Phil Ivey takes a big hit as marijuana-dispensary investment enters bankruptcy

Haley Hintze Author Photo
Haley Hintze
Posted on: April 30, 2022 14:02 PDT

Phil Ivey's credit-line investment of $1.9 million into one of Las Vegas's many marijuana dispensary businesses, NuVeda, LLC, may be up in smoke after NuVeda sought U.S. federal bankruptcy protection earlier this month. NuVeda filed its bankruptcy motion on April 11, claiming less than $50,000 in assets while acknowledging between $2.57 million and $10 million in outstanding liabilities.

NuVeda's bankruptcy filing is the latest development in a complicated string of events stretching back nearly a decade. Ivey and two co-investors, Shane Terry and Dotan Melech, sued NuVeda in June 2020 seeking to recoup lost investments and equity in the company. The lawsuit by Ivey and the other investors is still pending.

Meanwhile, NuVeda, in partnership with another dispensary-owning company, CWNevada, had minority interest in several Las Vegas dispensaries. Two of those-- one in downtown and one in North Las Vegas -- had been shuttered by the Nevada Department of Taxation over several financial hardships, including failure to pay taxes and failure to pay employees' insurance premiums.

Those weren't the only issues. NuVeda sued CWNevada in 2019, as part of the fallout over a 2019 decision by the Nevada Cannabis Compliance Board that fined CWNevada, and by extension NuVeda, $1.25 million for numerous violations, including off-the-book cannabis sales, selling untested cannabis, and destroying evidence. Six of the business's 14 dispensary licenses for CWNevada's "Canopi"-branded outlets were revoked, while the other eight were placed into receivership and ordered to be sold. CWNevada itself filed for bankruptcy protection in 2019.

The entire episode of legal events surrounding NuVeda and CWNevada, which jointly operated as CWNV, illustrated that the cannabis industry in Las Vegas was less of a goldmine than many investors had hoped. When Las Vegas approved dozens of dispensaries and their parent companies in 2014, the rush was on, while several notable individuals, including Ivey and fellow pro Antonio Esfandiari, joined investor efforts hoping for quick profits.

Ivey claim has extra ownership wrinkle

Though still unresolved, Ivey's 2020 lawsuit against NuVeda asserts that he was granted 3% equity in the company in exchange for a credit line of up to $1.9 million. The lawsuit claimed, “Ivey’s significant business experience and financial resources not only provided a solution in support of NuVeda’s business strategy, but also provided critical proof of financial viability in support of NuVeda’s competitive application, including the amount of taxes paid."

The lawsuit, though, declares that Ivey's 3% equity stake was removed by NuVeda sometime between 2014 and Ivey's filing in 2020. What isn't stated by either party, however, is why Ivey's ownership stake may have disappeared. During most of those years, Ivey was embroiled in a legal battle with New Jersey's Bellagio casino over alleged cheating at the Bellagio's high-stakes mini-baccarat tables. The Bellagio won a settlement of more than $12 million against Ivey and co-defendant Cheung Yin "Kelly" Sun, though Sun later declared bankruptcy and Ivey settled with the Bellagio, also in the summer of 2020, for an undisclosed but likely much lesser amount.

Ivey's ongoing claim is acknowledged indirectly in NuVeda's bankruptcy filing. In the required listing of what are asserted to be unsecured creditors, Ivey is the third of four such creditors. Only the first of the four creditors, former investor Jennifer Goldstein, is fully acknowledged as a creditor; Goldstein was expulsed by NuVeda in an earlier ownership dispute and was awarded $2.57 million in a arbitration ruling in 2020. NuVeda later tried but failed to overturn that ruling, yet acknowledges that debt in its filing.

For Ivey and two other listed unsecured creditors, however, their claims are disputed. Ivey's co-plaintiff Shane Terry and CWNevada (in the form of its receiver, Ivey's other co-plaintiff, Melech) are the other listed creditors. All three, however, are listed as "unliquidated" and "disputed", with no specific dollar amounts acknowledged, given the unresolved nature of the earlier case.

Featured image source: Hustler Live