The Nevada Department of Taxation shut two of CWNevada’s three dispensaries as the cannabis company struggles to pay the government, workers and creditors.
The news spurred creditors to file an emergency motion to impose a receiver over CWNevada, one of the largest cannabis companies in the state.
The regulator shut the company’s North Las Vegas and downtown dispensaries Friday evening through May 2 after it suspended the registration and licenses owned by CWNV, a venture between CWNevada and NuVeda. CWNevada owns 65 percent of CWNV and runs the business, NuVeda said in court documents.
The Nevada Department of Taxation declined to give a reason for the suspension.
“What happened is the Nevada Department of Taxation shut down both the North Las Vegas and Downtown dispensaries on April 12, 2019, for failure to pay taxes—putting the associated privileged licenses in grave danger,” CIMA Group LLC, a CWNevada creditor, said in a filing with Nevada District Court on April 13.
The closures came just hours after the landlord for CWNevada’s third dispensary on Blue Diamond Road filed an action to evict the company for non-payment of nearly $100,000 in rent.
CWNevada CEO Brian Padgett said Tuesday that the company takes the responsibility of holding a marijuana license seriously.
A week earlier, employees filed a class action lawsuit against CWNevada for untimely pay and temporary loss of healthcare insurance.
“CWNevada did not inform Plaintiffs or others similarly situated of the fact that their healthcare benefits were terminated due to lack of payment,” according to the April 4 class action filing.
Padgett told the Review-Journal the company offers “first class insurance coverage” for employees and their families and is in good standing.
These lawsuits add to the seven that have already been filed against CWNevada by investors, edible companies and its business partner NuVeda over the past 12 months. The five investor lawsuits — which are seeking more than $20 million — have been combined into one case.
CWNevada is also fighting a recent ruling that it must pay its former consultant 4Front Advisors $4.9 million.
Lawyers for 4Front, CIMA and other creditors asked Judge Rob Bare on April 4 to install a receiver over CWNevada amid fear the company’s dispensaries could be shut due to non-payment of taxes or rent.
Nevada District Court Judge Rob Bare postponed a decision to early May to give CWNevada’s new counsel time to catch up on the case. However, he ordered CWNevada to be current with tax payments as of April 9 and to notify creditors of its compliance.
CIMA, which is seeking about $500,000 in licensing fees for giving CWNevada the exclusive right to produce its Wana products in Nevada, filed an emergency application on April 13 to have a receiver appointed. CIMA claims CWNevada failed to follow Bare’s order.
“CWNevada is in danger of failing most heinously,” CIMA said in the filing. “Creditors, vendors, landlords, employees, the Nevada Department of Taxation – CWNevada hasn’t just burned one bridge, it’s burned them all. It is readily apparent that CWNevada’s current leadership is incapable of appropriately managing the business or working through the myriad of problems the company faces.’’
Nevada District Court Judge Rob Bare has scheduled an expedited hearing for receivership on Wednesday. No Nevada cannabis company has ever been put into receivership.
Several CWNevada employees, including executives, have quit or been let go in recent months as the company struggles to pay creditors.
Chief Operating Officer Diana Ritchie, Director of Wholesale Matt Bliven, Director of Analysis David Tyssee, Director of Compliance Kay Ann Tyssee and Research and Development Head Chris Stalnaker are among those who have left the company.