Will convictions for bribery, tax evasion stop a Turlock cannabis shop from opening?
So far, the city of Turlock isn’t stopping a cannabis dispensary from opening on West Monte Vista Avenue even though the company’s former majority owner may be sitting in prison when it starts doing business.
Natural Healing Center of San Luis Obispo, founded by Helios Raphael Dayspring, has promoted the Turlock store as a new location for selling NHC’s cannabis products to Central Valley customers.
Dayspring pleaded guilty in October 2021 to federal charges of bribing a former San Luis Obispo County supervisor and not reporting millions of dollars of income to the Internal Revenue Service.
Dayspring agreed to a plea bargain in federal court that details how he made $29,000 in bribery payments to late county Supervisor Adam Hill. The former supervisor received a number of unreported $5,000 payments after voting for or influencing county board decisions that were beneficial to Dayspring’s marijuana farms, according to court documents.
Dayspring was a large cultivator of marijuana in the Central Coast region before California’s legalization initiative in 2016 and was founder and majority owner of NHC, which opened permitted dispensaries in Morro Bay, Grover Beach and Lemoore. He is scheduled for a sentencing hearing later this month.
NHC has moved forward with Valnette Garcia as chief executive officer and the new majority owner of the company. According to news stories in San Luis Obispo, Garcia is Dayspring’s girlfriend.
Garcia said in an email Thursday that construction work on the former El Rosal restaurant in Turlock, at 3401 W. Monte Vista, is three-quarters completed and “we are slated to open in the next few months.”
Her email continued: “We believe Turlock will be an amazing opportunity for our company and are extremely excited for our opening.”
Garcia said Dayspring is not associated with the NHC business entities.
Turlock City Manager Reagan Wilson said Friday the federal case came to his attention a month ago and the city is looking into it.
The City Council approved the NHC retail outlet as the third dispensary of Turlock’s pilot cannabis program in September 2020. The vote was 4-1, with Mayor Amy Bublak opposed.
Turlock and NHC entered a five-year development agreement that requires the business to pay the city $300,000 in annual fees, with the fees increasing by $60,000 every year.
According to Garcia, Dayspring resigned as the company’s CEO in late 2020. The federal court agreed last month to continue Dayspring’s sentencing hearing to May 27. The maximum sentence for the offenses is 13 years in prison and a $500,000 fine.
City will make sure NHC complies
Wilson said the city will keep a close watch on NHC’s compliance with the development pact, but he doesn’t see a reason to keep the dispensary from opening.
“We are not going to require any more from them,” Wilson said. “We are going to require them to do what they agreed to do in their development agreement.”
Wilson said there has been a change in ownership of NHC. He said he wasn’t aware the new majority owner and CEO had a personal relationship with Dayspring.
Wilson said the city has the right to audit licensed dispensaries and will conduct the audits periodically.
The city manager, hired in February, said he didn’t know if Dayspring ever came to Turlock when NHC applied for permits in 2020. On agenda reports for city meetings, the applicant was identified as design consultant Randall Russom of San Luis Obispo; an NHC public affairs director spoke at public hearings, according to minutes.
False info cited in revoking permit in SLO
The city of San Luis Obispo revoked a permit in October 2021 that had been issued for NHC to operate a cannabis dispensary in that city. A city press release said false and misleading information about criminal misconduct had been submitted for the permit application.
NHC sought a restraining order in an attempt to reinstate the San Luis Obispo permit but it was denied in court. Turlock’s pilot cannabis program allows for four dispensaries to operate within the city boundaries.
Matthew Jacob, a former Turlock councilman, opposed the NHC dispensary on West Monte Vista as a property owner next to the site. His lawsuit challenging the city’s approval of the land use permit was settled out of court, he said.
Jacob said it’s a prime location that blends with the regional Monte Vista Crossing shopping center but doesn’t have the overhead costs of being part of it. Jacob said a grocery business considered his one-acre parcel for a development but lost interest because of a policy against operating next to a cannabis outlet.
He said the federal case against the former majority owner of NHC is alarming.
“It should be a red flag,” Jacob said. “I don’t know whether the city has legal authority to strip the conditional use permit. ... I encourage the city attorney to keep a close eye on them and make sure at the very least the city is receiving the revenue it is promised.”
Other dispensaries can’t afford fees
Stanislaus County has recently heard from retail cannabis business owners who claim they can’t afford the six-figure annual fees that they are obligated to pay in development agreements. County leaders said last week they may place a measure on the ballot in November to create a more affordable tax on cannabis receipts in unincorporated areas.
Garcia of NHC said by email that Turlock has a good cannabis program. “Obviously, (we) hope to become a major economic contributor to the city,” she said.
Garcia wrote that NHC has a successful track record in jurisdictions where it operates and expects Turlock to be no different. “We will be able to measure our success once we have had a chance to build the business and create our connections within the city,” Garcia wrote.
According to the plea agreement, Dayspring did not report $9 million in individual income to the IRS from 2014 to 2018, avoiding payment of $3.4 million in taxes.
He also pleaded guilty to a bribery scheme from fall 2016 until November 2019 in which Dayspring provided cash payments in person to Supervisor Adam Hill for his support of time extensions that blocked enforcement against nonpermitted cultivation. The payments also rewarded the supervisor for disclosing nonpublic county information and advocating for polices that benefited Dayspring’s marijuana farms, according to court records.
The San Luis Obispo Tribune reported that Hill died in August 2020. His death was ruled a suicide caused by a mixture of cocaine and antidepressant medication.
Bee Staff Writer Kristin Lam contributed to this report.
This story was originally published May 9, 2022 at 6:00 AM with the headline "Will convictions for bribery, tax evasion stop a Turlock cannabis shop from opening?."
