It seemed to outsiders that the marijuana industry in Las Vegas would be nothing but a BOOM – with the lucky dispensary license holders sure to make millions off locals and tourists alike, looking for a welcomed ‘high.’
However, despite how green the grass is in the marijuana industry, it is not always an easy industry to navigate, and now, as proof of the industry’s struggles, one of Nevada’s largest cannabis companies is facing six separate lawsuits and a subsequent Chapter 11 Bankruptcy. They will need the help of a skilled Las Vegas bankruptcy lawyer to navigate their situation.
What Are The Lawsuits Alleging?
CWNevada’s lawsuits allege fraud, failure to pay lenders on time, and misappropriation of intellectual property. CWNevada owns two cultivation facilities, a production facility, and three dispensaries under the “Canopi” brand. As per the company’s own declaration, they are the “premier cannabis distributor in Nevada.”
In spite of that claim, the company has struggled to pay back millions of dollars that it raised from lenders over the past years; the money was used for the cultivation, production, and distribution of marijuana products.
Defaults Due to Poor Management
A lawsuit by Green pastures Fund, Jakal Investments, Green Pastures Group, Jonathan Fenn and Growth Opportunities states, “While local and national media outlets report on the unprecedented success of Nevada’s regulated marijuana market, CWNevada, LLC’s management has managed to run the business into the ground… despite having substantial capital investment from Plaintiffs and otherwise, and the market advantage of holding privileged licenses relating to every facet of the operations, CWNevada has failed to turn a profit, has irreparably harmed its relationships with key vendors, and has now defaulted on its primary financing provided by Plaintiffs.”
The above-mentioned lawsuit states that CWNevada owes the plaintiffs $15 million.
Remember: that is but one of 6 different lawsuits facing CWNevada.
Other Lawsuits Allege Fraudulent Behavior
Another lawsuit is being filed by Highland partners NV LLC, which rents space to CWNevada. The Highland lawsuit accuses CWNevada of over $1.3 million in accounting fraud.
As well, MI-CW Holdings NV Fund 2 alleges that it loaned CWNevada $3.24 million for equipment and has not been paid back. They accuse CWNevada of “fraudulent conduct.”
Questions Loom About The Ability to Provide Bankruptcy Protections
So what happened? Poor management? Greed? At this point, it does not matter as much as cleaning up the financial mess matters. How does CWNevada intend to do that? They filed for Chapter 11 Bankruptcy, becoming Nevada’s first large-scale cannabis company to seek protection from creditors. However, it is still unclear whether or not U.S. Bankruptcy Judge Mike Nakagawa will have jurisdiction to consider a company involved with the cultivation, production, and sale of marijuana since it is still illegal under federal law. This is new and tricky territory to navigate, for all parties evolved.