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After Dayspring's quiet exit, Natural Healing Center can still open its dispensary in SLO, but there's a deadline 

About a year before Helios Dayspring would plead guilty to felony charges of bribery and tax evasion, an attorney for the cannabis businessman sent an email to San Luis Obispo city officials.

"Please be advised that Helios Dayspring has sold his interest in NHCSLO, LLC, to Valnette Garcia," attorney Paul Ready wrote on Sept. 9, 2020, referring to Dayspring's dispensary, Natural Healing Center. "If you have any questions about the transaction, please feel free to give me a call at your first convenience."

click to enlarge NOT OPEN Natural Healing Dispensary, Helios Dayspring's former company, must open its doors in SLO (pictured) before Oct. 22, or risk losing its permit, according to city officials. - PHOTO BY PETER JOHNSON
  • Photo By Peter Johnson
  • NOT OPEN Natural Healing Dispensary, Helios Dayspring's former company, must open its doors in SLO (pictured) before Oct. 22, or risk losing its permit, according to city officials.

At the time, the FBI was investigating Dayspring for bribing local government officials and underreporting millions of dollars in personal income—alleged crimes that Dayspring would later surrender to in July 2021.

Dayspring had acknowledged that investigation in court records available last fall, in the context of a lawsuit from his top investor, a former federal official, who called the Morro Bay cannabis magnate who'd ascended to the top of the SLO County industry an "unscrupulous con man."

But, according to SLO City Attorney Christine Dietrick, those were just allegations back in September 2020. When presented with Dayspring's ownership transfer notice last year, the city simply had an ordinance to follow.

"Allegations in a private civil action typically wouldn't be something we're even following," Dietrick told New Times. "We take our cues from investigatory agencies with the authority to enforce."

Dayspring's exits from his three SLO County cannabis dispensaries in SLO, Grover Beach, and Morro Bay occurred between September 2020 and July 2021, all prior to the FBI and Department of Justice unveiling his plea deal that levies a maximum prison sentence of 13 years.

When the public turned to city officials for answers as to why Dayspring's dispensaries could continue to operate and occupy three of the limited number of cannabis storefront permits available in local cities, all three city managers cited the fact that Dayspring was no longer involved in those businesses.

"We are currently carefully reviewing Natural Healing Center's permit applications, documents, and statements that involved him. To our knowledge, he has no current interest in any permitted cannabis businesses in SLO," SLO City Manager Derek Johnson told media outlets.

"Mr. Dayspring is currently not affiliated with the Natural Healing Center-Grover Beach business, as he is neither an employee nor owner of the company," Grover Beach City Manager Matt Bronson also said.

To understand how Dayspring extricated himself from the company he founded, and how the company continues to have a shot at opening a coveted dispensary in SLO city, New Times reviewed city documents and talked to officials.

'Not that complicated'

Since SLO city adopted its cannabis regulations in 2018, it's received four requests for cannabis business ownership transfers. Dayspring's was the first—and the only one to get approved thus far, according to records.

"The first one wasn't that complicated," Dietrick said.

SLO's cannabis ordinance has a short section outlining rules for the sale or transfer of a permit. It outlines "general parameters" for cannabis business owners seeking ownership changes, Dietrick said.

Those parameters include a requirement to notify the city about the transfer, and then potentially submit to fees, background checks, and other requirements for approval if the proposed new owner isn't an already-permitted cannabis operator in the city.

In Dayspring's case, he passed off all 88 percent of his share of the dispensary to Garcia, who already had a 3 percent stake in the company. Because of that, Garcia was already vetted by the city during its review of the company's original application (one of eight that the city received in 2018-19 for its three open dispensary permits).

For that kind of internal transfer, the city determined that no further review was necessary.

"If you read our ordinance, that's all our ordinance required," Dietrick said.

On Oct. 29, 2020, Dietrick "acknowledged" the transfer, giving Garcia Dayspring's 88 percent of Natural Healing Center.

"It helps to look at the big picture perspective of what we're trying to accomplish," Dietrick explained, "which is to make sure that everyone who's doing business in SLO has been vetted through our background process and is someone who doesn't have precluding issues in their background that we're aware of."

A few months later, in February 2021, SLO received its second ownership transfer request from another cannabis retailer, Megan's Organic Market. In that request, Megan's proposed adding four new members to its ownership group.

According to SLO officials, that second request spurred the development of new, more robust administrative guidelines for processing cannabis transfers, since the latest request involved outside members. In responding to Megan's, city officials told the company to stand by while they wrote those rules.

"The city reviewed the proposal and will need to develop the administrative process for this transfer," an email to Megan's read. "These will be developed over the next one to two months."

The resulting six-page document, released this July, stipulates how cannabis businesses seeking ownership transfers must follow detailed procedures under different scenarios, including paying between $4,700 and $9,800 in fees to cover the city's review. The only type of transfer exempted from any review, or approval, is an internal transfer, such as Dayspring and Garcia's.

Shifting deadlines

When a cannabis business receives a permit from the city of SLO to operate, it has exactly one year from that date to open its doors, according to the city ordinance.

Natural Healing Center received its permit for a dispensary in SLO on Oct. 22, 2019. Nearly two years later, the store planned at the former site of Mission Thrift on Broad Street has yet to open. The site combining two lots is still under construction.

According to city officials, Natural Healing Center—and all other cannabis businesses with "unactivated" permits in the city—were provided extensions to open due to the COVID-19 pandemic.

On July 6, the SLO City Council passed a resolution that extended deadlines and waived requirements for various industries, including cannabis, to accommodate the continuing challenges of the pandemic, officials said.

"There were two or three different resolutions prior to that [July one]," Dietrick said. "It wasn't limited to cannabis."

That resolution granted Natural Healing Center one more year from its original deadline to open its doors, which is now Oct. 22. The other cannabis businesses that received the same extensions are SLO Cal Roots, the recent recipient of the city's third and final cannabis dispensary permit, and two non-storefront businesses, Element 7 and Pure SL—a business type that has no citywide cap.

"We had set for cannabis, prior to COVID, a very aggressive opening schedule," Dietrick said. "COVID hit and the world turned to chaos."

Natural Healing Center did not respond to a request for comment about its timeline for opening in SLO. If the company cannot open by Oct. 22, the city will open up a new application process for its permit slot.

"[The permit] expires automatically, which means there's an open opportunity," Dietrick said. Δ

Assistant Editor Peter Johnson can be reached at pjohnson@newtimesslo.com.

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