Cannabis kingpin versus public integrity, SLO County judge to decide

January 3, 2022

By KAREN VELIE

Natural Healing Center SLO filed a lawsuit against the city of San Luis Obispo in December alleging improper termination of its retail pot shop permit and asking the court to order the city to allow them to open.

Marijuana mogul Helios Dayspring transferred ownership of Natural Healing Center SLO into the name of his live-in girlfriend Valnette Garcia in Oct. 2020, before he pled guilty to tax fraud and bribery charges. Two months ago, city staff revoked the pot shop’s permit because Dayspring had not disclosed his criminal activity and had lied about owning the underlying property during the application process.

SLO City Council members, several of whom failed to report campaign donations from Dayspring, created a selection criteria in late 2018 for determining the winners of three lucrative cannabis retail permits, a benchmark that appeared to promote specific candidates. For example, the city provided extra points if a company had enough money to purchase their property while also handing out points for having a minority owner with financial difficulties.

To get extra points for SLO’s “property control” merit criteria, Dayspring claimed he fully owned 2640 Broad Street, the property associated with his pot shop application, according to court records. Partially based on the fabricated information in Dayspring’s Natural Healing Center SLO application, in March 2019, the city awarded Dayspring one of the three coveted pot shop permits.

It was more than two years later, on Sept. 21. 2021, that Dayspring purchased the property at 2640 Broad Street from Levi Seligman, Keith Sweeney and Christopher Wright, for $4.2 million, according to property records.

In the lawsuit, Garcia’s attorney John Armstrong asserts that the city cannot revoke the permit based on lies Dayspring made during the application process because Dayspring no longer has any interest in the business.

In what appears to be well over market value, and a possible avenue for Dayspring to benefit from the pot shop even though it is no longer in his name, Daypring rents 2640 Broad Street to his girlfriend’s business for $55,000 a month, or $660,000 a year. In addition, he required Garcia pay a $110,000 security deposit, according to the rental agreement.

“While also not a basis for the city’s current action against NHC, it is also relevant to note that Mr.Dayspring’s longstanding and continuing personal relationship with the new majority owner, Ms. Garcia, strains the credibility of statements that Mr. Dayspring has not had and will not have any affiliation with NHC from and after the date of the October 2020 transfer of his interests to Ms. Garcia,” according to an Oct. 16 letter from SLO City Manager Derek Johnson explaining the permit termination.

Armstrong also argues that Natural Healing Center SLO could face financial destruction if not permitted to open because of the monthly rent payments made to Dayspring.

“NHC has no available means of meeting this lease obligation without being able to operate with the permit and should NHC default on that obligation NHC anticipates that it will be liable for the landlord’s cost and expense of improving the premises, over of $4,000,000.00 [sic] which will result in the financial destruction of NHC,” according to the lawsuit.

In the lawsuit, Armstrong asks the court to order the city of San Luis Obispo to reinstate the pot shop permit, to declare the taking of the permit unlawful, to restrain the city from taking further action against the plaintiff and for attorney’s fees and court costs.