Eastern Arizona Town Faces Massive Lawsuit in Wake of Bad Pot Deal

In November 2020, the Town Council of Springerville, an Arizona town located in Apache County near the New Mexico border, voted to rezone some property near its airport.

A pair of land parcels previously designated as light industrial were approved for industrial use, and a conditional use permit was issued for a “medical marijuana cultivation, manufacturing and infusion facility." The changes were intended to pave the way for a company called White Mountains Flower, LLC, to build a 50,000-square-foot greenhouse and an 8,000-square-foot building on 19.5 acres of land.

As it turns out, though, the town did not have the authority to authorize any kind of cannabis business on the property. The Springerville airport is "federally obligated," meaning the town has accepted federal funds for airport development and operations under the federal Airport Improvement Program. And because marijuana is still illegal under federal law, Springerville would be putting its airport federal funding at risk and opening itself up to criminal prosecution for inviting a pot company to do business there. 

In April, after hearing from the Federal Aviation Administration, the town pulled out of its lease and development agreements with White Mountains Flower and ordered the company to cease and desist building on the property. WMF was subsequently evicted and left a substantial amount of work behind.

Now, it appears that WMF intends to sue Springerville over all the trouble it ran into when trying to build there.

WMF eventually moved on to Eden, Ariz., northeast of Safford, “in an effort to mitigate its damages,” according to a notice of claim filed in late August by Larry Wulkan of Zwillinger Wulkan, a Phoenix-based law group. (A notice of claim is a letter that must be sent to a municipality before suing them and is often a precursor to a lawsuit.) The company is seeking $6 million in damages incurred and future income lost.

The claim alleges that Springerville did not actually own the land and that when Springerville learned about problems with land ownership, it “took no action” to fix the problems.

“The Town has also breached the covenant of good faith and fair dealing, which is implied in every contract,” the claim states. “It has failed to honor the agreements entered into and which provided White Mountains Flower the rights it bargained for which were conveyed by the Town in the Development Agreement.”

WMF claims it spent no less than $3.5 million in building materials and labor, and the final calculation is likely to exceed $4 million.

Additionally, the company claims that “net annual” rent for the Springerville property would have been $9,600 for 25 years, while in Eden its net annual rent is $500,000. Quite a difference there.

“The 25-year differential will cost White Mountains Flowers $12.5 million,” the claim states.

Neither Town of Springerville officials nor the WMF's attorney would comment for this story. News of the suit was first reported by the White Mountain Independent.