The Recorder: “A regional IRS executive told a gathering of cannabis lawyers on Friday that the agency is not out to target them, despite their work with clients whose marijuana businesses remain illegal under federal law. Matthew Houtsma, associate area counsel for the IRS Office of Chief Counsel, said the tax agency’s Office of Professional Responsibility has held that “to the extent [a lawyer] is representing someone in the industry, that is not sanctionable.”
Ray Stern of the Phoenix New Times wrote a story with the headline “Big Green: Marijuana Merger of Harvest, Cultivation Company May Bear Fruit for Patients.” This story about Harvest of Arizona doesn’t add up, It raises a whole lot of questions. Here are some quotes from the story:
“Harvest of Arizona, the Tempe-based medical-marijuana dispensary company with retail shops in Tempe and Scottsdale, announced a merger Tuesday that would make it one of the largest players in the growing industry.
Harvest has merged with Arizona cultivator Modern Flower, currently the state’s “leading wholesale supplier,” the company said in a news release, adding that the company will soon become “the largest medical marijuana operator in Arizona.”
By January, Harvest — the 2015 Best of Phoenix winner for Best Dispensary — will own eight dispensaries and seven cultivation centers in the state, said the company’s CEO, attorney Steve White.”
Here are some interesting facts about the company Ray Stern said will soon be “the largest medical marijuana operator in Arizona:”
- There is a website at www.harvestofaz.com that appears to be the site for two Arizona medical marijuana dispensaries referred to as Harvest of Tempe and Harvest of Scottsdale. This website says that Harvest of Tempe is located at 710 W Elliot Rd #102 Tempe, AZ and Harvest of Scottsdale is located at 15190 N Hayden Rd. Scottsdale, AZ.
- According to an August 2, 2016 list of dispensaries published by the Arizona Department of Health Services the dispensary located at 710 W. Elliot Road, Suite 102, Tempe, AZ, is owned by Verde Dispensary, Inc., not Harvest of Arizona, LLC. This list does not show a dispensary at 15190 N Hayden Rd. Scottsdale, AZ, because it was published before that dispensary opened.
- Verde Dispensary, Inc., is an Arizona nonprofit corporation formed on February 25, 2011. Its president and sole director is Steve White.
- Harvest of Arizona, LLC, is an Arizona limited liability company created on July 31, 2015. It is a manager managed LLC whose sole manager and member is Steve White.
- Because Harvest of Arizona, LLC, was created four years after the first dispensary licenses were issued by the Arizona Department of Health Services in 2011, it could not own a license to operate any of the original 98 medical marijuana dispensaries that were licensed in 2011. Licenses to operate a medical marijuana dispensary in Arizona cannot be transferred. How is it possible for Harvest of Arizona, LLC, to acquire eight Arizona medical marijuana dispensary licenses?
- As of July 13, 2017, Harvest’s website homepage says “Harvest of Arizona Dispensaries, Servicing Phoenix Metro Area Patients at our Tempe and Scottsdale Dispensaries” Why does Harvest of Arizona, LLC’s website say it has two dispensaries rather than three or four or eight if it acquired additional dispensaries?
- A May 3, 2017, story in the Arizona Republic stated “When the doors to the original Harvest dispensary opened in 2013, it was the fourth in the Valley and first in Tempe, White said. In September 2016, the second Harvest location opened in Scottsdale.” How does an LLC created on July 31, 2015, own a dispensary that opened in 2013?
- As of July 13, 2017, Harvest’s In the News web page is silent as to a merger of Harvest with any company.
- The Phoenix New Times story says “Harvest has merged with Arizona cultivator Modern Flower, currently the state’s “leading wholesale supplier,” Clicking on the Modern Flower link takes you to a Facebook with the heading “Modern Flower Dispensary.”
- There is no entity formed in Arizona or licensed to do business in Arizona under the name “Modern Flower.” Modern Flower is a trade name filed on February 7, 2017, with the Arizona Secretary of State. This trade name is owned by an Arizona limited liability company called TJV-168, LLC, which was formed on March 1, 2017. The TJV-168 TRUST is the member of the TJV-168, LLC, Its manager is Touraj Jason Vedadi. The TJV-168 Trust could be Touraj Jason Vedadi’s trust.
- Black’s Law Dictionary defines “merger” as “A merger of corporations consist in the uniting of two or more corporations by the transfer of property of all to one of them, which continues in existence, the others being swallowed up or merged therein.” A merger results in the legal termination of one of the parties to the merger. Because both TJV-168, LLC, and Harvest of Arizona, LLC, continue to exist they have not merged. Why does Harvest of Arizona, LLC, say it merged with a trade name owned by an Arizona LLC that continues to exist?
“Harvest” issued a press release dated July 11, 2017, that has some interesting statements:
“Harvest, a national medical marijuana operator based in Arizona, has merged with Modern Flower, a local marijuana cultivator and leading wholesale cannabis supplier. The merger allows Harvest to become the largest medical marijuana operator in Arizona, with more dispensary licenses and cultivation facilities than any other medical marijuana operator in the state.
‘Since we opened our first dispensary in Tempe four years ago, Harvest has grown, and we’ve done so in a manner that directly benefits patients,’ said Steve White, CEO of Harvest.
Merger allows Harvest to increase its footprint in the state, with 8 medical marijuana dispensary licenses and 3 cultivation facilities, to serve the growing demand from patients for medicinal cannabis
Since we opened our first dispensary in Tempe four years ago, Harvest has grown
[Harvest is] A national model in the medical cannabis industry
The merger will bring six additional Arizona dispensary licenses to Harvest
Harvest is a national medical cannabis company that was founded by a business-litigation attorney in 2011
For more information, visit harvestinc.com. . . . Kaylynn Arnold, (602) 828-1478 firstname.lastname@example.org”
No where in the press release does it identify the exact name of the company called “Harvest” that is the subject of the press release. Clearly Harvest does not mean Harvest of Arizona, LLC, because it was not formed until July 31, 2015, and the press release says Harvest opened its first dispensary in 2013. Why doesn’t the press release state the exact name of Harvest? Could the Harvest that is the subject of the press release be one of the following:
- Harvest Dispensaries, Cultivations & Production Facilities, LLC, an Arizona LLC formed on June 9, 2015, whose members are Steve White and Matt Waltz?
- Harvest of Massachusetts, LLC, an Arizona LLC formed on September 8, 2015, whose member is Steve White.
What is the exact name of the company called “Harvest” in the press release? Why does the press release fail to identify Harvest? The press release raises the following questions:
- How is it possible for Modern Flower (what ever that is) to be “a local marijuana cultivator and leading wholesale cannabis supplier?” Modern Flower is apparently not a licensed Arizona medical marijuana dispensary. How can Modern Flower be a wholesale cannabis supplier? Only Arizona licensed medical marijuana dispensaries and licensed care givers can legally grow marijuana in Arizona.
- Why doesn’t the press release identify the Arizona medical marijuana dispensaries it acquired in the merger?
- Steve White says Harvest opened its first dispensary four years ago, but Harvest of Arizona, LLC, was formed on July 31, 2015.
- Note the press release ends with “For more information, visit harvestinc.com.” Why doesn’t it say visit harvestofaz.com, which is the website for Harvest of Tempe and Harvest of Scottsdale. There is no company formed in Arizona or registered to do business in Arizona named Harvest Inc.
In researching Harvest I found some additional interesting facts.
- On March 4, 2013, the Arizona Secretary of State issued the trade name “Harvest of Tempe” to an Arizona nonprofit corporation called Nowak Wellness, Inc. for a health and wellness center. Nowak Wellness, Inc., was incorporated on February 25, 2011, and dissolved by the Arizona Corporation Commission on August 8, 2014. Its statutory agent was Steve White. Paul Nowak was the corporation’s President and sole member of its board of directors.
- The Harvest, Inc., website states “Harvest is a national enterprise. Presently, we hold medical cannabis dispensary, cultivation, and production licenses in Arizona, Illinois, Maryland, and Nevada.” How is it possible that a company that is not formed in Arizona or registered to do business in Arizona “holds” medical cannabis dispensary, cultivation, and production licenses in Arizona?”
- The Harvest, Inc., website states “Our flagship dispensary, Harvest of Tempe, has been in operation since May 2013.”
- The Harvest, Inc., website states on its contact page that its address is “627 S 48th St, Ste 100 Tempe, AZ 85281.” Why is Harvest, Inc. doing business in Arizona when it is not registered with the Arizona Corporation Commission to do business in Arizona as required by Arizona law?
- The URL harvestinc.com is registered to Matthew DiDonato who is the treasurer and director of an Arizona company called Harvesting Hope, Inc., an Arizona nonprofit corporation formed in April 9, 2014. David Grandon, William Troutt NMD and Steven M. White are also directors of this corporation. “Harvesting Hope’s website states its “Medical Director, Dr. William D. Troutt, is a Naturopathic Medical Doctor who specializes in cannabis-based medicine and treatment.”
- The address of Harvesting Hope, Inc. is the same as Harvest of Tempe.
- In 2015 the Phoenix New Times named Harvest of Tempe a “best medical marijuana dispensary.” This story ends with the following text: “Readers Choice: Herbal Wellness Center 710 W. Elliot Rd., Tempe, 85284 480-777-2100 harvestoftempe.com. If you click on that URL you will be redirected to www.harvestofaz.com. The URL harvestofaz.com is registered to Kyle Wyloge.
I hope the “Harvest” of the press release will give the public:
- the location of each of its eight Arizona medical marijuana dispensaries
- the legal name of the entity that owns each of the eight dispensaries
- an explanation of the so called merger between Harvest of Arizona, LLC, and the trade name “Modern Flower.”
Fox 13 Salt Lake City: “Nevada’s governor has endorsed a statement of emergency declared for recreational marijuana regulations, after the state’s tax authority declared that many stores are running out of weed. The Nevada Tax Commission said in a statement it will consider emergency regulations on July 13 to provide a structure for marijuana distribution to retailers. It would allow for liquor wholesalers to get in on the marijuana business.”