In May 2020, Illinois News Joint did a story on Chris Visco, owner of the medical cannabis dispensary The Yard and co-founder and CEO of TerraVida Holistic Centers. At that time, Visco, with the help from Juan Aguirre, was one of 700 applicants who were left in the lurch after Governor J.B. Pritzker suspended 75 conditional adult use cannabis dispensing organization licenses on April 29.
Visco had employed and been paying ten social equity staff members from Chicago as part of the application process for months, until Illinois announced more delays in licensing.
July 29, 2021, Visco and her team (Illinois Kindness LLC) received the news they were awarded a Social Equity License for the state of Illinois.
However, within a week after receiving the conditional license, Visco claimed she received a call from her Silent Investors’ attorney advising her that they intended to take full control over the license.
Visco’s “silent partners” had allegedly changed the operating agreement just before the deadline, giving Visco very little time to review the lengthy contract. According to Visco, they were trying to hold ownership via trust. They pulled an audible and switched ownership to individuals, not allowing enough time for review.
“We were getting down to the wire and then they said they were going to change the operating agreement to put it into my customer’s lien,” Visco said. “They did that less than 36 hours before I applied. And it’s chaos. You’re assembling everything, double-checking, triple-checking everything. There are sections you want to spell check again.”
Visco knew she would not have had the time to send the operating agreement to her attorney.
“I had been business partners with them for three years,” Visco said, “so I said to him, ‘Is this identical to all our other operation agreements,’ and he said, ‘Yes.’”
On August 31, 2021 the investors issued a “Notice to Take Action,” which filled board seats to the investors and unknown persons.
Visco alleges the new operating agreement does not offer a guarantee of a board seat for Visco and added a new “drag-along” clause.
“It essentially says that if the majority shareholder, which they are, decide to sell, the company gets sold. So now they have an operating agreement that can do whatever they want, and they don’t need my signature. I’m not even going to know what happens to this license.”
Visco believes the shareholders, who do not hold residence in Illinois, want to strip all controls from the diverse set of applicants and take over and open a location in Chicago area, then flip it for millions of dollars.
The silent investors’ attorneys were very clear that Visco had no ability to prevent a sale.
“They whole thing is insane,” she said. “The whole point of this law was to protect the social equity impact of these licenses, and the fact white rich, very extremely wealthy, people can just come in from Florida and New York and take it away from the person who wrote it is just (wrong).”
Depending how the situation plays out, Visco is hopeful that Illinois will not approve “such a hostile move.” She is keeping all legal actions on the table.
“These people have no experience in retail, wholesale, cannabis, anything specifically listed as silent partners,” Visco said.
For more news about the Illinois cannabis industry, click here.