"Cannabis In Nevada: M&A and Rural Growth"
Of Counsel Interviews Andrew Gabriel and Dennis Gutwald
Partner Business Entities & TransactionsCo-ChairReal Estate & Land UseCo-Chair agabriel@mcdonaldcarano.com Phone702.873.4100 Fax702.873.9966 V-Card PDF (Print)
Gutwald
Partner dgutwald@mcdonaldcarano.com Office702.873.4100 Direct702.257.4517 V-Card PDF (Print)
Of Counsel magazine, the Legal Practice and Management Report, interviewed prominent lawyers across the country for an in-depth study of the cannabis industry and the outlook for law firms serving cannabis clients. McDonald Carano partners Andrew Gabriel and Dennis Gutwald shared their insights on the cannabis sector in Nevada, including their views about corporate transaction activity, expansion into rural counties, and the impact of potential federal legalization. Their comments are excerpted below, and the complete article is available here on pages 1, 2, 13 and 14.
Quotes from Andrew Gabriel and Dennis Gutwald
"Cannabis Law Attorneys Stay Busy to Keep Pace with Industry Growth," Of Counsel, April 2022
The consolidation craze that has run rampant across many economic sectors has also affected the cannabis industry. Many larger companies see lucrative opportunities and swoop in to acquire smaller businesses. But those players in the M&A market encounter difficulties too. "In corporate transactions, one of the most important takeaways for cannabis businesses is to be prepared for longer-than-expected delays in regulatory approvals that can create challenges in daily operations, financing arrangements, and business planning," says Andrew Gabriel, who chairs the Business Entities & Transactions department as well as the Real Estate & Land Use team at Nevada's McDonald Carano.
Attorneys at McDonald Carano, which has offices in Las Vegas and Reno, have been serving clients in the marijuana business for several years (medical pot has been legal since 2000 and recreational cannabis since January 2017). Gabriel says national legalization will also boost mergers, acquisitions, and other deals. "If federal law changes to make cannabis legal, U.S. public companies and banks will be encouraged to dive in, creating a flurry of transactional activity," he says.
Not surprisingly, Nevada's marijuana industry growth has centered in urban areas. But that's changing as rural counties are beginning to embrace cannabis businesses and the revenue they generate. "The state has issued more than 700 medical and recreational cannabis licenses, but most are in the main population centers of Clark and Washoe counties," said Dennis Gutwald, Gabriel's partner at McDonald Carano, who practices in the firm's Gaming & Administrative Law group. "Several once-hesitant rural counties that previously issued local cannabis moratoriums are now interested in diversifying their local economies by bringing cannabis-driven economic benefits to their communities."
Nevada's Cannabis Sector Statistics: As of April 2022, 216 entities have obtained 758 medical and recreational establishment licenses/certificates – 344 certified for medical cannabis, 414 licensed for recreational cannabis, and approximately half of the total are dual licensees operating at one location. The 758 establishments include cultivation facilities, production facilities, independent testing laboratories, distributors, medical dispensaries, and recreational retail. The total includes 94 active dispensaries/retail stores – 64 co-located, 28 stand-alone recreational, and 2 stand-alone medical. The 758 total does not include cannabis consumption lounges allowed under Assembly Bill 341, which went into effect October 1, 2021, and gives the state Cannabis Compliance Board the authority to license and regulate cannabis consumption lounges. The CCB has not yet completed the drafting of regulations and has not yet announced the date it will accept applications for licenses.