Natural Healing Center loses dispensary permit; former CEO pleads guilty to bribery, tax evasion


A few dozen employees of Natural Healing Center chanted their company’s acronym in unison on Oct. 19 while gathered on the steps of San Luis Obispo City Hall.

click to enlarge Natural Healing Center loses dispensary permit; former CEO pleads guilty to bribery, tax evasion
COMPANY PLEA : Employees of Natural Healing Center, led by Government Affairs Manager Joe Armendariz (center right) and CEO Valnette Garcia, gathered on the steps of San Luis Obispo City Hall on Oct. 19 to ask the city to reverse a decision to terminate its cannabis dispensary permit on Broad Street in SLO.

Donning white T-shirts with “save my career” printed across the back, NHC executives and workers assembled to protest a recent SLO city decision to revoke NHC’s permit for a cannabis dispensary on Broad Street—which came after company founder Helios Dayspring pleaded guilty to felony charges of bribery and tax evasion related to his cannabis businesses. 

“We are here to ask the City Council for help. … What’s happened here is a big mistake,” NHC Government Affairs Manager Joe Armendariz said on the steps, flanked by now-CEO and majority owner Valnette Garcia. 

On Oct. 6, SLO terminated NHC’s dispensary permit following a “thorough review” of the evidence. City officials concluded that NHC had submitted “false or misleading information about criminal misconduct” in its permit application in 2018.

In July, the U.S. Department of Justice announced that Dayspring had agreed to plead guilty to charges of tax evasion and bribery. On Oct. 14, former CEO Dayspring officially signed the plea agreement, admitting to committing tax fraud between 2014 and 2018 and to bribing late SLO County 3rd District Supervisor Adam Hill for favorable cannabis votes from 2016 to 2019—both of which started before his company applied for a dispensary permit in SLO.

City officials said NHC never disclosed that misconduct in its background interviews, which violated local regulations, and that the company “would never have received the permit had we known then what we know now.” SLO awarded three cannabis storefront permits in 2019, including one to NHC, while nine companies applied.

“While we understand the company’s disappointment, we, too, are disappointed that the business included false and/or misleading information to the city, which directly resulted in automatic disqualification of their application and termination of their permit,” SLO Public Communications Manager Whitney Szentesi said in an Oct. 19 email to the Sun.

NHC owners Garcia and Kenny Johnson (a minority owner) penned a letter to the City Council that called its staff’s decision “draconian” and a “devastating financial blow to our company.” Founded following cannabis’s legalization, NHC has stores open in Grover Beach, Morro Bay, and Lemoore and has NHC-related growing operations in SLO and Santa Barbara counties and the Central Valley.

“It is nothing less than a travesty that Val and her staff are being punished for something they had nothing to do with or were involved in,” their letter read. 

NHC staff repeated these pleas during public comment at the City Council’s Oct. 19 meeting. In response, Mayor Erica Stewart and Councilmember Andy Pease expressed sympathy for the workers but backed staff’s decision, which Pease said was about preserving the “integrity of the process.” The council took no action afterward.

“There’s extensive documentation that will be available in terms of the background, in case employees want to better understand where we’re coming from,” Pease said. “I think we totally sympathize with what the folks are going through. This is a super unfortunate situation overall.”

NHC promised to challenge the city’s decision in court. In a letter sent to the city, NHC attorneys said that “millions of dollars are at stake here” and the company is “prepared to proceed with a formal complaint if your attempt to terminate my client’s permit is not immediately revoked.” The letter emphasized that the city’s punishing of the company “for the sins of a former owner flies in the face of the city’s actual ordinances” and “the legal rights and reasonable expectations” of NHC.

City officials and NHC attorneys met on Oct. 15 for a formal discussion about the permit but it did not change the city’s decision. During that meeting, City Attorney Christine Dietrick questioned NHC’s assertion that former owner Dayspring was no longer involved in company operations. NHC attorneys then divulged that Dayspring was still the owner of the property in SLO that NHC’s dispensary was built on and would be collecting rent from the cannabis company if it were allowed to open.

On Oct. 19, while NHC was protesting at City Hall, SLO sent out a press release confirming its initial conclusion to revoke the permit.

“The company cannot activate, obtain, or hold an operator permit to conduct commercial cannabis activity at 2640 Broad St. in San Luis Obispo, which is not yet open to the public,” City Manager Derek Johnson said.

SLO is the first city to take action against NHC in the wake of the Dayspring scandal. He is scheduled for a sentencing hearing in February.

Comments (0)
Add a Comment