107°F
weather icon Clear

CWNevada cannabis company files for Chapter 11

CWNevada filed for Chapter 11 bankruptcy Tuesday night, becoming the state’s first large-scale cannabis company to seek protection from creditors.

However, it is unclear if U.S. Bankruptcy Judge Mike Nakagawa will even have jurisdiction to consider a company involved in the cultivation, production and sale of marijuana, which is still illegal under federal law.

CWNevada, one of Nevada’s largest cannabis companies, is facing 10 lawsuits from investors, makers of edibles, partners, a landlord and workers over failure to pay or pay on time.

Separately, a judge recently ordered CWNevada to pay its former consultant $4.9 million, while the Nevada Department of Taxation shut two of its dispensaries in Clark County for failure to pay taxes.

There have been four temporary suspensions of marijuana dispensary licenses and certificates in Clark County since 2016, according to the Department of Taxation.

Filing for bankruptcy will enable CWNevada to reorganize its business. CWNevada’s licenses alone are worth tens of millions of dollars.

The bankruptcy filing came just before creditors were to ask Nevada District Court Judge Rob Bare Wednesday afternoon to appoint a receiver over CWNevada.

The bankruptcy filing automatically puts a stay on all legal proceedings against the company, including receivership as well as eviction. Renaissance Blue Diamond is suing to evict CWNevada from its southwest Las Vegas dispensary.

“I think CWNevada is exploring all possible avenues before it comes to a conclusion about how the company needs to act moving forward,” said Jason Wiley, who is representing NuVeda, CWNevada’s partner in the two shuttered dispensaries.

CWNevada CEO Brian Padgett did not respond to a request for comment. On Tuesday, he said the company will “always strive to be good license holders.”

Department of Taxation Director Melanie Young said “challenges are expected as the marijuana industry evolves in the competitive marketplace.”

Contact Todd Prince at 702-383-0386 or tprince@reviewjournal.com. Follow @toddprincetv on Twitter.

Don't miss the big stories. Like us on Facebook.
THE LATEST
Fifth Amazon’s Prime Day lifting many retail boats

The gravitational pull of Amazon Prime Day is so strong on shoppers it’s benefiting other retailers as well, according to an early analysis from a key data group.

Facebook’s currency proposal gets hostile reception in Congress

A Facebook executive on Tuesday defended the social network’s ambitious plan to create a digital currency and pledged to work with regulators to achieve a system that protects the privacy of users’ data.

Lawsuit accuses Encore Boston Harbor of cheating gamblers

The suit by New York resident Richard Schuster says the Everett casino is paying out less for certain winning hands at blackjack and rounding down payouts from slot machines. It was filed Monday in Middlesex County Superior Court.