the other dispensaries have actually closed or couldn’t sell certain flower products. We have not had that experience.”

Bold Ramps Up Production

Lercher said Bold recently doubled its growing capacity, and that the company’s biggest crop yet is now drying at the Cotton Plant facility. It’s a tricky prospect, he said, because state rules forbid cultivators from flooding the market with too much cannabis. But he said the yield should bring Bold in line with production levels at Osage Creek and Natural State, the state’s top-producing cultivators.

Beyond a pinch on certain cannabis strains, Lercher also doubts any general supply shortage exists. “I passed economics, and I know when there is a shortage, if the demand is greater than the supply, prices should rise. But if you look, even though Dragan says otherwise, I can provide documents to prove my price has actually gone down, not up, since the beginning,” Lercher said.

“We are at maximum capacity now as a cultivator, and the week after next is the first time you’ll see a yield to completely debunk anyone’s shortage theory. I haven’t felt that there’s a shortage to begin with, there just wasn’t a surplus. But now I really do, I feel like the next two weeks are really going to tell the story.”

Several industry figures noted that Vicentic is being sued by a former associate, Bruce Simpson, in a case still active in Garland County Circuit Court. Simpson was listed as Vicentic’s partner in Green Springs’ licensing applications, but the dispensary barred him from its property on Seneca Street in Hot Springs after a dispute arose last year, according to court filings. The case has been slowed down by the COVID pandemic, Vicentic said, adding that he never considered Simpson a partner because, in Vicentic’s arguments, Simpson never put money or effort into the business. So far, count rulings have favored Simpson.

Medical marijuana is a booming industry, Lercher said, with money to be made by dispensaries and cultivators if they cooperate. “I went and sat with Dragan, and I told him, ‘Robert Lercher does not need Dragan Vicentic to be successful in this business; Dragan Vicentic does not need Robert Lercher to be successful. But a good working relationship is best for the industry, best for the patients and best for both of us.”