City Will Vet New Cannabis Store Owner

Written by Neil Farrell

Neil has been a journalist covering the Estero Bay Area for over 27 years. He’s won numerous journalism awards in several different categories over his career.

July 1, 2022

With its founder floundering in jail, a Morro Bay cannabis store was sold. But the City, which by law has to investigate and approve the new owners doesn’t seem concerned that one of just two cannabis stores is changing hands for the second time in the 15 months that it’s been open.

Natural Healing Center or nhc opened in April 2021 on Morro Bay Boulevard at Napa Avenue. It was the second cannabis dispensary to open in the city. 

The other, Perfect Union, opened the previous fall at 1000 Quintana Rd. 

Nhc took over the former Mill’s Stationary/ASAP Reprographics store, which had been a Downtown staple for decades. ASAP moved to a storefront on Quintana Road.

Nhc’s founder, Helios Dayspring, who grew up in Morro Bay, was on hand to cut the Chamber of Commerce grand opening ribbon on April 12, 2021. His celebrations were short-lived however, because he was soon arrested on Federal bribery allegations, to which he pled no contest.

He was accused of bribing the late County Supervisor Adam Hill, who committed suicide in 2020, after the FBI served a search warrant at his office in the County Government Center and his Pismo Beach home.

Prior to the scandal making headlines, Dayspring transferred his cannabis license in Morro Bay to his girlfriend/business partner before his legal tsunami hit the fan.

The allegations were that Dayspring bribed Hill to get favorable votes on County permits for growing operations. He reportedly paid Hill off in cash, free food and pot — a total of some $32,000.

Dayspring also was hit with tax evasion charges that accused him of failing to pay some $3.4 million in taxes. Dayspring reported his taxable income was $1.26 million, but in reality his income was more than $6.5 million. Dayspring paid the IRS some $3.46 million before he went to prison on a 2-year sentence.

Nhc kept its store licenses in Morro Bay and Grover Beach but the City of SLO stripped its license to open there, just as a multi-million dollar renovation was finishing up at a storefront on Broad Street. Nhc sued the City of SLO to get its license back but lost, and it will not be opening a store in that town.

In May nhc sold three dispensaries — in Morro Bay, Turlock and Lemoore — to Glass House Brands in a deal worth more than $22.6 million, according to an article in MjBizDaily.com. It should be noted that at the time of the article’s writing, the Turlock store had not yet opened. The Grover Beach store was not sold.

The Turlock store was highly prized by Glass House, MjBizDaily.com said, because it has Cal State Stanislaus. College towns are apparently good places for cannabis stores.

Gross sales for the Morro Bay and Lemoore stores were over $15.3 million (from April 2021 to May 2022), according to the MjBizDaily.com article.

The deal was for $5.7 million in cash (financed) and the remainder in Glass House stock, according to the article.

Glass House Chairman and CEO Kyle Kazan, said, “Given nhc’s positioning in limited license markets and its strong consumer following, we are excited to be adding these three dispensaries. We are now poised to execute a dramatic transformation in the size of our retail dispensary business this summer. 

“Along with the ongoing ramp up of Phase I production at our SoCal facility and the addition of PLUS [edibles company], this further reinforces our trajectory to becoming cash flow positive by early 2023.”

The new stores brought Glass House’s retail cannabis shops in California up to 10. Will all this 3-card Monty with licenses and ownership of Morro Bay’s nhc store raise red flags for City officials? Apparently not.

Estero Bay News asked City Manager Scott Collins about the sale of the pot store and he said, “The City’s municipal code requires that any new owner must be vetted.”

The first time ownership changed, when Dayspring signed everything over to his girlfriend, there wasn’t really an ownership change per se. This sale to Glass House Brands is different.

“The municipal code outlines that City staff conduct the vetting [community development, fire, police and finance] and make recommendations to the City Manager for decision,” Collins said.

Two of those three department heads — the fire chief and finance director — on that vetting committee were not working in Morro Bay when the cannabis review committee first vetted the half dozen firms that sought cannabis dispensary licenses.

In the end, the City was sued by one of the companies that scored high on the first part of the process but didn’t impress the City committee. The City ultimately prevailed in that court case.

Asked if he was concerned the City might be sued if the committee decided not to grant transfer of the cannabis license to Glass House Brands, and snubbed out the sale, Collins said, “Sure. The City will make a determination of qualification based upon the elements established in the City’s municipal code, and not out of fear of litigation.”

And what about the sales figures mentioned above, namely $15 million in sales in the first year for Morro Bay and Lemoore stores combined? The City has a 5% tax on sales of cannabis products, but just how much money is the City taking in with sales?

Collins said, “The City is projecting $480,000 in cannabis revenue for Fiscal Year 2021/2022.”

They predict the same revenues from taxes for the new fiscal year that starts July 1. “We are projecting the same amount for cannabis tax in FY 22/23 — $480,000 — as FY 2021/22,” Collins said.

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