Bankruptcy for Marijuana Businesses? (CRS Report for Congress)
| Release Date |
Oct. 29, 2014 |
| Report Number |
LS_2014-10-29_01 |
| Report Type |
Legal Sidebar |
| Authors |
Gary Sidor |
| Source Agency |
Congressional Research Service |
Summary:
This Legal Sidebar discusses, "...the disparity between state and federal marijuana laws and the resulting risks to individuals and companies in--or providing services to--medical and recreational marijuana businesses that operate legally under the laws of more than 20 states even while such activities remain unlawful under federal law. Recent bankruptcy court cases suggest that one such risk may be the ultimate unavailability to both debtors and creditors of the protections, benefits, and predictability of the U.S. Bankruptcy Code when state-regulated marijuana businesses fail. Two recent cases from the U.S. Bankruptcy Court for the District of Colorado address this issue in the context of motions to dismiss the case (or convert the case to another chapter of the Bankruptcy Code, a frequent alternative to a motion to dismiss in bankruptcy cases) based on the debtor's relationship to a marijuana business that is legal under state law, but not under federal law."
