Tracy A. Gallegos

Three years ago, Tracy A. Gallegos made a lateral move to a partnership at Duane Morris LLP from a partnership at Fox Rothschild LLP. Both firms have active cannabis practices, which complemented Gallegos' expertise in corporate and real estate work.

Since her entry into the cannabis space, she has handled numerous transactions, including mergers and acquisitions and debt financing deals with an aggregate value exceeding several billion dollars. Gallegos leverages her real estate and corporate knowledge to develop creative structures for her cannabis clients.

Indeed, Gallegos has been involved in the cannabis industry since 2010. "I had a client in an unrelated corporate M&A transaction who learned that Oakland was about to issue a medical [cannabis] dispensary license. He had a family member who'd been helped by medical cannabis, and he decided he wanted to make a play for the license."

It was tricky. "I had to educate myself and the client, but once we got started, I could draw on my prior transactions work to get through the process," she said. "It was nice then and it's nice now to be at the forefront of a new industry, though that brings its own challenges."

Gallegos keeps the names of her clients confidential. For one holding company whose subsidiaries held cannabis manufacturing licenses, she is currently working on a restructuring plan. It involves an exchange agreement as the limited partners swap their interests for membership interests in the holding company.

"This workout is essentially a cleanup of the corporate structure as we guide the client through cannabis regulatory issues plus potential securities issues, given that this would be classified as a limited offering under state securities regulations," Gallegos said. "We're looking to a possible future sale of the company."

In another deal, Gallegos represented a cannabis manufacturing company, advising on the redemption of one member's interests and the transfer of another member's interests in the real estate companies that owned the property on which five cannabis dispensaries were to be operated.

"The main issues were over a business divorce among the owners," she said. The five dispensaries were owned by separate operating companies, and each was owned by various members of the client company. The redemption and transfer required a restructuring complicated by licensing issues and competing tax burdens of the various parties. The restructuring resulted in one of the largest cannabis manufacturers in Southern California becoming vertically integrated with five retail stores.

"We've been ridiculously busy," Gallegos said of her practice. "And none of these are boilerplate deals. You learn something new every day."

- John Roemer